For years, Wall Street complained about Silicon Valley’s refusal to pay dividends and buybacks.
Even if those tech companies are making less profit than they used to, it doesn’t matter anymore. Nevertheless, it basically benefits Wall Street.
Meta Platforms Inc.
is the latest to promise that labor savings will be passed on to investors, announcing a new $40 billion share repurchase authorization despite having more than $10 billion in repurchase resources remaining. bottom.the news overshadowed Revenue Loss and Meta’s Third Consecutive Quarter of Falling Sales and Profits, and the effect was hard to miss – the stock surged about 20% in after-hours trading. This is a move that adds about $80 billion to Facebook’s parent company’s market capitalization.
Meta’s large stock purchase guarantee is added to Intel Corp. INTC.
Management’s decision to keep the dividend that paid out $6 billion to investors last year, even as the chipmaker’s free cash flow is expected to dip negative in 2022 and return to a loss in the first quarter.in the meantime dismiss a worker, salary cut Intel has shelved several plans to expand its manufacturing operations to cut costs by $3 billion, and Intel is expected to pay a dividend of about $1.5 billion in the first quarter.
For many: Intel Stock Dividend Stands Out Among Chipmakers
The disconnect between the money spent calming Wall Street and the money saved by layoffs is even more different for Facebook. The company said fourth-quarter restructuring costs were $4.2 billion, which included real estate consolidation, disintegration and write-downs on data center assets, or just 10% of the new share repurchase authorization. It’s just
Meta expects another $1 billion in restructuring costs in 2023. We will lay off over 11,000 people, or about 13% of our global workforce. CEO Mark Zuckerberg took the blame when the cuts were announced as the macroeconomic downturn accelerated and the huge meta growth looked like a waste of money.
Details from Therese: Intel just had its worst year since the dotcom bankruptcy and it won’t get better anytime soon
But Zuckerberg on Wednesday actually sounded happy with the job cuts. Layoffs have been difficult, but Meta is already doing well, he said, and the company is becoming more focused on profitability and can’t “treat everything like hypergrowth.”
“I think we grew 20%, 30%, or more every year for the first 18 years, right?” Zuckerberg told analysts on the company’s phone. “And obviously, 2022 will change very dramatically, with revenue negative for growth for the first time in the company’s history.”
But he said he admitted that when Meta started working on cutting costs, “I actually think it’s making us better.”
As such, Meta is an example of Wall Street’s positive and negative effects on businesses. Clearly, there are some tech giants that became too bloated during the COVID-19 pandemic to continue operating at the same profit levels during the economic downturn.The company really listened to investors who advocated some cost reductions, Even if that hasn’t weakened Zuckerberg’s vision of the Metaverse yet.
Also Read: Facebook and Google became giants by ignoring Wall Street
However, these reductions need to be felt by everyone involved, not just your employees. If the company is shrinking, Intel’s revenue fell by more than 60% last year, while Meta’s profit fell by more than 40% of his. Everyone involved needs to feel the pain. But King Zuckerberg will now see his special founder stock skyrocket in value. Meanwhile, the workers he laid off are vying for new jobs so he can pay the mortgage.
