Boom times end for US tech industry

Market resilience

Companies in other industries have said they will shed jobs. Warner Bros. Discovery Inc has trimmed its payroll, while Walt Disney Co said it will likely make layoffs.

While many large companies are cutting back, the overall US labor market continues to show resilience. Employers added 261,000 jobs last month, when the unemployment rate rose to 3.7 percent.

Companies that grew quickly at the start of the pandemic are now having to adapt to weaker revenue.

Paolo Pescatore, technology analyst at PP Foresight, said: "It's been a really disappointing quarter for earnings at many of the Big Tech companies. Nobody is immune."

Mike Morini, from WorkForce Software, which provides digital management tools, told the BBC a turning point appears to have been reached.

"The tech industry is exiting a period of growth at all costs. Technology companies that grew quickly during the past two years — when COVID-19 forced millions of people to spend more time working online, going to school and shopping — have faced a reckoning as revenue growth has slowed and people turn to pre-pandemic habits," he said.

Even Apple has signaled caution, with CEO Tim Cook saying the company is still hiring, but only on a "deliberate basis".

Apple spokeswoman Kelly Nantel said, "As part of our annual operating planning review process, we always look at each of our businesses and what we believe we should change.

"As we've gone through this, given the current macroeconomic environment (as well as several years of rapid hiring), some teams are making adjustments, which in some cases means certain roles are no longer necessary. We don't take these decisions lightly, and we are working to support any employees who may be affected," Nantel said.

In an open letter to Alphabet, the parent company of Google and YouTube, activist investor Christopher Hohn urged Alphabet to slash jobs and pay, according to the BBC. Alphabet had to be more disciplined about costs, Hohn wrote, and cut losses from projects such as its self-driving car company, Waymo.

Industry observer Scott Kessler told the BBC there is less tolerance for big spending on high-tech gambles such as virtual reality or driverless cars that may not pay off in the short term. "Some companies have had to face harsh realities," he said.

But while the Big Tech companies may be buffeted by economic headwinds, they aren't broken. Amazon's proposed 10,000 job cuts in corporate and technology roles represent only 3 percent of its office staff members.

The cuts may also be the start of new businesses as talented employees, dumped by the big companies, join or create startups. As veteran Silicon Valley observer Mike Malone recently told the BBC: "I won't write the Valley off yet. I still have a lot of hope."

Amazon CEO Andy Jassy said that layoffs underway at the tech company, which will extend into next year, are the most difficult decision he has made since taking over from Bezos last year.

In a note to employees that was made public, Jassy said positions are being eliminated across Amazon's devices and books businesses.

Amazon executives have acknowledged that the devices unit has been targeted for cuts. The business, which is headlined by the Alexa voice-assistant brand, has lost more than $5 billion annually in recent years.

Dave Limp, Amazon's senior vice-president of devices and services, said in a message to employees made public on Wednesday that his team members who notified affected employees on Tuesday were working to help them find new jobs.

In some cases, those who don't find a new role at Amazon are set to receive severance of one week's pay for every six months worked, according to employees, with a maximum of 20 weeks' pay. Some employees in human resources have also been given the option of voluntarily leaving the company through buyout offers. Amazon didn't publicly provide details of severance packages.

From the end of 2019 to the end of last year, Amazon hired more than 800,000 employees, mostly at its hundreds of warehouses. Layoffs are rare at Amazon, which employs more than 1.5 million employees globally.

Jassy said Amazon continues to have growth opportunities in established and newer businesses, including advertising and Amazon Web Services, and in ventures such as healthcare and autonomous vehicles.

"Amazon has weathered uncertainty and difficult economies in the past and we will continue to do so," he said.

Agencies contributed to this story.