Tech executives keep trying to tell us the party is over: Morning Brief – Yahoo Finance
This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Friday, September 9, 2022
Today’s newsletter is by Myles Udland, senior markets editor at Yahoo Finance. Follow him on Twitter @MylesUdland and on LinkedIn.
The tech industry has had one refrain all summer long — the party is over.
It remains unclear if investors are listening. Or if they really care. Or if the message is for them.
This week, at the Code Conference in Los Angeles, Alphabet CEO Sundar Pichai, Snap CEO Evan Spiegel, and Amazon CEO Andy Jassy all flagged some version of the need for a slowdown in how their companies think about spending, hiring, and the future that lies ahead.
Meanwhile, The Wall Street Journal reported this week that Netflix is looking to cuts costs across its business, notably its cloud-computing costs paid to Amazon Web Services, but also in areas as far flung as how much company swag employees are gifted each year.
Pichai’s comments from Code might have sent the biggest chill through the industry and with good reason — Alphabet employed some 174,014 people at the end of the second quarter.
Pichai told the Code Conference his company feels “very uncertain” about the current macroeconomic picture and is working to “figure out how to make the company 20% more productive,” according to CNBC. These comments were followed by a report from The Information, which cited an email sent to Google managers last week outlining the need to better control expenses, with particular scrutiny placed on business travel.
Speaking at the Code Conference on Wednesday, Snap’s Spiegel said: “We don’t see a lot of things that make us optimistic and so what we’ve had to do is really restructure our business,” according to the Wall Street Journal.
Spiegel’s comments came after Snap announced late last month it had cut about 20% of staff and rolled back a number of initiatives as part of a plan set to save the company about $500 million per year.
In its quarterly letter to shareholders ahead of these layoffs, Snap wrote: “We intend to substantially slow our rate of hiring, as well as the rate of operating expense growth. We will reprioritize our investments and drive a renewed focus on productivity… We may incur transition costs in the near term as we execute on these changes, but we expect to emerge with a more focused cost structure as a result.”
Snap shares have lost 70% so far this year. The Nasdaq has lost 24% in 2022.
Jassy’s comments at Code were a relative bright spot, with Amazon’s chief telling the audience, “I don’t think that you’ll see us hiring at the same rates that we did. But we’ll be hiring,” The Journal noted.
This rash of tech exec commentary on belt-tightening is merely the latest in what has now been a months-long campaign from the industry to make clear that times have changed.
Go back to June and Meta Platforms CEO Mark Zuckerberg was telling his employees to brace for “one of the worst downturns that we’ve seen in recent history.” Tesla CEO Elon Musk said that same month he had a “super bad feeling” about the global economy and announced plans to cut 10% of Tesla’s workforce.
We’ve argued previously that the audience for these comments is not investors, but employees.
This remains the case.
Rising interest rates raise the cost of capital for all businesses, requiring teams to make more intentional spending decisions. Every misstep in this environment is amplified.
For many tech companies, headline growth has been enough to keep investors and staff excited about the business — and to keep the bean counters in the finance department at bay.
High salaries, loose budgets, and perpetually growing teams are the norm when capital is abundant and the business is growing. For many employees and leaders at these companies, this is the only environment they’ve ever known.
As the screws tighten on all businesses, not just tech, leadership has tried to impart on staff the harsher realities of this new environment. Fewer or no backfills. T&E budgets shrinking. And in many cases, outright staff cuts.
Look at the stock market and we know investors have had their say about the tech sector.
Public comments from these same companies’ executives, however, suggest there remains work to do when it comes to employees truly hearing the message.
Wholesale Trade Sales, month-over-month, July (1.8% previously)
Wholesale Inventories, month-over-month, July final (0.8% expected, 0.8% previously)
Household Change in Net Worth, Q2 (-$544.0 billion previously)
Kroger (KR)
Goldman says an end to the bear market does not appear imminent
Jeep announces 4 new EVs coming by 2025
U.S. will cap Russian oil prices by December to fight inflation, hamper Russian economy
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
The Orangeburg sheriff and postal inspectors tracked a 10 pound package of marijuana to the suburban Edisto home, the county’s sheriff’s office said.
Anselm Bilgri, a former monk and prior at one of Germany's most famous monasteries, had to leave the Roman Catholic Church to wed his long-term male partner. Bilgri, 68, and his partner Markus Achter, 41, were wed in a Munich church on Saturday by a priest of the Old Catholic Church, which emerged in the Netherlands in the 19th century and lets priests marry and allows same-sex relationships. Bilgri, who was ordained in 1980 by Joseph Ratzinger, who became Pope Benedict, left the Roman Catholic Church in 2020 due to frustrations over its failure to modernise – the Vatican does not allow priests or same-sex couples to wed.
Here are the markets that will be open on Columbus Day, also recognized as Indigenous Peoples' Day, on Monday, Oct. 10.
The year 2022 has been a painful journey for semiconductor manufacturers. Following the example of AMD , Nvidia and Intel , which are the three main players in the sector, 2022 is a year to forget .Their valuations are in recession. Advanced Micro Devices (AMD) currently has a market value of $94.4 billion, which is a decrease of at least $83 billion compared to December 31, 2021.
Everyone knows that you should buy low and sell high if you want to turn a profit in the markets. The trick is finding the bottom, to know when to buy. Jim Cramer, the well-known host of CNBC’s ‘Mad Money’ program, sees the market bottom hitting in the next couple of weeks, making the end of October the right time for investors to buy in. Referring to some recent predictions by market technician Larry Williams, Cramer says, “The bear market is more or less… toast and, even if the current rally s
Tesla stock is forming a bearish head-and-shoulders pattern. And with CEO Elon Musk likely selling more stock to fund his Twitter purchase, shares of the electric-vehicle giant might have further to fall.
PayPal is in trouble. "You are independently responsible for complying with all applicable laws in all of your actions related to your use of PayPal's services, regardless of the purpose of the use," the document, called "Acceptable Use of Policy," said.
A market rally attempt is reeling as the indexes plunged on Friday's jobs report. Tesla, AMD and On Semi sold off.
For the retail investor, the only certainty of our current market environment is uncertainty. Volatility is up, and the main indexes are showing deepening losses. As if that wasn't enough, at least one market bull is turning a bit more pessimistic. JPMorgan strategist Marko Kolanovic has been one of the more bullish voices on Wall Street in recent months, but current conditions have him pushing the timeline back. While he still believes that the S&P 500 can hit 4,800, or a 32% gain from current
“The Fed will have no choice but to reliquefy the system,'' an event that is likely to happen by the end of the World Series, Minerd writes on Thursday.
The veteran telecom company is having a stellar year in many respects, but reason for concern has emerged.
If you buy one between now and the end of October, you’ll earn a composite interest rate of 9.62%.
Wall Street tends to give stock splits more weight than they should have. Annaly's reverse split, however, might be a genuine warning sign.
In Musk v. Twitter, a part of the business life of the richest man in the world is revealed. Private messages exchanged with his inner circle immerse us into his process when he conceives an idea. The messages were released by the Delaware Chancery Court as part of the proceedings between the two parties.
What do Amazon, Microsoft, and Google parent Alphabet have in common? The company develops ready-made and customizable AI solutions for hundreds of companies across different industries, which can materially accelerate their adoption of advanced technology. Cloud-computing technology is key to businesses that operate online in any capacity, and the three leading providers of cloud services happen to be Amazon Web Services (AWS), Microsoft Azure, and Google Cloud.
Most S&P 500 investors consider Tesla stock to be the ultimate investment. But it turns out you could do better — much better.
You would think this would be TIPS’ time to shine. Instead, the prices of Treasury inflation-protected securities—government bonds that are adjusted to keep up with inflation—have declined this year, even as inflation has soared. The comparable loss for ICE’s index of regular Treasury bonds was 13.5%.
(Bloomberg) — Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.Most Read from BloombergRussia Races to Reopen Crimea Bridge Damaged in Fiery BlastPutin Orders Sakhalin-1 Project Transferred to Russian EntityMinecraft Star Dream Meets His Screaming Fans for First TimeFacebook Is Warning 1 Million Users About Stolen Usernames, PasswordsWall Street Is Missing the Risk to Stocks If Inflation Is BeatenGlobal finance chiefs gather in Washington in the co
Back in July, electric vehicle maker Polestar made a bold promise. The Gothenburg, Sweden-based company reported that it delivered 21,200 cars during the first six months of 2022, more than double the year-earlier figure.
Gary Black, a Tesla bull who has been critical of the Twitter deal since the very beginning, warned of selling pressure ahead.