The iPhone maker is seeking to limit spending and job growth in some of its divisions, Bloomberg reported Monday, although Apple has not adopted a company-wide policy. The more cautious stance mimics the approach of its tech peers, including Amazon.com Inc., Google and Microsoft Corp. of Alphabet Inc., all of which have taken steps to slow spending.
The news sent stocks sliding and heightened concern surrounding the tech earnings season, which is in full swing this week. It can be difficult for companies to reassure nervous investors. International Business Machines Corp. posted better-than-expected sales growth on Monday, but saw its shares tumble late in the session.
For now, most of the biggest tech companies aren’t talking about eliminating jobs, just cutting the hiring rate. And overall, job growth in the United States has not stagnated. Payrolls rose by 372,000 in June, beating the estimate of 265,000, with manufacturing jobs helping to bolster the numbers.
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The United States created 25,000 jobs in the information sector in June, which puts this category 105,000 more than before the pandemic.
But some tech companies are going so far as to cut jobs. That includes Microsoft, which said last week it was eliminating some positions as part of a reorganization.
The reduction affects less than 1% of its 180,000 employees, and Microsoft still expects to end the year with an increase in the workforce. But that follows a decision in May to slow hiring across Windows, Office and Teams divisions “as Microsoft prepares for the new fiscal year.”
Last month, Tesla Inc. laid off hundreds of workers and closed a California factory dedicated to its Autopilot self-driving technology, according to people familiar with the matter.
Chief executive Elon Musk said earlier that layoffs would be necessary in an increasingly unstable economic environment. He clarified in a later interview with Bloomberg that about 10% of salaried employees would lose their jobs in the next three months, although the overall headcount could be higher a year from now.
Former top pandemic officials like Netflix Inc. and Peloton Interactive Inc. have also furloughed workers in recent months. Netflix cut a few hundred jobs in June, and Peloton just announced plans to shut down in-house manufacturing.
Facebook’s parent company, Meta Platforms Inc., cut spending and slowed hiring for some high-level positions. In April, the company announced plans to cut spending by $3 billion this year. The idea is to refocus Meta’s product teams on core priorities, like the metaverse and its TikTok clone, Reels.
Meta also halted development of one of its early smartwatch prototypes and repositioned its home video device, Portal, to focus more on business customers rather than regular consumers.
Google CEO Sundar Pichai told staff last week that the company plans to slow hiring for the rest of 2022 – a rare move for the internet giant, which typically adds tens of thousands of new employees. employees each year. Google will focus its hiring on technical positions and “other critical roles” throughout this year and next.
“We need to be more enterprising, work with more urgency, sharper focus and more hunger than what we showed on the sunnier days,” he said.
Other companies are looking to end ambitious growth plans without the need for major layoffs.
Amazon has put in staff during the pandemic so that it can cope with increased e-commerce spending. This has now left it overstaffed in its warehouses, but the company said it is working on this attrition issue.
In some cases, Amazon is subletting warehouse space and has suspended development of facilities for office workers, saying it needs more time to determine how much space employees will have. need for hybrid work.
Amazon CEO Andy Jassy said the company made the decision early in the pandemic to err on the side of having too many workers and too much warehouse space — rather than too little.
“We knew that might mean we could have more capacity for a short period of time,” he said.
A key question over the past earnings season is whether consumer demand has faltered. Apple warned in April that the final quarter would be bumpy, but mostly due to supply chain challenges.
These issues are expected to erase up to $8 billion from Apple’s sales in the quarter. Investors should have a clearer idea of the damage — and Apple’s outlook for the coming months — when it reports results on July 28.
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