Google-parent Alphabet on Friday said it will cut 12,000 jobs, or roughly 6% of its global workforce, adding to a growing wave of layoffs among U.S. technology companies. Google stock popped on the announcement, which follows a recent hiring spree at the company.
In an email sent to employees Friday, Google Chief Executive Sundar Pichai said U.S. layoffs will begin immediately. Then job cuts in other countries will follow, depending on local laws.
"Over the past two years we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today," Pichai said in the letter to employees, posted in a Google blog.
He added: "I am confident about the huge opportunity in front of us thanks to the strength of our mission, the value of our products and services, and our early investments in (artificial intelligence). To fully capture it, we'll need to make tough choices."
Pichai went on to say, "So, we've undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company. The roles we're eliminating reflect the outcome of that review. They cut across Alphabet, product areas, functions, levels and regions."
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Alphabet will offer U.S.-based employees 16 weeks of severance pay. Further, longer-term employees will get additional pay based on time served at Google.
"We believe this is absolutely the right move by management against a clearly softening industry backdrop," Evercore ISI analyst Mark Mahaney said in a note to clients. "The past five quarters of consecutive record-high headcount adds have created major margin risk for GOOGL going into Q4 and into fiscal 2023."
Mahaney added: "The company has clearly seen slowing top-line growth."
On the stock market today, Google stock popped 5.3% to close at 98.02. With the gain, shares have advanced 11% in 2023. Also, Google stock dropped 39% in 2022.
Alphabet reports fourth-quarter earnings on Feb. 2.
GOOGL Stock: Hiring Spree Continued In 2022
Google's news follows that of software giant Microsoft, which announced plans Wednesday to lay off 10,000 employees, or about 4.5% of its workforce. Meanwhile, other tech companies that have announced job cuts include Meta Platforms, Salesforce and Amazon.com.
In a Jan. 13 report, Oppenheimer analyst Jason Helfstein hiked his 2023 operating income forecast for Google stock on an expected "workforce reduction."
In addition, Alphabet had nearly 187,000 employees as of Sept. 30 amid its hiring bonanza. In the September quarter, Alphabet added 12,765 employees, which was above Wall Street estimates. Also, in the first nine months of 2022, the company added about 30,300 employees. That compares with 21,000 in 2021 and 16,000 in 2020.
According to a Morgan Stanley report, Alphabet has added 63,700 employees since the onset of the coronavirus pandemic in the second quarter of 2020. Much of the hiring has been at Google's cloud computing business.
Also, on its September-ended quarter earnings call, the company told Google stock analysts that it expected to add 50% fewer workers in the fourth quarter — about 6,800.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
