The WSJ writes that Twitter Inc. is developing plans for mass layoffs, citing knowledgeable, confidential sources. And it’s only been a few days since the social media platform was acquired by billionaire Elon Musk for $44 billion.
One of the sources said that the proposed layoffs are expected to result in a reduction in engineering positions and impact other areas within the company. Twitter has about 7,500 employees, according to information released earlier this year. The full extent of the cuts discussed cannot be determined.
Earlier this year, Twitter said it was looking at ways to cut costs due to the macroeconomic environment, adding that hiring slowed significantly in the second quarter, according to a July Securities and Exchange Commission report. Social media companies have faced market shocks this year that have weighed on digital advertising spending, including rising inflation, recession fears, and military conflict in Ukraine.
According to FactSet, Twitter has reported losses for eight of the last 10 fiscal years. The New York Times previously reported on Twitter’s plans to cut jobs at the company.
In June, Mr. Musk told employees he thought spending on Twitter was “not a good situation.” He did not rule out layoffs, adding that no one should care who would significantly contribute to the company’s business.
Employees fearing being fired before payout
Several employees said they were concerned that Musk could cut jobs before November 1, when Twitter’s compensation program goes into effect. Employee grants were to be paid in cash after Mr. Musk’s acquisition, according to people familiar with the matter. Several employees expressed concern that Musk might try to avoid those payouts if they were fired before November 1.
Before the transaction’s closing, employees whose jobs were terminated typically expected cash in the form of shares, which would be transferred to them within three months of leaving the company, as well as the remainder of the severance pay. An internal memo reviewed by The Wall Street Journal.
Based on terms previously set out in documents related to the deal, analysts estimate that Twitter will be forced to pay more than $1 billion a year in interest on loans, up from about $51 million the year 2021 in the last five years.
Trading the company’s shares on the New York Stock Exchange has been suspended since October 28, and TWTR will be delisted until November 8. The company went public in 2013. Now it’s a private company.
