Speaker 1: It was a sharply lower session on Wall Street where
Speaker 1: we had a lot of aggressing, aggressive selling that was
Speaker 1: mostly tied to macro conditions, very aggressive commentary from the FED,
Speaker 1: but also a lot of interesting individual stories. One we're
Speaker 1: about to talk about at Facebook Corp. Metta and also
Speaker 1: at Apple with that stock down nearly five percent, and
Speaker 1: often we can say that as Apple goes, so goes
Speaker 1: the NASDAC and the broader indexes. Well, let's take a
Speaker 1: look at this meta story though. The CEO Mark Zuckerberg
Speaker 1: outlining plans to reorganize the company, reorganized teams and reduce
Speaker 1: the headcount for the first time ever, and joining us
Speaker 1: to discuss this is Sarah Fryer, Bloomberg News, Big Tech
Speaker 1: team leader. So this is a big story, first time
Speaker 1: since two thousand and four, I guess to see this
Speaker 1: sort of restructuring. It also has some big implications about
Speaker 1: advertising revenue growth. Maybe save that for a moment and
Speaker 1: just walk us through if you could share how they're
Speaker 1: going to do this is just through um sort of
Speaker 1: you know, just people leaving and not being replaced, or
Speaker 1: will they actually lay off people. Well, I think it's
Speaker 1: a little bit the same thing Basically, what they're saying
Speaker 1: is that teams across the board at Meta are going
Speaker 1: to have their budgets reduced, and how the teams manage
Speaker 1: that is going to be up to them. UM, but
Speaker 1: they are going to rely, as you said, eleettrition, if
Speaker 1: people believe their jobs, they may not fill those roles.
Speaker 1: In Overall, they do ext to be a smaller company
Speaker 1: by the end of This is significant because, as you noted,
Speaker 1: Meta for its entire history has been growing and growing
Speaker 1: and growing UM using it's it's advertising business, which essentially
Speaker 1: prince cash to fund these grand visions like like growing
Speaker 1: into the metaverse, which is Mark Zuckerberg's idea of how
Speaker 1: we'll all be hanging out in virtual reality in the future.
Speaker 1: Now that, it's a lot harder when a few factors
Speaker 1: come to account, namely UM, the economy is slowing, so
Speaker 1: advertisers spending less UM, there have been some privacy restrictions
Speaker 1: by Apple Inc. On iPhones that make it harder for
Speaker 1: Meta to target advertising effectively. And UM people are being
Speaker 1: drawn away from from Facebook and Instagram to new products
Speaker 1: like TikTok. So you have this this UM, this the
Speaker 1: set of factors that make it difficult for this company
Speaker 1: to grow revenue in the way that they used to grow. Plus,
Speaker 1: they're spending billions on this metaverse vision that is unlikely
Speaker 1: to contribute to the bottom line for years now. During
Speaker 1: let's during the first quarter, earning school better so that
Speaker 1: the annual expenses would be roughly three billion dollars low
Speaker 1: than initially projected. And what was the reading from that, Well,
Speaker 1: the reading from that was that you know, they were
Speaker 1: they were being responsible. Investors were UM, you know, pleased
Speaker 1: to hear at UM. Now it's a little different. I mean,
Speaker 1: I think this with this announcement, we're seeing an era
Speaker 1: of UM a lot of limited opportunities for Meta. They
Speaker 1: don't really have a backup plan for the way their
Speaker 1: business is working right now. UM they need to grow
Speaker 1: advertising revenue, but their their legacy services are not adding
Speaker 1: users the way they used to. UM they need to
Speaker 1: come up with their next big business model after advertising,
Speaker 1: but things like e commerce haven't worked and they haven't
Speaker 1: come up with a new blockbuster idea. UM. They've basically
Speaker 1: acquired UM they're big growth areas like like Instagram and WhatsApp,
Speaker 1: and they can't make a major acquisition like that again
Speaker 1: because of antitrust pressure. So so they're really in a
Speaker 1: tough spot here. Uh and they've lost more than half
Speaker 1: of their value this year, um and and it is
Speaker 1: it is a sort of an existential moment for this company.
Speaker 1: And you know, it's not surprising that they're going to
Speaker 1: have to cut cost, but how they recover from it
Speaker 1: is going to be what's worth watching. Well, it's a
Speaker 1: tough period of time for sure. I mean other companies
Speaker 1: also reducing headcount and struggling with how to get leaner
Speaker 1: going into the next year. Out of time now, Sarah,
Speaker 1: but thanks very much for joining us. Sarah Fryar, Bloomberg
Speaker 1: News Big Tech team Leader,