5 ms·

To me, Meta's 2022 FY results were a textbook profile for "this company should lay people off". (flat revenue across a whole calendar year, coupled with balloon

by gen220 4y ago

To me, Meta's 2022 FY results were a textbook profile for "this company should lay people off". (flat revenue across a whole calendar year, coupled with ballooning costs) Google's 2022 FY results are not Meta's: modest but solid revenue growth, costs a bit over-inflated, but not at all beyond the pale. The layoffs didn't seem fiscally necessary, prima facie, unless they have reasons to believe in extremely conservative forecasts for future revenue growth. It would have been fascinating to be a fly on the wall in the board room for that decision.

CydeWeys 4y ago
I think the execs got peer-pressured into it. Other companies were doing it, and they ignored the fact that other companies were in much more dire straits. As a result we now have all the psychic costs of the layoff, but few of the benefits, as it wasn't really even necessary anyway. I'm betting that our headcount will be back up to where it was before the layoffs by summer.
- aaomidi 4y ago
  What a strong executive team that they can get peer pressured to doing layoffs. What are we paying them for again? Hm.
- gen220 4y ago
  I personally doubt the mimetic explanation is the explanation they gave to themselves, which is the one I'm more interested in (even if the mimetic explanation is the most likely root cause). Reflecting on it, maybe one explanation is that the alternative to a layoff would have been slamming the breaks on their (very complicated!) hiring apparatus so hard, and for so long, that it had the potential of grinding to a halt and rusting. Maybe, they judged that the long-term cost of a layoff was less than the long-term cost of a completely impotent hiring system. IDK.
  - lokar 4y ago
    They pulled waaay back on hiring in 2008/9 (let go all the contract sourcers, etc). They were able to start up again.
    - gen220 4y ago
      That's good context! Perhaps there's some institutional memory from that, i.e. that they regretted that trade-off, in retrospect.
      - hgsgm 4y ago
        Nobody in charge now was involved then. The people in charge now are carpetbaggers.
        gen220 4y ago
        For the context of this decision, this is strictly false: Larry and Sergey are on the board and on the executive committee. If it wasn't a board decision, it was at least an executive committee decision.
    - alfalfasprout 4y ago
      Yeah but they were smaller then. Google's hiring aparatus is massive now. It's clearly far too tricky to surgically change hiring. They struggled as is with the hiring freezes.
      - hgsgm 4y ago
        In what world is the VP not signing offer letters harder than firing staff already at work?
        alfalfasprout 4y ago
        Sure, that's basically a hiring freeze or slowdown. They did that. What they clearly suck at (btw I'm not defending them, just pointing out the reality) is refocusing hiring priorities. There are tons of candidates already in pipelines, etc. so that seems to be somewhat complex.
  - Swenrekcah 4y ago
    I had never before considered the possibility that for these gigantic companies the hiring process is like a huge independent machine full of moving parts that can’t easily be stopped. That’s an interesting thought and I can also believe it’s true. I also think that perhaps a part of the reason for layoffs at companies like Google in these times is simply because they can easily do it now without people reading much into it.
  - mc32 4y ago
    Do they solely rely on FTE talent acquisition teams or do they also lean on partners --which they could presumably pull back on.
    - gen220 4y ago
      It's a mix of both. But there's also the IC-led interviewing component, as well as the regular hiring committee meetings. There's deep norms in those rituals that disappear/diverge if they stop meeting regularly.
andsoitis 4y ago
Past results isn’t what you use to decide how to position for the future. It is about expected future(s) and how to set yourself up for longer term success.
- gen220 4y ago
  Of course, but one must acknowledge that past growth is a large (often, dominating) contributing factor to future growth. But that's part of my question: what did they predict that merited a layoff, when their cost structure wasn't ballooning out of control, and which made the alternative of maintaining a hiring freeze throughout 2023 insufficient?
  - brewdad 4y ago
    I’m guessing that a certain percentage of new hires over the past boom years aren’t working out. It’s easier to identify them and do a massive layoff than have to justify each case individually. The fact that everyone else is also laying people off gives them the cover to avoid the huge morale hit than comes with a layoff announcement.
  - andsoitis 4y ago
    Well, their profit dropped by 34% and is the fourth consecutive quarter for profit to drop. That’s also historical data… https://www.nytimes.com/2023/02/02/technology/alphabet-earnings.html https://www.nytimes.com/2023/02/02/technology/alphabet-earni...
runamok 4y ago
Does anyone understand why Meta is up 23% today? Did the cuts show an impact in Q4? I'd have assumed the initial cost of the severance would be significant. https://finance.yahoo.com/quote/META?p=META&.tsrc=fin-srch https://finance.yahoo.com/quote/META?p=META&.tsrc=fin-srch
- HDThoreaun 4y ago
  Mark signaled he will listen to investors instead of spitting on them as he has been for the last yea or two.
- theposey 4y ago
  40B buyback
- gen220 4y ago
  Cuts have no impact on 2022 Q4 metrics, because the laid off employees are still on the books through 2023 Q1. It's anybody's interpretation as to why it would trade higher. Raising buybacks to pre-2022 levels, in conjunction with rising ad impressions and reducing opex are all positive factors.
- justapassenger 4y ago
  Meta dropped like rock in 2022, and walstreet assumed it's dying. Their valuation got crushed much more than their peers. Q4 showed that their business is actually still working and company is making necessary changes, so they recovered to be roughly in line with big tech peers.
DeRock 4y ago
> modest but solid revenue growth, costs a bit over-inflated, but not at all beyond the pale Net income dropped 34% compared to the same quarter last year. 21% drop comparing FY2022 to FY2021. That feels significant, especially when revenue grew over the same periods.
- samspenc 4y ago
  Yeah, even though revenue increased a modest amount, the drop in income / profit should have investors worried.
- jsnell 4y ago
  It's mostly driven by changes to Other Income (+12b to -3b), which is dominated by shares Google owns in other companies being marked to market. Basically this exaggerates both the good times (unrealized gains boost the net income, even though it's all on paper) and the bad times (the inverse). The operating income is probably a better way to reason about how sound the core business is.
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by gen220 4y ago

CydeWeys 4y ago

I think the execs got peer-pressured into it. Other companies were doing it, and they ignored the fact that other companies were in much more dire straits. As a result we now have all the psychic costs of the layoff, but few of the benefits, as it wasn't really even necessary anyway. I'm betting that our headcount will be back up to where it was before the layoffs by summer.

aaomidi 4y ago
What a strong executive team that they can get peer pressured to doing layoffs. What are we paying them for again? Hm.
gen220 4y ago
I personally doubt the mimetic explanation is the explanation they gave to themselves, which is the one I'm more interested in (even if the mimetic explanation is the most likely root cause). Reflecting on it, maybe one explanation is that the alternative to a layoff would have been slamming the breaks on their (very complicated!) hiring apparatus so hard, and for so long, that it had the potential of grinding to a halt and rusting. Maybe, they judged that the long-term cost of a layoff was less than the long-term cost of a completely impotent hiring system. IDK.
- lokar 4y ago
  They pulled waaay back on hiring in 2008/9 (let go all the contract sourcers, etc). They were able to start up again.
  - gen220 4y ago
    That's good context! Perhaps there's some institutional memory from that, i.e. that they regretted that trade-off, in retrospect.
    - hgsgm 4y ago
      Nobody in charge now was involved then. The people in charge now are carpetbaggers.
      - gen220 4y ago
        For the context of this decision, this is strictly false: Larry and Sergey are on the board and on the executive committee. If it wasn't a board decision, it was at least an executive committee decision.
  - alfalfasprout 4y ago
    Yeah but they were smaller then. Google's hiring aparatus is massive now. It's clearly far too tricky to surgically change hiring. They struggled as is with the hiring freezes.
    - hgsgm 4y ago
      In what world is the VP not signing offer letters harder than firing staff already at work?
      - alfalfasprout 4y ago
        Sure, that's basically a hiring freeze or slowdown. They did that. What they clearly suck at (btw I'm not defending them, just pointing out the reality) is refocusing hiring priorities. There are tons of candidates already in pipelines, etc. so that seems to be somewhat complex.
- Swenrekcah 4y ago
  I had never before considered the possibility that for these gigantic companies the hiring process is like a huge independent machine full of moving parts that can’t easily be stopped. That’s an interesting thought and I can also believe it’s true. I also think that perhaps a part of the reason for layoffs at companies like Google in these times is simply because they can easily do it now without people reading much into it.
- mc32 4y ago
  Do they solely rely on FTE talent acquisition teams or do they also lean on partners --which they could presumably pull back on.
  - gen220 4y ago
    It's a mix of both. But there's also the IC-led interviewing component, as well as the regular hiring committee meetings. There's deep norms in those rituals that disappear/diverge if they stop meeting regularly.

andsoitis 4y ago

Past results isn’t what you use to decide how to position for the future. It is about expected future(s) and how to set yourself up for longer term success.

gen220 4y ago
Of course, but one must acknowledge that past growth is a large (often, dominating) contributing factor to future growth. But that's part of my question: what did they predict that merited a layoff, when their cost structure wasn't ballooning out of control, and which made the alternative of maintaining a hiring freeze throughout 2023 insufficient?
- brewdad 4y ago
  I’m guessing that a certain percentage of new hires over the past boom years aren’t working out. It’s easier to identify them and do a massive layoff than have to justify each case individually. The fact that everyone else is also laying people off gives them the cover to avoid the huge morale hit than comes with a layoff announcement.
- andsoitis 4y ago
  Well, their profit dropped by 34% and is the fourth consecutive quarter for profit to drop. That’s also historical data… https://www.nytimes.com/2023/02/02/technology/alphabet-earnings.html https://www.nytimes.com/2023/02/02/technology/alphabet-earni...

runamok 4y ago

Does anyone understand why Meta is up 23% today? Did the cuts show an impact in Q4? I'd have assumed the initial cost of the severance would be significant. https://finance.yahoo.com/quote/META?p=META&.tsrc=fin-srch https://finance.yahoo.com/quote/META?p=META&.tsrc=fin-srch

HDThoreaun 4y ago
Mark signaled he will listen to investors instead of spitting on them as he has been for the last yea or two.
theposey 4y ago
40B buyback
gen220 4y ago
Cuts have no impact on 2022 Q4 metrics, because the laid off employees are still on the books through 2023 Q1. It's anybody's interpretation as to why it would trade higher. Raising buybacks to pre-2022 levels, in conjunction with rising ad impressions and reducing opex are all positive factors.
justapassenger 4y ago
Meta dropped like rock in 2022, and walstreet assumed it's dying. Their valuation got crushed much more than their peers. Q4 showed that their business is actually still working and company is making necessary changes, so they recovered to be roughly in line with big tech peers.

DeRock 4y ago

> modest but solid revenue growth, costs a bit over-inflated, but not at all beyond the pale Net income dropped 34% compared to the same quarter last year. 21% drop comparing FY2022 to FY2021. That feels significant, especially when revenue grew over the same periods.

samspenc 4y ago
Yeah, even though revenue increased a modest amount, the drop in income / profit should have investors worried.
jsnell 4y ago
It's mostly driven by changes to Other Income (+12b to -3b), which is dominated by shares Google owns in other companies being marked to market. Basically this exaggerates both the good times (unrealized gains boost the net income, even though it's all on paper) and the bad times (the inverse). The operating income is probably a better way to reason about how sound the core business is.
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