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The cloud arm of Chinese e-commerce giant Alibaba Group (NASDAQ: BABA) has begun a layoff set to affect 7% of its total workforce. Sources describe the downsizing as part of broader measures to prepare Alibaba’s cloud division for a spinoff. Furthermore, sources add that the new standalone company would ultimately pursue an initial public offering (IPO).
In late March, reports stated that Alibaba would split into six business groups capable of pursuing IPOs. The company’s shares dipped marginally in pre-market trading Tuesday on news of the layoff development.
Alibaba has reportedly begun informing affected staff of its cloud division layoff plans. Inside sources stated that the Chinese multinational tech company is offering severance packages to affected staff. The company also plans to transfer some workers to other parts of its business empire as part of the headcount shakeup. However, one of the sources stressed that the transfer scheme is not guaranteed.
Alibaba, which is on course to streamline its cloud unit into a separate company within a year, employed over 235,000 people as of March.
Last week, Alibaba CEO Daniel Zhang detailed the company’s cloud division restructuring for the first time. Zhang explained that the Asian tech giant plans to entirely relinquish control of its once-thriving Alibaba Cloud venture. According to the chief executive, the e-commerce powerhouse views giving up control of the cloud arm as unlocking potential. Free from any potentially stifling Alibaba ownership constraints, the cloud unit can attract more significant growth potential as an independent entity.
Amid Alibaba Cloud’s agenda to operate as a separately-owned business entity, some analysts value the business above $30 billion. The reason is that the cloud business sector appears primed for substantial growth following ChatGPT’s explosive popularity. Furthermore, from a back-end point of view, ChatGPT’s technology relies on cloud-based resources to train next-gen artificial intelligence models.
Despite the positive outlook by experts, Alibaba Cloud’s representatives remained mum on suggestions that the unit would benefit from the AI revolution. Instead, reports stated that the cloud unit was selected as an early IPO candidate due to its more developed business model and customer profile. Furthermore, Zhang pointed out that the business’ spinoff was to establish its overall market structure and growth potential trajectory properly. The Alibaba CEO added that he believes a standalone cloud division could potentially outgrow and outpace Alibaba in size and scale. Zhang doubled down on his belief regarding the business offshoot’s potential if it attracted sound external financing.
Approximately two months ago, Alibaba announced plans to split its services into 6 distinct standalone business groups. The company described the move as a way to “unlock shareholder value and foster market competitiveness” amid uncertain economic factors. Furthermore, Alibaba also said the six offshoot business groups revolve around its strategic priorities. The groups are Cloud Intelligence Group, Local Services Group, Tmall Commerce Group, Global Digital Commerce Group, Digital Media and Entertainment Group, and Cainiao Smart Logistics.
Each standalone business division would have its own CEO, board of directors, and potential public listing.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Vodafone shares took a beating today amid company plans to layoff thousands of workers, and properly allocate resources.
Vodafone (LON: VOD) shares fell 7% on Tuesday following a mass layoff announcement by the British multinational telecom company. In a statement, chief executive officer Margherita Della Valle said the company’s plan to ax a record 11,000 jobs is necessary to remain profitable. Vodafone forecasted flat profit growth and explained that the massive downsizing would take place over three years. The cut accounts for a wipeout of just over 10% of the telecom giant’s 100,000 total headcounts.
Expositing on Vodafone’s most significant staff reduction in company history, the recently appointed Della Valle said:
“Our performance has not been good enough. To consistently deliver, Vodafone must change.”
Furthermore, the chief executive officer also added:
“My priorities are customers, simplicity, and growth. We will simplify our organization, cutting out complexity to regain our competitiveness. We will reallocate resources to deliver the quality service our customers expect and drive further growth from the unique position of Vodafone Business.”
Vodafone shares initially sank 7% following the layoff news but were trading down 5.84% at 84.77 GBX as of press time. The Berkshire-based telecom corporation faces stiff competition in key markets in Germany and Italy. However, it has a German turnaround plan and a strategic review in Spain. Furthermore, Vodafone also plans to tailor its continued pricing action to accommodate growth, with Della Valle saying that they “will focus our resources on a portfolio of right-sized products and geographies for growth and returns over time”.
The CEO stressed that Vodafone would rebalance its organizational structure to optimize the potential of Vodafone Business. The reason is that Vodafone Business is a crucial growth driver and has a strong position in an emerging digitized market.
Vodafone plans to cover ground amid investor criticism for moving too slowly and not adopting transformative changes quickly. According to Della Valle, the British telco will be a “leaner and simpler organization” that increases commercial agility and frees up resources.
Vodafone has reallocated substantial FY24 investments toward customer experience and brand. This development comes in light of the company’s underwhelming fiscal year 2023 performance.
Vodafone also seeks to refocus on essential customer experience service quality to gain an edge in consumer markets. This also includes delivering the simple and predictably good experiences that customers expect from the brand.
For the fiscal year ending March 31st, Vodafone reported a revenue haul of 45.7 billion euros ($49.7 billion). This figure remained unchanged versus the previous year, causing Vodafone to issue underwhelming guidance for FY24. For the fiscal year ending March 2024, the company said free cash flow would drop to 3.3 billion euros. Vodafone’s free cash flow stood at 4.8 billion euros the year before (FY23).
Vodafone is currently discussing a merger with Three UK owner CK Hutchinson. However, the telecom giant said there is no certainty that both parties would ultimately agree to a merger.
Other business news can be found here.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
A source confirmed that the latest development would impact employees within major divisions of Walt Disney.
Like many other companies reducing headcounts, mass media company The Walt Disney Company (NYSE: DIS) has started dismissing employees. This follows CEO Bob Iger’s announcement in February to lay off 7,000 workers as the company restructures. Walt Disney is working on managing expenses and creating a more “streamlined” business by reducing employees. Notably, Iger has been making significant organizational changes since he took over from Bob Chapek in November 2022.
The CEO informed workers of the first of three layoff rounds in a memo, noting that the impacted people would be notified. Walt Disney spread the firing into three rounds as victims of the first round of employee reduction were contacted by the company’s leaders. After the first round of dismissal of their employees, Walt Disney plans additional job cuts in April. The April round will be larger, and more staff will have to leave the mass media company. Finally, the third round will commence before the beginning of the summer to make up a total of 7,000 job cuts.
The layoff did not come as a shock as Iger had prepared employees for a coming job cut. The chief executive mentioned the firing while the company reported its first subscriber loss during its Q1 2023. During the quarter, the number of Disney+ global subscribers dropped by 2.4 million from 164.2 million to $161.8 million. The loss came after Disney increased the subscription price for its Disney+ ad-free plan to $11 per month. As a matter of fact, analysts expected more profound losses of about 3 million subscribers following the price change.
Noting that the target is $5.5 billion in cost savings, Iger referred to his last month’s notification:
“As I shared with you in February, we have made the difficult decision to reduce our overall workforce by approximately 7,000 jobs as part of a strategic realignment of the company, including important cost-saving measures necessary for creating a more effective, coordinated and streamlined approach to our business.”
A source confirmed that the latest development would impact employees within major divisions of Walt Disney. The source noted that the divisions that may be largely affected are Disney Parks, Disney Entertainment, corporates, and Experiences and Products. While ESPN survived the first round of layoff, the sports media conglomerate is expected to be touched in consecutive rounds. Another source mentioned television production and acquisition departments as the first areas targeted for the layoff.
Following news of dismissing employees, Walt Disney stock trades at $95.2 in after-hours. The company’ shares closed up 1.64%, gaining 1.49% in the last five days. It also has a 10.06% increase to its name since the year started and another 8.56% in the last three months.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
Amazon is reducing costs and headcounts, considering the “uncertainty that exists in the near future” and the unstable economy.
E-commerce giant Amazon (NASDAQ: AMZN) has announced the additional layoff of 9,000 workers extending its recent record job cuts. The company announced in January that it would dismiss some staff, no less than 18,000. Amazon noted that it is making the decision as a result of the global economic situation. Ahead of this additional layoff, Amazon dismissed over 18,000 people between November and January. Specifically, e-commerce and human resources department workers were projected to be most affected.
Most recently, Amazon CEO Andy Jassy said on 20th March that additional employees would be forced to leave the company in the coming weeks. According to the Memo, the job cuts will majorly affect workers in Amazon Web Services, PXT, Advertising, and Twitch. While Jassy said it was difficult to decide, he added that it is best for the company long-term.
In the published memo, the CEO said Amazon made massive recruitment while the economy and business boomed. Indeed, the company went on a hiring spree during the coronavirus pandemic. As of the end of 2021, Amazon’s global workforce was more than 1.6 million. Meanwhile, it has about 798,000 employees as of Q4 2019.
However, the company is reducing costs and headcounts, considering the “uncertainty that exists in the near future” and the unstable economy. The retail giant wants to invest “robustly” in long-term consumer experiences beneficial to both customers and the company. The Amazon executive said their additional layoff did not come earlier as some teams were not done with the annual analysis until recently. The company had to wait for the reports before making its decision.
“If I go back to our tenet-being leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole – I believe the rest of this year’ planning cycle is a plan that accomplishes this objective. I remain very optimistic about the future and the myriad of opportunities we have, both in our largest businesses, Stores and AWS, and our newer customer experiences and businesses in which we’re investing.”
Also, Amazon will contact impacted employees about being victims of the additional layoff. According to Twitch CEO Dan Clancy, about 400 people would be fired in the extended headcount reduction. Clancy explained that Twitch’s users and revenue growth have not been up to expectations.
Amazon stock is down 0.28% to $97.44 in after-hours trading. AMZN has lost 39.50% in the last twelve months.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
Crypto bank Silvergate had to undertake a 200-employee layoff and take other drastic measures to facilitate a withdrawal bank run.
During the FTX-triggered crypto meltdown, Silvergate Bank scrambled to cover a massive withdrawal spate and also embarked on a substantial staff layoff. According to the Wall Street Journal, the crypto-focused bank offloaded assets at a loss to cover $8.1 billion in withdrawals. Silvergate also downsized its staff force by a whopping 40% to remain buoyant. Despite these extreme measures taken, the crypto bank says that it remains committed to digital assets.
In addition to its sizable staff layoff and emergency liquidity injection, Silvergate also halted plans to launch a digital currency. Furthermore, the California-based bank wrote off the $196 million linked to its acquisition of Diem Association from Meta (NASDAQ: META).
Silvergate’s shares were trading down 23% at $16.9 during the pre-market trading session after these developments.
According to Silvergate, crypto-related deposits plummeted 68% in the fourth quarter of last year. In order to satisfy the withdrawals, the crypto bank liquidated debt on its balance sheet. However, Silvergate incurred a $718 million loss selling the debt, which far surpasses its total profits since at least 2013.
At the end of 2022’s fourth quarter, Silvergate stated that it had more cash on hand at $4.6 billion than its remaining $3.8 billion deposits. In addition, the bank held another $5.6 billion in debt securities, such as US Treasurys, that were easy to liquidate. Silvergate, which saw a rise in daily average volume on its network in the fourth quarter, also said:
“While Silvergate is taking decisive action to navigate the current environment, its mission has not changed. Silvergate believes in the digital asset industry.”
Silvergate, which laid off more than 200 employees, could withstand a steep decline in deposits due to its internal structure. The crypto-centric platform is not structured like most other banks and sold off much of its traditional banking branches and operations. This move freed Silvergate to focus exclusively on providing crypto investors and exchanges bank accounts. As it stands, crypto-related deposits make up around 90% of Silvergate’s total. In addition, the bank retains almost all of its deposits in cash or easy-to-liquidate securities.
Despite the tumult brought about in the crypto space by FTX’s collapse, Silvergate pledged to remain committed. According to the bank, it has the funding to weather a sustained period of transformation.
Silvergate’s core service is to custody the deposits of crypto-minded companies. In addition, the platform also operates a network that facilitates business between investors and crypto exchanges. However, late last year, Silvegate came under intense scrutiny over its relationship with ex-FTX CEO Sam Bankman-Fried’s companies. Furthermore, the sudden implosion of FTX in early November rattled the crypto space and sent Silvergate’s stock plummeting.
Since FTX’s bankruptcy, questions regarding the viability of Silvergate’s business model have grown louder. Furthermore, a few days ago, a group of federal regulators warned banks against too much exposure to the crypto market.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
In the email that confirmed the latest headcount reduction, the CEO wrote that it was difficult for the company to reach the decision.
Israel-based digital entertainment company Playtika is the latest company to receive the hit of the global economic meltdown as it plans a 15% layoff of its entire workforce. Many companies have dismissed significant percentages of their staff to cut back expenses and push through these challenging times. The dice have rolled again, and Playtika has confirmed the layoff of 610 employees of its 4,100 people of its workforce.
The company’s CEO and founder, Robert Antokol, confirmed the staff cut by email on Monday, confirming the rumors that made rounds last week. There was news in the past week that the company would let go of 12-15% of its people. Reports also showed that around 180 employees in the Israel headquarters would be victims of the dismissal. And the total number of people that would be bidding farewell to the gaming giant could be as high as 500. Meanwhile, the company fired 250 persons in May. Those affected belonged to the London, Montreal, and Los Angeles offices. As a result, it had to cancel the games that were scheduled to develop in those offices. On the other hand, some activities that were meant to take place in the location were transferred to the HQ in Israel.
In the email that confirmed the latest headcount reduction, Antokol wrote that it was difficult for the company to reach the decision. He added:
“This decision has not come easy, yet we think it necessary to best position Playtika for the future. As we assess the current environment and look toward the future, Playtika must return to our roots of excellence through agility, efficiency, creativity and being obsessed with winning to deliver the most fun forms of mobile entertainment to our players.”
Furthermore, the top executive noted that Playtike would balance teams and redeploy talent even as it executes the workforce layoff. The company also plans to lower “non-core initiatives and consolidating studios for greater efficiency and a stronger focus on optimization.” Additionally, the gaming giant said its creative team at Wooga would centralize the evaluation of its new game concepts.
Antikol and Uri Shahak co-founded Playtika in 2010 before Caesars Entertainment Corporation acquired it in May 2011. In July 2016, a Chinese consortium purchased the company’s operation for $4.4 billion. The Chinese consortium sold its 20% stake to Joffre Capital at an $8.5 billion valuation. However, the deal has been canceled.
Coinspeaker announced in January last year that Playtika would be going public in the US.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.