Finance

Zoom to Lay Off 15% of Staff as Pandemic Wanes

Published FEB 8 2023

Story

Image credit: Getty Images [via Fox Business]

The Facts

As demand for its services slowed due to the waning pandemic, Zoom Video Communications Inc. announced Tuesday, that it will be laying off about 1.3K employees, or roughly 15% of its staff, and incur about $50M to $68M in charges.
Al Jazeera
In a note to staff, Zoom's 2011 founder and CEO Eric Yuan said he would cut his own pay by 98% and forego his 2023 bonus, adding that while tripling its size in two years to meet pandemic demand, the company didn't focus enough on whether that growth was sustainable.
NPR Online News
Yuan said the downsizing will affect every organization in the company and that those who are laid off will be offered up to 16 weeks of salary and health-care coverage, also noting that the company had "worked tirelessly" but that "we also made mistakes."
CNBC
After declining 63% last year, shares of the company jumped 9% following Yuan's announcement. Compared with its 400% revenue surge in 2021 and 900% jump in profits that year, its revenue is believed to have risen just 6.7% last year along with a 38% drop in profits.
New York Post
Other Zoom executives will also take a 20% salary cut and forego their fiscal 2023 bonuses. Yuan's statement added that those who are laid off will also receive "outplacement services" like "1:1 coaching, workshops, networking groups, and more."
FOX News
This was just one in a series of layoff announcements over the past few days, including eBay (4%), Secureworks (9%), Boeing (2K finance and human resources staff), Dell Technologies (6,650 staff), and FedEx (10% of its officer and director team).
Forbes

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

These mass layoffs are undoubtedly real, but so is the strong economy. This is because most layoffs are occurring in the tech industry, particularly for software engineers, recruiters, and product, marketing, and operations managers. However, this doesn't mean those jobs are obsolete, but that major corporations simply overhired during the pandemic and are now correcting course. Other sectors are open for business right now and tech workers will soon catch up as their industry is expected to boom in the coming decade.

GOBankingRates

Narrative B

This is not just a tech sector or white-collar problem, as temp workers, particularly in manufacturing, have seen a recent wave of 110K workers being laid off. Though unemployment seems to be holding steady, the mixture of white and blue-collar job losses, coupled with impending stagflation as the Fed retains its high-interest rates, could amount to a very real, albeit unique, recession.

CNBC