The S&P 500 rose to its highest level in five months on Thursday as better-than-expected Meta results further improved sentiment around technology shares, which led the market lower last year.
The broader market index jumped 1.4%, or its best level since August. Meanwhile, the tech-heavy Nasdaq Composite advanced about 3% to its highest level since September. The gains come ahead of a trio of Big Tech results after the bell in Apple, Amazon and Alphabet.
Meanwhile, the Dow Jones Industrial Average underperformed, falling 102 points, or about 0.3%. The major index was dragged by Merck shares after the pharmaceutical firm issued a weak outlook in its latest earnings results, despite beating estimates on the top and bottom lines.
Meta surged more than 25% in its best day since 2013 after reporting a fourth-quarter beat on revenue and announcing a $40 billion stock buyback. That helped investors look past losses in the business unit overseeing the metaverse.
Other mega-cap tech stocks rose on the back of those results. Shares of Google-parent Alphabet were up more than 6%, while Amazon jumped more than 6%. Apple shares gained more than 3%.
Tech stocks have outperformed in 2023, buoyed by recent signals of cooling inflation that investors expect could lead to a pause from the Federal Reserve in its aggressive rate hiking campaign. The S&P 500 information technology sector is up more than 14% this year after a decline of more than 28% last year.
“It’s showing that growth is outperforming value as it unwinds some of the pressures that hawkish rhetoric brought to risk markets over the course of 2022,” said Keith Buchanan, senior portfolio manager at GLOBALT Investments.
Wall Street is coming off a winning session after the Fed on Wednesday announced a 0.25 percentage point interest rate hike. While the central bank gave no indication of an upcoming pause in rate hikes, investors were encouraged by the smaller increase and Chair Jerome Powell’s comments recognizing easing inflation.
Traders are awaiting the latest jobs report Friday that will give further insight into the labor market. Any signs of cooling could suggest to investors that further rate hikes are off the table.
Brody Longo works out on his Peloton exercise bike on April 16, 2021 in Brick, New Jersey.
Michael Loccisano | Getty Images
Peloton said Wednesday its net loss narrowed year over year, and, for the third quarter in a row, subscriptions revenue was higher than sales of the company’s connected fitness products.
CEO Barry McCarthy called the results a possible “turning point” for the business, which has spent much of the past year executing an aggressive turnaround strategy.
The fitness equipment company’s fiscal second quarter revenue beat Wall Street’s expectations, but the company posted wider losses per share than expected. Peloton’s stock jumped about 7% in premarket trading.
Here’s how Peloton did in the three months that ended Dec. 31 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
Loss per share: 98 cents vs. 64 cents expected
Revenue: $792.7 million vs. $710 million expected
The company’s reported net loss for the three-month period that ended Dec. 31 was $335.4 million, or 98 cents per share, compared with a loss of $439.4 million, or $1.39 per share, a year earlier. While it’s the eighth quarter in a row the exercise company has reported losses, it’s the narrowest loss Peloton has marked since its 2021 fiscal fourth quarter.
Revenue dropped 30% compared to the year ago period but exceeded the company’s expected range of $700 to $725 million. Connected fitness product sales, which are typically strong during Peloton’s holiday quarter, dropped 52% year-over-year while subscription revenue jumped 22%.
“This is the time of year when, if we’re going to sell a lot of hardware, we have so you would expect there to be lots of hardware related revenue, and you would expect that maybe that revenue would exceed subscription,” McCarthy told CNBC. “It didn’t. It’s why in the letter [to investors], I call it out, as it may be a turning point.”
In his letter to investors, McCarthy said he expects the trend to continue.
The company ended the quarter with 6.7 million total members and 3.03 million connected fitness subscriptions, which is a 10% jump compared to the year ago period. The company counted 852,000 subscribers to its app, a 1% drop compared to the year ago period. It has a goal of getting 1 million people to sign up for trials of its app over the next year.
Peloton is losing money on Bikes, Treads and other machines, but its subscription business has once again kept its overall margins above water. Gross margins for its connected fitness products were negative 11.2%, but gross margins for subscription sales were 67.6%. The total gross margin was 29.7%, up from 24.8% in the year ago period. It declined from the previous quarter, however, driven in part by increased promotions in the holiday quarter.
Peloton expects revenue to be lower but margins higher in the next quarter. The company is forecasting sales between $690 million to $715 million and a total gross margin of about 39%. Wall Street analysts pegged their revenue estimate for the quarter at $692.1 million.
The company is also expecting connected fitness subscribers to be between 3.08 million and 3.09 million.
Next phase of the turnaround
Peloton, which boomed during the earlier days of the pandemic, has been in the midst of a broad turnaround strategy under McCarthy, who took the helm of the business a year ago.
The company’s stock is up about 62% so far this year, closing at $12.93 on Tuesday, giving it a market value of about $4.4 billion. Shares are well off their 52-week high of $40.35, which they hit around the time McCarthy became CEO.
“The viability of the business was very much in doubt when I walked in,” said McCarthy, a former Spotify and Netflix executive. “It probably wouldn’t be an overstatement to say there were some people who didn’t expect us to survive this long.”
Since he took over, McCarthy has cut Peloton’s workforce by more than half, expanded its Bike rental program nationwide, started selling certified pre-owned Bikes, debuted a rowing machine and partnered with Amazon and Dick’s Sporting Goods to sell its Bikes and Treads.
McCarthy’s top priority was to manage cash flow and get the company out of the red, a goal he said the company has nearly accomplished. Free cash flow was negative $94.4 million, compared with negative $246.3 million in the previous quarter and negative $546.7 million in the year-ago period.
McCarthy said he’s ready to pivot from trying to keep the company alive to growing it, he told CNBC.
“Now that we’ve addressed the viability issues, let’s get back to thinking about growth and the future of the business, like full stop,” said McCarthy.
“So there are a bunch of initiatives that we’ve announced that position us to pursue growth,” he added. “And the question we need to answer for investors now that we’re not talking about viability is how fast, how profitable, where’s it coming from, and over time we’ll begin to address some of those questions.”
An employee arranges beauty product gift boxes displayed for sale at a Wal-Mart Stores Inc. location in Los Angeles, California.
Patrick T. Fallon | Bloomberg | Getty Images
Walmart said Tuesday that it is raising its minimum wage for store employees to $14 an hour, representing a roughly 17% jump for the workers who stock shelves and cater to customers.
Starting in early March, store employees will make between $14 and $19 an hour. They currently earn between $12 and $18 an hour, according to Walmart spokeswoman Anne Hatfield.
With the move, the retailer’s U.S. average wage is expected to be more than $17.50, Walmart U.S. CEO John Furner said in an employee-wide memo on Tuesday.
About 340,000 store employees will get a raise because of the move, Hatfield said. That amounts to a pay increase for roughly 21% of Walmart’s 1.6 million employees.
The retail giant, which is the country’s largest private employer, is hiking pay at an interesting moment. Some economists are calling for a recession. Prominent tech companies, media organizations and banks, including Google, Amazon and Goldman Sachs, have laid off thousands of employees and set off alarm bells. And weaker sales trends have prompted retailers, including Macy’s and Lululemon, to recently warn investors about a tougher year ahead.
But so far, retailers have largely avoided job cuts. Instead, they are still grappling with a tight labor market.
Retail, compared with other industries, tends to have higher churn than other industries — which allows employers to manage their headcount by slowing the backfilling of jobs said Gregory Daco, chief economist for EY Parthenon, the global strategy consulting arm of Ernst & Young.
Yet he said retailers may also be planning cautiously. For the past 18 months, they have had to work harder to recruit and retain workers. If they lose too many employees, he said, hiring and training new employees can be costly.
“Any retailer is going to have to think carefully and think twice about laying off a good share of their workforce,” he said.
In Walmart’s employee memo, Furner said the wage hike will be part of many employees’ annual increases. Some of those pay increases will also go toward store employees who work in parts of the country where the labor market is more competitive, the company said.
Walmart is sweetening other perks to attract and retain employees, too. Furner said the company is adding more college degrees and certificates to its Live Better U program, which covers tuition and fees for part- and full-time workers. It is also creating more high-paid roles at its auto care centers and recruiting employees to become truck drivers, a job that can pay up to $110,000 in the first year.
This story is developing. Please check back for updates.
Days after Google announced the largest round of layoffs in the company’s 25-year history, executives defended the job cuts and took questions from a concerned workforce during a town hall meeting on Monday.
Google CEO Sundar Pichai led the companywide meeting and told employees that executives will see their bonuses cut. He pleaded with staffers to remain motivated as Google faces heightened competition in areas like artificial intelligence, while also trying to explain why employees who lost their jobs were removed from the internal system without warning.
“I understand you are worried about what comes next for your work,” Pichai said. “Also very sad for the loss of some really good colleagues across the company. For those of you outside the U.S., the delay in being able to make and communicate decisions about roles in your region is undoubtedly causing anxiety.”
CNBC listened to audio of the meeting, which followed the company’s announcement Friday that it’s eliminating 12,000 jobs, or roughly 6% of the full-time workforce. While employees had been bracing for a potential layoff, they wanted answers regarding the criteria that was used to determine who would stay and who would go. Some of the laid-off staffers had long tenures and were recently promoted.
Pichai opened Monday’s town hall meeting acknowledging the Lunar New Year mass shooting in Southern California Saturday night that killed 11 people and injured at least nine others.
“Many of us are still grappling with the violence in L.A. over the weekend and the tragic loss in life,” Pichai said. “I know more details are yet to come out, but it’s definitely hit our Asian-American community in a deep way, especially during the moment of Lunar New Year and we’re all thinking of them.”
‘We have over 30,000 managers’
After moving the conversation to job cuts, Pichai offered some explanation for how he and the executive team made its decisions.
Pichai said he consulted with the founders and controlling shareholders Sergey Brin and Larry Page as well as the board of directors.
Pichai said 2021 marked “one of the strongest years we’ve ever had in the history of the company,” with 41% revenue growth. Google expanded headcount to match that expansion, and Pichai said the company was assuming growth would persist.
“In that context, we made a set of decisions that might have been right if the trends continued,” he said. “You have to remember if the trend had continued and we had not hired to keep pace, we would fall behind in many areas as a company.”
Google and Alphabet finance chief Ruth Porat responded to a couple employee questions in Monday’s town hall that addressed its recent layoff.
Executives said 750 senior leaders were involved in the process, adding that it took a few weeks to determine who would be laid off.
“We have over 30,000 managers at Google and to consult with all of them would have made this an open process where it would have taken additional weeks or even months to come to a decision,” said Fiona Cicconi, Google’s chief people officer, at the meeting. “We wanted to get certainty sooner.”
Regarding the criteria for cuts, Cicconi said execs looked at areas where the work was necessary, but the company had too many people as well as places where the work itself wasn’t critical. Cicconi said the company considered “skill set, time in role where experience or relationships are relevant and matter, productivity indicators like sales quotas and performance history.”
Pichai indicated there would be executive compensation cuts but provided limited details. He said all senior vice presidents “will see a very significant reduction in their annual bonus” this year.
“The more senior you are, the more your compensation is tied to performance,” he said. “You can reduce your equity grants if performance is not great.”
Prior to the job cuts, Google had made the decision to pay out 80% of bonuses this month with the rest expected in March or April. In prior years, the full bonus was paid in January.
Thomas Kurian, the CEO of Google Cloud, offered some perspective on the areas that saw cuts. Google’s cloud unit has been one of the fastest-growing areas for headcount expansion as the company tries to catch Amazon and Microsoft.
“Our engineering hiring is being much more targeted in areas where we need to fill out a product portfolio,” Kurian said. “We are adding sales and customer engineers in very specific countries and industries.”
Kurian said that starting in July, the cloud unit’s aim was to focus hiring “in response to generative AI across our portfolio.”
Like with other all-hands meetings, Google executives took questions from the company’s internal forum called Dory. Employees can post questions there, and they bubble up to the top when their co-workers give them an upvote.
For Monday’s meeting, some of the top-rated questions had to do with the process and communication around the layoffs. One comment said that employees are “playing a game of ping-and-hope-to-hear-back to figure out who lost their job. Can you speak to the communication strategy?”
Rick Osterloh, senior vice president of devices and services, said the company “deliberately didn’t share out of respect for people’s privacy.”
“We know this can be frustrating for people who are still here,” Osterloh said. “But losing your job without any choice in it is very difficult and it’s very personal and many people don’t want their names to be on a list that’s distributed to everyone.”
Looking ahead to A.I.
Another commenter on Dory wrote, “We severed access for 12k employees without the chance to perform knowledge transfers or even let them say goodbye to their colleagues. This is what we do to people who get fired.”
Then came the question: “What’s the message for those of us who are left?”
Royal Hansen, vice president of Security at Google, chimed in to describe “an unusual set of risks that frankly we’re not that well-practiced at managing.” He said there were “tradeoffs.”
“When you think about our users and how critical they’ve become in people’s lives — all the products and services, the sensitive data they’ve trusted us with — even though it might have been a very low likelihood, we had to plan for the possibility that something could go terribly wrong,” Hansen said. “The best option was to close corporate access the way you described,” he said, referring to the abrupt shutdown.
In response to a question asking how employees who had been with the company for 15-plus years were targeted for cuts, Brian Glaser, vice president and chief talent and learning officer said, “we all know that no one is immune to change in our careers.”
Pichai reminded staffers that the company has important work ahead, in particular with respect to rapid progress in AI. Last month, Google employees asked executives at an all-hands meeting whether the AI chatbot ChatGPT represents a “missed opportunity” for Google.”
Pichai said on Monday that “it will be an important year given the rapid advancements in AI,” which will have an impact across the company.
“There’s a paradigm shift with AI and I think, with the concentration of talent we have and work we will do here, will be a big draw and I hope it will continue to be,” Pichai added. “We have to keep earning it.”
He closed the town hall by bringing the discussion back to the topic at hand.
It’s evident, Pichai said, “how much you all care about your colleagues and the company.” He added, “I know it will take a lot more time to process this moment and what you heard today as well.”
Just this week, Alphabet, Google’s parent company, Microsoft
(MSFT) and Vox Media announced layoffs that willaffect more than 22,000 workers.
Their moves follow on the heels of job cuts earlier this monthat Amazon, Goldman Sachs and Salesforce. More companies are expected to do the same as firms that aggressively hired over the last two years slam on the brakes, and in many cases shift into reverse.
The cutbacks are in sharp contrast to 2022, which had the second-highest level of job gains on record, with 4.5 million. But last year’s job numbers began falling as the year went on, with December’s job report showing the lowest monthly gains in two years.
The highest level of hiring occurred in 2021, when 6.7 million jobs were added. But that came on the heels of the first year of the pandemic, when the US effectively shut down and 9.3 million jobs were lost.
The current layoffs are across multiple industries, from media firms to Wall Street, but so far are hitting Big Tech especially hard.
That’s a contrast from job losses during the pandemic, which saw consumers’ buying habits shifting toward e-commerce and other online services during lockdown. Tech firms went on a hiring spree.
But now, workers are returning to their offices and in-person shopping is bouncing back. Add in the increasing likelihood of a recession, higher interest rates and tepid demand due to rising prices, and tech businesses are slashing their costs.
January has been filled with headlines announcing job cuts at company after company. Here is a list of layoffs this month– so far.
Google
(GOOGL)’s parent said Friday it is laying off 12,000 workers across product areas and regions, or 6% of its workforce. Alphabet added 50,000 workers over the past two years as the pandemic created greater demand for its services. But recent recession fears has advertisers pulling back from its core digital ad business.
“Over the past two years we’ve seen periods of dramatic growth,” CEO Sundar Pichai said in an email to employees. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”
The tech behemoth is laying off 10,000 employees, the company said in a securities filing on Wednesday. Globally, Microsoft has 221,000 full-time employees with 122,000 of them based in the US.
CEO Satya Nadella said during a talk at Davos that “no one can defy gravity” and that Microsoft could not ignore the weaker global economy.
“We’re living through times of significant change, and as I meet with customers and partners, a few things are clear,” Nadella wrote in a memo. “First, as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.”
The publisher of the news and opinion website Vox, tech website The Verge and New York Magazine, announced Friday that it’s cutting 7% of its staff, or about 130 people.
“We are experiencing and expect more of the same economic and financial pressures that others in the media and tech industries have encountered,” chief executive Jim Bankoff said in a memo.
Layoffs are also hitting Wall Street hard. The world’s largest asset manager is eliminating 500 jobs, or less than 3% of its workforce.
Today’s “unprecedented market environment” is a stark contrast from its attitude over the last three years,, when it increased its staff by about 22%. Its last major round of cutbacks was in 2019.
The bank will lay off up to 3,200 workers this month amid a slump in global dealmaking activity. More than a third of the cuts are expected to be from the firm’s trading and banking units. Goldman Sachs
(FADXX) had almost 50,000 employees at the end of last year’s third quarter.
The crypto brokerage announced in early January that it’s cutting 950 people – almost one in five employees in its workforce. The move comes just a few months after Coinbase laid off 1,100 people.
Though Bitcoin had a solid start to the new year, crypto companies were slammed by significant drops in prices of Bitcoin and other cryptocurrencies.
McDonald’s
(MCD), which thrived during the pandemic, is planning on cutting some of its corporate staff, CEO Chris Kempczinski said this month.
“We will evaluate roles and staffing levels in parts of the organization and there will be difficult discussions and decisions ahead,” Kempszinski said, outlining a plan to “break down internal barriers, grow more innovative and reduce work that doesn’t align with the company’s priorities.”
The online personalized subscription clothing retailer said it plans to lay off 20% of its salaried staff.
“We will be losing many talented team members from across the company and I am truly sorry,” Stitch Fix
(SFIX) founder and former CEO Katrina Lake wrote in a blog post.
As the new year began, Amazon
(AMZN) said it plans to lay off more than 18,000 employees. Departments from human resources to the company’sAmazon
(AMZN) Stores will be affected.
“Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year,” CEO Andy Jassy said in a memo to employees.
Amazon boomed during the pandemic, and hired rapidly over the last few years. But demand has cooled as consumers return to their offline lives and battle high prices. Amazon says it has more than 800,000 employees.
At The New York Times DealBook summit In November, Jassy said he believes Amazon “made the right decision” regarding its rapid infrastructure build out but said its hiring spree is a “lesson for everyone.”
Even as he spoke, Amazon warehouse workers who helped organize the company’s first-ever US labor union at a Staten Island facility last year were picketing Jassy’s appearance outside the conference venue.
“We definitely want to take this opportunity to let him know that the workers are waiting and we are ready to negotiate our first contract,” Amazon Labor Union President Chris Smalls said, calling the protest a “welcoming party” for Jassy.
Salesforce
(CRM) will cut about 10% of its workforce from its more than 70,000 employess and reduce its real estate footprint. In a letter to employees, Salesforce
(CRM)’s chair and co-CEO Marc Benioff admitted to adding too much to the company’s headcount earlyin the pandemic.
– CNN’s Clare Duffy, Matt Egan, Oliver Darcy, Julia Horowitz, Catherine Thorbecke, Paul R. La Monica, Nathaniel Meyersohn, Parija Kavilanz, Danielle Wiener-Bronner and Hanna Ziady contributed to this report.
CNBC’s Jim Cramer on Friday offered investors a list of e-commerce plays he believes are worth buying, despite the group’s rough performance in 2022.
“There are still some e-commerce plays that I’m willing to get behind here, the ones that have truly prioritized profitability,” he said.
related investing news
Here is his list:
Etsy
Shopify
Pinterest
MercadoLibre
Chewy
Prologis
E-commerce stocks skyrocketed during the height of the Covid pandemic, as at-home consumers made purchases online rather than in-store. But when the economy reopened, consumers prioritized spending on travel and experiences over goods.
That shift, along with the Federal Reserve’s interest rate hikes, sent e-commerce stocks tumbling from their highs last year.
Cramer cautioned that while he believes the group’s struggles are temporary, it’s still too early to buy many of the names in the e-commerce space — including Amazon.
He said that one of his biggest concerns with the company is that it needs to cut more costs. Amazon said earlier this month that it plans to lay off over 18,000 employees.
While that might seem like a sizable cut, “this is a company with well over a million employees — to them, this is a drop in the bucket,” Cramer said.
But Amazon’s stock will eventually bottom, he said. “I think the business can eventually make a big comeback and there will come a point where the stock’s a screaming buy.”
Disclaimer: Cramer’s Charitable Trust owns shares of Amazon.
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LONDON (AP) — Google is laying off 12,000 workers, or about 6% of its workforce, becoming the latest tech company to trim staff as the economic boom that the industry rode during the COVID-19 pandemic ebbs.
Google CEO Sundar Pichai, who also leads its parent company Alphabet, informed staff Friday at the Silicon Valley giant about the cuts in an email that was also posted on the company’s news blog.
It’s one of the company’s biggest-ever round of layoffs and adds to tens of thousands of other job losses recently announced by Microsoft, Amazon, Facebook parent Meta and other tech companies as they tighten their belts amid a darkening outlook for the industry. Just this month, there have been at least 48,000 job cuts announced by major companies in the sector.
“Over the past two years we’ve seen periods of dramatic growth,” Pichai wrote. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”
He said the layoffs reflect a “rigorous review” carried out by Google of its operations.
The jobs being eliminated “cut across Alphabet, product areas, functions, levels and regions,” Pichai said. He said he was “deeply sorry” for the layoffs.
Regulatory filings illustrate how Google’s workforce swelled during the pandemic, ballooning to nearly 187,000 people by late last year from 119,000 at the end of 2019.
Pichai said that Google, founded nearly a quarter of a century ago, was “bound to go through difficult economic cycles.”
“These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities,” he wrote. He called out the company’s investments in artificial intelligence as an area of opportunity.
There will be job cuts in the U.S. and in other unspecified countries, according to Pichai’s letter.
The tech industry has been forced to freeze hiring and cut jobs “as the clock has struck midnight on hyper growth and digital advertising headwinds are on the horizon,” Wedbush Securities analysts Dan Ives, Taz Koujalgi and John Katsingris wrote Friday.
Just this week, Microsoft announced 10,000 job cuts, or nearly 5% of its workforce. Amazon said this month it is cutting 18,000 jobs, although that’s a fraction of its 1.5 million strong workforce, while business software maker Salesforce is laying off about 8,000 employees, or 10% of the total. Last fall Facebook parent Meta announced it would shed 11,000 positions, or 13% of its workers. Elon Musk slashed jobs at Twitter after after he acquired the social media company last fall.
Those job cuts are hitting smaller players as well. U.K.-based cybersecurity firm Sophos laid off 450 employees, or 10% of its global workforce. Cryptocurrency trading platform Coinbase cut 20% of its workforce, about 950 jobs, in its second round of layoffs in less than a year.
“The stage is being set: tech names across the board are cutting costs to preserve margins and get leaner” in the current economic climate, the Wedbush analysts said.
Employment in the U.S. has been resilient despite signs of a slowing economy, and there were another 223,000 jobs added in December. Yet the tech sector grew exceptionally fast over the last several years due to increased demand as employees began to work remotely.
CEOs of a number of companies have taken blame for growing too fast, yet those same companies, even after the latest round of job cuts, remain much larger than they were before the economic boom from the pandemic began.
In their layoff announcements, both Pichai and Microsoft CEO Satya Nadella emphasized the importance of capitalizing on their advances in artificial intelligence technology, reflecting renewed competition between the tech giants sparked by Microsoft’s growing partnership with the San Francisco startup OpenAI.
Microsoft is cutting 10,000 workers, almost 5% of its workforce, joining other tech companies that have scaled back their pandemic-era expansions.
The company said in a regulatory filing Wednesday that the layoffs were a response to “macroeconomic conditions and changing customer priorities.”
The Redmond, Washington-based software giant said it will also be making changes to its hardware portfolio and consolidating its leased office locations.
Microsoft is cutting far fewer jobs than it had added during the COVID-19 pandemic as it responded to a boom in demand for its workplace software and cloud computing services with so many people working and studying from home.
“A big part of this is just overexuberance in hiring,” said Joshua White, a finance professor at Vanderbilt University.
Microsoft’s workforce expanded by about 36% in the two fiscal years following the emergence of the pandemic, growing from 163,000 workers at the end of June 2020, to 221,000 in June 2022.
The layoffs represent “less than 5 percent of our total employee base, with some notifications happening today,” CEO Satya Nadella said in an email to employees.
“While we are eliminating roles in some areas, we will continue to hire in key strategic areas,” Nadella said. He emphasized the importance of building a “new computer platform” using advances in artificial intelligence.
He said customers that were accelerating their spending on digital technology during the pandemic are now trying to “optimize their digital spend to do more with less.”
“We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one,” Nadella wrote.
Other tech companies have also been trimming jobs amid concerns about an economic slowdown.
Amazon and business software maker Salesforce earlier this month announced major job cuts as they prune payrolls that rapidly expanded during the pandemic lockdown.
Amazon said that it will be cutting about 18,000 positions. It’s the largest set of layoffs in the Seattle company’s history, although just a fraction of its 1.5 million global workforce.
Facebook parent Meta is laying off 11,000 people, about 13% of its workforce. And Elon Musk, the new Twitter CEO, has slashed the company’s workforce.
Nadella made no direct mention of the layoffs on Wednesday when he put in an appearance at the World Economic Forum’s annual meeting happening this week in Davos, Switzerland.
When asked by the forum’s founder Klaus Schwab on what tech layoffs meant for the industry’s business model, Nadella said companies that boomed during the COVID-19 pandemic are now seeing “normalization” of that demand.
“Quite frankly, we in the tech industry will also have to get efficient, right?” Nadella said. “It’s not about everyone else doing more with less. We will have to do more with less. So we will have to show our own productivity gains with our own sort of technology.”
Microsoft declined to answer questions about where the layoffs and office closures would be concentrated. The company sent notice to Washington state employment officials Wednesday that it was cutting 878 workers at its offices in Redmond and the nearby cities of Bellevue and Issaquah.
As of June, it had 122,000 workers in the U.S. and 99,000 elsewhere.
White, the Vanderbilt professor, said all industries are looking to cut costs ahead of a possible recession but tech companies could be particularly sensitive to the rapid rise in interest rates, a tool that has been used aggressively in recent months by the Federal Reserve in its fight against inflation.
“This hits tech companies a little harder than it does industrials or consumer staples because a huge portion of Microsoft’s value is on projects with cash flows that won’t pay off for several years,” he said.
Among the projects that have been attracting attention recently is Microsoft’s investment in its San Francisco startup partner OpenAI, maker of the writing tool ChatGPT and other AI systems that can generate readable text, images and computer code.
Microsoft, which owns the Xbox game business, also faces regulatory uncertainty in the U.S. and Europe delaying its planned $68.7 billion takeover of video game company Activision Blizzard, which had about 9,800 employees as of a year ago.
____
AP Business Writer Kelvin Chan contributed to this story from London.
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Scientists have identified a tiny new species of dwarf boa living in the Ecuadorian Amazon that even a snake hater could love: These small reptiles are just a foot long.
Alex Bentley, research coordinator of the Sumak Kawsay In Situ field station in the eastern foothills of the Andes, stumbled across a small, curled up snake in a patch of cloud forest, an upland forest where clouds filter through the treetops.
He sent a photo of the snake to colleagues, including Omar Entiauspe-Neto, a graduate student at the Federal University of Rio Grande do Sul and Butantan Institute in Brazil.
“We were immediately surprised, because it shouldn’t be there,” said Entiauspe-Neto, the corresponding author of the paper describing the species in the European Journal of Taxonomy.
Other dwarf boas have been identified elsewhere in South America and the West Indies, but none had ever been found in the region where Bentley spotted this one. The closest known match in Ecuador lives west of the Andes, and, according to Entiauspe-Neto, it looks “radically different” from the specimen in Bentley’s photo.
While the snake didn’t match any known species of dwarf boas, it had a lot in common with a specimen in the Ecuadorian Museum of Natural Sciences collected several years ago.
“We’re usually afraid to describe new species based on only a single one, because there’s a chance that there might be some sort of variation,” Entiauspe-Neto said. “Once we had those two specimens, we were fairly sure they were a new species.”
By comparing both the physical characteristics and genetic sequences of the mystery snakes with known species, the researchers determined that they’d found an animal new to science. They named it Tropidophis cacuangoae in honor of Dolores Cacuango, an Indigenous activist who championed women’s rights and founded Ecuador’s first bilingual schools with lessons in Spanish and the Indigenous language Quechua.
Like its fellow dwarf boas, T. cacuangoae is distantly related to the bigger boa constrictor, but they have key traits in common.
They both have thickset bodies, and their skeletons bear vestigial hip bones, relics of snakes’ ancient legged ancestors. And instead of being armed with venom, they squeeze their prey to death, blocking blood flow and causing cardiac arrest.
While 10-foot-long boa constrictors go after animals as big as wild pigs, dwarf boas have diets that largely consist of small lizards. And since they don’t have size on their side like true boa constrictors, dwarf boas have evolved a strange defense mechanism: When threatened, they curl into a ball and bleed out of their eyes.
This behavior, also seen in horned lizards, might appear more gross than threatening, but Entiauspe-Neto suspects the behavior is part of a bigger constellation of death feigning found throughout the animal kingdom.
“Most predators tend to feed on living prey,” he said. If a predator such as an eagle sees a dwarf boa coiled up and bleeding from its eyes, “the predator is very likely to think that the snake might be either sick or dying, so therefore it will not feed on it” to avoid catching whatever made the snake seem ill.
However, dwarf boas face far bigger threats than predators: The newly identified species may already be endangered due to habitat loss. “It has a fairly small range,” Entiauspe-Neto said. “So while it still needs to be formally evaluated by the IUCN (International Union for Conservation of Nature), I think it might be threatened with extinction.”
Thaís Guedes, a researcher at the State University of Campinas in Brazil who was not involved with the study, praised the work. “I am always happy when I see a new species of snake being introduced to the world,” Guedes said.
Honoring activist Cacuango in the naming of the species is also important, she said, since Indigenous peoples play a key role in conservation.
For the 275,000 Amazon drivers dropping off 10 million packages a day around the world, the job can be a grind. But a lot has changed since drivers in 2021 told CNBC about unrealistic workloads, peeing in bottles, dog bites and error-prone routing software.
Among the biggest developments is the arrival of a brand-new electric van from Rivian.
Amazon was a big and early investor in the electric vehicle company, which went public in late 2021 with a plan to build trucks and SUVs for consumers and delivery vans for businesses. Since July, Amazon has rolled out more than 1,000 new Rivian vans, which are now making deliveries in more than 100 U.S. cities, including Baltimore, Chicago, Las Vegas, Nashville, New York City and Austin, Texas.
The partnership began in 2019, when Amazon founder and ex-CEO Jeff Bezos announced Amazon had purchased 100,000 electric vans from Rivian as one step toward his company’s ambitious promise of reaching net-zero carbon emissions by 2040.
″[We] will have prototypes on the road next year, but 100,000 deployed by 2024,” Bezos said at the National Press Club in Washington, D.C., in September 2019. Amazon has since revised the timeline, saying it expects all 100,000 Rivian vans on the road by 2030.
Rivian has faced several challenges in recent months. It cut back 2022 production amid supply chain and assembly line issues. Its stock price dropped so sharply last year that Amazon recorded a combined $11.5 billion markdown on its holdings in the first two quarters.
CNBC talked to drivers to see what’s changed with the driving experience. We also went to Amazon’s Delivering the Future event in Boston in November for a look at the technology designed to maximize safety and efficiency for delivery personnel.
For now, most Amazon drivers are still in about 110,000 gas-powered vans — primarily Ford Transits, Mercedes-Benz Sprinters and Ram ProMasters. Amazon wouldn’t share how it determines which of its 3,500 third-party delivery firms, or delivery service partners (DSPs), are receiving Rivian vans first.
The e-commerce giant has been using DSPs to deliver its packages since 2018, allowing the company to reduce its reliance on UPS and the U.S. Postal Service for the so-called last mile, the most expensive portion of the delivery journey. The DSP, which works exclusively with Amazon, employs the drivers and is responsible for the liabilities of the road, vehicle maintenance, and the costs of hiring, benefits and overtime pay.
Amazon leases the vans to DSP owners at a discount. The company covers the fuel for gas-powered vans and installs charging stations for electric vehicles.
The company says DSP owners have generated $26 billion in revenue and now operate in 15 countries, including Saudi Arabia, India, Brazil, Canada, and all over Europe.
What drivers think
In the early days of testing the Rivian vans, some drivers voiced concerns about range. An Amazon spokesperson told CNBC the vans can travel up to 150 miles on a single charge, which is typically plenty of power for a full shift and allows drivers to recharge the vehicle overnight.
As for maintenance, Amazon says that takes place at Rivian service centers near delivery stations or by a Rivian mobile service team, depending on location.
Julietta Dennis launched a DSP, Kangaroo Direct, in Baltimore three years ago. She employs about 75 drivers and leases more than 50 vans from Amazon. She now has 15 Rivian vehicles.
“It’s very easy to get in and out with all of the different handles to hold on to,” Dennis said. She said that some drivers were hesitant at first because the vehicles were so new and different, “but the moment they get in there and have their first experience, that’s the van that they want to drive.”
Baltimore DSP owner Julieta Dennis shows off a Rivian electric van at Amazon’s Delivering the Future event in Boston, Maryland, on November 10, 2022.
Erin Black
Brandi Monroe has been delivering for Kangaroo Direct for two years. She pointed to features on a Rivian van that are upgrades over what she’s driven in the past. There’s a large non-slip step at the back, a hand cart for helping with heavy packages and extra space for standing and walking in the cargo area.
“We have two shelves on both sides to allow for more space,” Monroe said, adding that she’d prefer to drive a Rivian for every shift. “And then the lights at the top: very innovative to help us see the packages and address a lot easier, especially at nighttime.”
There’s even a heated steering wheel.
Former driver B.J. Natividad, who goes by Avionyx on YouTube, says his non-electric van could get very cramped.
“I remember one time I had 23 or 24 bags and over 40 oversize packages and I had to be able to figure out how to stuff that all in there within the 15 minutes that they give us to load up in the morning,” said Natividad, who now works for USPS.
The Rivian vans have at least 100 more cubic feet than the Sprinter and up to double the cargo space of the Ford Transit vans Natividad drove in Las Vegas. Rivian vans are still small enough that they don’t require a special license to drive, though Amazon provides its own training for drivers.
One driver in Seattle, who asked to remain unnamed, was especially excited about the new Rivian vans. He offered an extensive tour of the new driving experience on his YouTube channel called Friday Adventure Club.
He said one of his favorite features is a light bar “that goes all the way around the back.” He also likes that the windshield is “absolutely massive,” the wide doors allow for easy entry and exit, and the cargo door automatically opens when the van is parked. There are two rows of shelves that fold up and down in the cargo area.
There’s also new technology, such as an embedded tablet with the driving route and a 360-degree view that shows all sides of the van.
Mai Le, Amazon’s vice president of Last Mile, oversaw the testing of the center console and Rivian’s integrated software.
“We did a lot of deliveries as a test,” Le said. “As a woman, I want to make sure that the seats are comfortable for me and that my legs can reach the pedals, I can see over the steering wheel.”
She demonstrated some of the benefits of the new technology.
“When we start to notice that you’re slowing down, that means that we can tell you’re getting near to your destination,” she said. “The map begins to zoom in, so you begin to find where’s your delivery location, which building and where parking could be.”
The new vans have keyless entry. They automatically lock when the driver is 15 feet away and unlock as the driver approaches.
Workers load packages into Amazon Rivian Electric trucks at an Amazon facility in Poway, California, November 16, 2022.
Sandy Huffaker | Reuters
Cameras and safety
Above all else, Amazon says the changes were designed to make the delivery job safer.
A ProPublica report found Amazon’s contract drivers were involved in more than 60 serious crashes from 2015 to 2019, at least 10 of which were fatal. Amazon put cameras and sensors all over the Rivian vans, which enable warnings and lane assist technology that autocorrects if the vehicle veers out of the lane.
Dennis mentioned the importance of automatic braking and the steering wheel that starts “just kind of shaking when you get too close to something.”
“There’s just so many features that would really, really help cut back on some of those incidental accidents,” she said.
Amazon vans have driver-facing cameras inside, which can catch unsafe driving practices as they happen.
“The in-vehicle safety technology we have watches for poor safety behaviors like distracted driving, seat belts not being fastened, running stop signs, traffic lights,” said Beryl Tomay, who helps run the technology side of delivery as vice president of Last Mile for Amazon.
“We’ve seen over the past year a reduction of 80% to 95% in these events when we’ve warned drivers real time,” she said. “But the really game-changing results that we’ve seen have been almost a 50% reduction in accidents.”
As a DSP owner, Dennis gets alerts if her drivers exhibit patterns of unsafe behavior.
“If something with a seat belt or just something flags, then our team will contact the driver and make sure that that’s coached on and taken care of and figured out, like what actually happened,” Dennis said.
That level of constant surveillance may be unsettling for some drivers. Dennis said that issues haven’t come up among her staffers. And Amazon stresses it’s focused on driver privacy.
“We’ve taken great care from a privacy perspective,” Tomay said. “There’s no sound ever being recorded. There’s no camera recording if the driver’s not driving and there’s a privacy mode.”
Amazon says the cabin-facing camera automatically switches off when the ignition is off, and privacy mode means it also turns off if the vehicle is stationary for more than 30 seconds.
Safety concerns extend beyond the vehicle itself. For example, an Amazon driver in Missouri was found dead in a front yard in October, allegedly after a dog attack.
Amazon says new technology can help. Drivers can choose to manually notify customers ahead of a delivery, giving them time to restrain pets. Another feature that’s coming, according to Le, will allow drivers to mark delivery locations that have pets.
Natividad said he had multiple close calls with dogs charging at him during deliveries.
“You customers out there, please restrain your dogs when you know a package is coming,” he said. “Please keep them inside. Don’t leave them just outside.”
Optimizing routes
Providing drivers with more efficient and better detailed routes could improve safety, too. Drivers in 2021 told us about losing time because Amazon’s routing software made a mistake, like not recognizing a closed road or gated community. In response, they sometimes tried to save time in other ways.
“People are running through stop signs, running through yellow lights,” said Adrienne Williams, a former DSP driver. “Everybody I knew was buckling their seat belt behind their backs because the time it took just to buckle your seat belt, unbuckle your seat belt every time was enough time to get you behind schedule.”
Amazon listened. The company has been adding a huge amount of detail to driver maps, using information from 16 third-party map vendors as well as machine learning models informed by satellite driver feedback and other sources.
One example is a new in-vehicle data collection system called Fleet Edge, which is currently in a few thousand vans. Fleet Edge collects real-time data from a street view camera and GPS device during a driver’s route.
“Due to Fleet Edge, we’ve added over 120,000 new street signs to Amazon’s mapping system,” Tomay said. “The accuracy of GPS locations has increased by over two and a half times in our test areas, improving navigation safety by announcing upcoming turns sooner.”
Tomay said the maps also added points of interest like coffee shops and restrooms, so in about 95% of metro areas, “drivers can find a spot to take a break within five minutes of a stop.”
In 2021, Amazon apologized for dismissing claims that drivers were urinating in bottles as a result of demanding delivery schedules. Natividad said he occasionally found urine-filled bottles in his vans before his shift in the mornings.
“As soon as I open the van, I’m looking around, I see a bottle of urine. I’m like, ‘Oh, I’m not touching this,'” he said.
Pay for Amazon drivers is up to the discretion of each individual DSP, although Amazon says it regularly audits DSP rates to make sure they’re competitive. Indeed.com puts average Amazon driver pay at nearly $19 an hour, 16% higher than the national average.
Natividad started delivering for Amazon in 2021 when his gigs as a fulltime disc jockey dried up because of the pandemic. He liked the job at the time, generally delivering at least 200 packages along the same route. However, during the holiday season that year, he once had more than 400 packages and 200 stops in a single shift.
“Towards the end of my day, they sent out two rescues to me to help out to make sure everything’s done before 10 hours,” he said.
Amazon is working to optimize its routes. But it’s an unwieldy operation. The company says it’s generated 225,000 unique routes per day during peak season.
Tomay said the company looks at the density of packages, the complexity of delivery locations “and any other considerations like weather and traffic from past history to put a route together that we think is ideal.”
There’s no one-size-fits-all solution.
“Given that we’re in over 20 countries and every geography looks different, it’s not just about delivery vehicles or vans anymore,” Tomay said. “We have rickshaws in India. We have walkers in Manhattan.”
In Las Vegas, Amazon held a roundtable last year for DSP owners and drivers. Natividad says he spoke for 20 minutes at the event about the need for Amazon to improve its routing algorithms.
“I think they should do that probably once a month, with all the DSP supervision and a few of the drivers, and not the same drivers every time. That way different feedback is given. And like seriously listen to them,” Natividad said. “Because they’re not the ones out there seeing and experiencing what we go through.”
Natividad didn’t get to try out the routing technology in the Rivian vans before he left to deliver for USPS in July. He’s excited that the postal service is following in Amazon’s footsteps with 66,000 electric vans coming by 2028.
Amazon, meanwhile, is diversifying its electric fleet beyond Rivian. The company has ordered thousands of electric Ram vans from Stellantis and also has some on the way from Mercedes-Benz.
