Visitors take photos in front of the Meta sign at the company’s headquarters in Menlo Park, California, on December 29, 2022.
Teyfan Coskun | Anadolu Agency | Getty Images
Technology companies are learning an old lesson from Wall Street that maturity means shrinking.
meta and Amazon The company’s stock soared Friday after reporting fourth-quarter earnings. Revenue for both companies exceeded expectations, but the talking point for investors is that both companies are demonstrating the ability to do more with less, an attractive equation for shareholders.
There’s also a perception that investors often value cash above all else. The tech industry has long preferred to reinvest surplus funds into growth, adding jobs and experimenting with the next big thing. But after a year of massive layoffs and capital conservation, Meta announced Thursday that it would pay its first quarterly dividend of 50 cents a share while also approving an additional $50 billion share buyback plan. .
“The key for these companies is whether they can reinvent themselves,” Neuberger Berman analyst Daniel Flax said in an interview Friday on CNBC’s “Squawk Box.” They “continue to invest in the future and continue to play aggressively while managing spending in this challenging environment,” he said.
Amazon hasn’t been very keen on transferring cash to shareholders, but the topic is certainly being discussed. The company launched a $10 billion share buyback program in 2022, but has not announced anything since then. During Thursday’s earnings call, Morgan Stanley analyst Brian Nowak asked about plans for additional capital gains.
In response, Treasurer Brian Olsabsky said, “We’re really excited to actually be asked that question.” “No one has asked me that in three years.”
“We discuss and discuss our capital structure policy on an annual, if not more frequent, basis,” Olsavsky added, but said the company has nothing to announce. “We are pleased to have improved our liquidity at the end of 2023 and will continue to strive to improve it,” he said.
After years of seemingly unfettered growth, the world’s largest internet company is certainly entering a new era. They still continue to search for the best technical talent, especially in areas such as artificial intelligence, but growth in employee numbers is being measured. Increasing headcount in certain parts of your business may mean downsizing others.
“Play to win”
Asked about the company’s headcount expansion in a later call, Zuckerberg said new hires would be “relatively minimal compared to what we’ve traditionally had,” adding: “We want to stay lean.”
Olsavsky said most teams at Amazon are “trying to maintain headcount levels, but are probably looking at reducing headcount as we can drive efficiencies at scale.”
This story is playing out across Silicon Valley.According to the website, January was the month with the most tech layoffs since March. layoff.fyi, approximately 31,000 people were laid off at 118 companies.Amazon and alphabet In addition to the 2023 job cuts, further job cuts were made last month. microsoftremoved 1,900 roles in its gaming division shortly after completing its acquisition of Activision Blizzard.
SAN FRANCISCO, CA – JUNE 23: XBOX CEO Phil Spencer appears in federal court in San Francisco, California on June 23, 2023. Executives from Microsoft and Activision/Blizzard are scheduled to testify in a five-day hearing before the FTC to determine the fate of their $68.7 billion merger. (Photo by Justin Sullivan/Getty Images)
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This week’s downsizing hit the cloud software market. Octa The company announced that it will cut approximately 400 jobs, or 7% of its workforce. zoom The company confirmed it is cutting less than 2% of its workforce, or nearly 150 positions. Zuora announced a plan to reduce employment by 8%based on the latest headcount numbers, there are nearly 125 positions.
Evan Thorne, chairman of Recruiter.com, called it a “very confusing job market.” Last year, tech companies responded to dramatically changing market conditions, including soaring inflation, rising interest rates and risk aversion during an extended bull market. Meta will cut more than 20,000 jobs in 2023, Amazon will lay off more than 27,000 people, and Alphabet will cut more than 12,000 jobs.
The economy is in a very different place today. Growth has returned to healthy levels, inflation appears to be under control, and the Federal Reserve has signaled that interest rate cuts are on the horizon this year. The unemployment rate stood at 3.7% in January, down from 6.4% three years ago, when the economy was just reopening from pandemic lockdowns. and non-farm employment. The number of jobs increased by 353,000 last month, the Department of Labor’s Bureau of Labor Statistics said Friday.
Tech stocks are booming, with Meta, Alphabet and Microsoft all at or near record levels.
However, the industry continues to shrink.
“Companies are still in the midst of consolidation for the first time since 2023,” Song told CNBC’s “Worldwide Exchange” this week. “To really deal with the new world of 2024, we may need a reversal of skills, a different set of skills.”

Wall Street is rewarding technology companies for discipline and better capital allocation, but it’s raising questions about where they can turn for big growth.other than NvidiaThe company has raised the flag for 2023 due to a surge in demand for its AI chips, but none of the other giant tech companies are growing at their historical averages.
Even Meta’s better-than-expected 25% growth in Q4 is a bit misleading. This is because comparable numbers from a year ago showed a slowdown in the digital advertising market; apple iOS updates have made targeting ads more difficult. Finance chief Susan Lee reminded analysts on Thursday that the company will “enter a period of increasingly strong demand” as 2024 progresses.
Analysts expect Meta’s growth rate to return to the low teens at most by the second half of this year. Growth forecasts for Amazon and Alphabet are even lower, indicating that calls for capital allocation measures could be even stronger.
Ben Ballinger, a technology analyst at Quilter Cheviot, told CNBC that Meta’s decision to pay a dividend was a “symbolic moment” in that regard.
“Mark Zuckerberg has signaled that he wants to take shareholders with him and emphasizes that Meta is now a mature, growing company,” Ballinger said.
— CNBC’s Annie Palmer contributed to this report
clock: Meta’s Q4 report suggests it’s making good use of Nvidia’s chips
