Reversing Covid-era excesses: Big Tech braces for sackings, dismal profits

Large US technology firms expected to announce layoffs, cut costs through the next few months, say experts

Keen to buttress margins and appease investor concerns at a time of slowing sales growth, big US technology firms are expected to whittle away at their bloated workforce and costs through the next few months, reversing pandemic-era excesses, analysts said.

Each of America’s five largest tech companies, though, are expected to report a fall in profits for the October-December period, as they try to recalibrate in a high-interest environment. Facebook-owner Meta Platforms and Amazon.com are expected to report the biggest declines.

Analysts have cut their total revenue projection for the five companies - Meta, Amazon, Apple Inc, Alphabet Inc and Microsoft Corp - by 5 per cent to $561.4 billion as of January from October.

“I would not expect good news for a while ... at least for the next three quarters. I would expect more layoffs,” said Siddharth Singhai, chief investment officer at investment firm Ironhold Capital. Amazon is expected to report that earnings slumped 38 per cent and revenue grew at the slowest pace in over 22 years.

Meta could see a 42 per cent plunge in profit, its fifth straight quarter of decline.

“We are forecasting another 5 per cent to 10 per cent headcount cut across the tech sector as many of these companies were spending money like 1980s rockstars,” said Wedbush analyst Dan Ives. Analysts expect the Microsoft to report a 2.4 per cent rise in revenue, the slowest pace in about 24 quarters. Profit is expected to fall 9 per cent. Apple’s revenue is expected to fall for the first time in 15 quarters as its major supplier Foxconn faced major disruption at the biggest iPhone factory in China.