Zoom Video Communications Inc (ZM) Announces Layoff of 1,300 Employees, Shares Rise 9%
By Shares of Zoom Video Communications Inc. (ZM) were up 9.31%, trading at $84.24, on Thursday afternoon following news of a 15% decrease in staff.[0] In a memo to employees, CEO Eric Yuan said the company has made the “tough but necessary decision” to lay off 1,300 employees, or approximately 15% of its total staff.
Yuan said the layoffs were a result of the uncertainty of the global economy and its effect on Zoom’s customers. He added that mistakes were made in how quickly the company grew during the pandemic, and that he and other executives would take a significant pay cut as a result.[1]
Yuan said affected employees in the U.S. will receive up to 16 weeks salary and healthcare coverage, along with a payment of their earned fiscal 2023 bonus.[2]
Zoom experienced an unprecedented rise in demand during the pandemic, as most enterprises went into work-from-home mode.[3] Within 24 months, the company grew 3x in size to manage the demand while enabling continued innovation.[4] But as many companies have reopened their workplaces and office employees have returned to work, Zoom's growth has slowed markedly, with single-digit revenue increases for the last two quarters.[5]
The company is now trying to reverse slowing growth by expanding its tools for business, but analysts project that sales have continued to decelerate in the current quarter. On Tuesday, after the announcement, Zoom's shares rose around 9% during midday trading.[6]
0. “Why Zoom Shares Are Exploding Higher – Zoom Video Comms (NASDAQ:ZM)” Benzinga, 7 Feb. 2023, https://www.benzinga.com/news/23/02/30772822/why-zoom-shares-are-exploding-higher
1. “Zoom will lay off 1,300 employees and CEO is taking a massive pay cut” CNN, 7 Feb. 2023, https://www.cnn.com/2023/02/07/tech/zoom-layoffs/index.html
2. “Zoom to cut 15% of its workforce” UPI News, 7 Feb. 2023, https://www.upi.com/Top_News/US/2023/02/07/Zoom-layoff-covid-pandemic-job-cuts/7401675794931/
3. “Zoom lays off 15% of its workforce after growth spurt during pandemic” Computerworld, 7 Feb. 2023, https://www.computerworld.com/article/3687176/zoom-lays-off-15-of-its-workforce-after-growth-spurt-during-pandemic.html
4. “Zoom laying off 1300 workers, adding to recent tech-cut woes” New York Daily News, 7 Feb. 2023, https://www.nydailynews.com/news/national/ny-zoom-layoffs-1300-employees-15-percent-workforce-latest-tech-cuts-20230207-o7letxbxqbgupm6xsfhkz5lnmi-story.html
5. “Zoom to lay off 1,300, blames economic uncertainties – Silicon Valley Business Journal” Silicon Valley Business Journal, 7 Feb. 2023, https://www.bizjournals.com/sanjose/news/2023/02/07/zoom-to-lay-off-1300.html
6. “Zoom will lay off 1300 employees and CEO is taking a massive pay cut” WAAY, 7 Feb. 2023, https://www.waaytv.com/zoom-will-lay-off-1-300-employees-and-ceo-is-taking-a-massive-pay-cut/article_41d48c77-88bd-5c48-9adc-df7a49b39d2f.html
