: Zoom’s stock jumps on news that company will lay off 15% of staff and cut executive pay
Zoom Video Communications Inc. plans to lay off 1,300 workers, cutting its staff by 15%, Chief Executive Eric Yuan announced Tuesday.
In a blog post, Yuan noted that he had tripled Zoom’s workforce during the pandemic and had “made mistakes.”
“We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities,” he wrote.
Yuan said he would cut his own pay by 98% and forego any corporate bonus in the 2023 fiscal year and that other executive leaders will also receive 20% pay cuts and will not receive bonuses. “As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today — and I want to show accountability not just in words but in my own actions,” he wrote in the post.
Cuts will be across the board, and those who are laid off be offered up to 16 weeks’ salary and healthcare coverage, according to Yuan.
jumped to 10% gains on the news Tuesday, after previously trading less than 1% higher.
Zoom was one of the biggest beneficiaries during the pandemic, when many people were forced to work from home and turned to video software to communicate and work. But the company has struggled of late as more employees return to the office and has diversified its product portfolio in the process. Its stock has plunged 40% over the past 12 months.
“This was a necessary step as Zoom is seeing a slowdown in its business and strategic value, with inputs implying less upside to the estimates going forward (including with ‘low-to-mid-single digits growth” likely being ‘at best’ for FY24,” Piper Sandler analyst James Fish said in a note Tuesday. “New products outside of Phone aren’t going to be material revenue generators for some time.”
The company is scheduled to report fiscal fourth-quarter earnings on Feb. 28. Analysts surveyed by FactSet expect Zoom to report earnings of 81 cents a share on revenue of $1.1 billion.