Insider Today: Google's costly job cuts

Tech CEOs testify, and Chipotle's burrito season.

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January 31, 2024 • 5 min read with Dan DeFrancesco Hello! It’s never too early to learn the value of a dollar. Check out this third-grade teacher who charges her students “rent” and lets them spend fake money on homework passes and other perks.   In today’s big story, we’re looking at highlights from two of the world’s biggest tech companies’ earnings reports, including how much layoffs cost for one of them.  What's on deck Markets: Here are a few things to watch for at the Fed’s meeting today, according to a top economist. Tech: Tech CEOs will testify before Congress today for a hearing on child safety. Business: It’s the most wonderful time of the year at Chipotle: “burrito season.” But first, a tale of two tech companies.

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Mateusz Wlodarczyk/Getty Images The big story The cost of cuts There’s been plenty of speculation about what Google’s mass layoffs last year meant for its famous culture. But what about the impact on its bottom line? The 2023 job cuts, which totaled some 12,000 in January alone and left employees shocked, cost Google $2.1 billion, Business Insider’s Sarah Jackson reports. Alphabet shared the number as part of its fourth-quarter earnings report on Tuesday. The cutting costs don’t stop there. The tech giant also reported it expects to incur an additional $700 million in severance costs this quarter. Google already laid off hundreds of employees this month, impacting everything from advertising to central engineering. And CEO Sundar Pichai reportedly told employees there will be more to come.  This year’s layoffs have led some Googlers to start fighting back amid what they believe is a destruction of the company’s culture.  Paying nearly $3 billion to lay off employees wasn’t the only sore spot on Google’s earnings report. The company’s revenue for its search business, its bread and butter, fell just short of Wall Street estimates.  Google’s revenue for the quarter ($86.3 billion) and fiscal year ($307.4 billion) showed year-over-year growth — 13% and 9%, respectively — and topped analysts’ estimates. But that wasn’t enough to soften the blow of Google’s core business not meeting expectations, as its share price dropped during after-hours trading. Stephen Brashear/Getty Images Adding salt to Google’s wound was Microsoft’s success last quarter due to its AI products. The fellow tech giant posted $62 billion in revenue, an 18% increase. The growth was largely thanks to its big bets in AI paying off. The earnings results validated the company’s strategy to move quicker than some of its peers during the early stages of the AI race. Meanwhile, rivals like Amazon and Google have scrambled to respond. (Never one to be satisfied, shares of Microsoft dropped a bit in after-hours trading as investors were looking for even more AI-fueled growth, Bloomberg reported.) Still, Microsoft’s big revenue growth shows the tech giant is on the right track as it looks to cement itself as the go-to destination for companies looking to leverage AI.

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Markets 🔔 Before the opening bell: Nasdaq-100 futures fall early Wednesday after Alphabet and Mircosoft reported earnings. Hisham Ibrahim/Getty Images 1. A crash course in analyzing the Fed’s policy meeting. The central bank will hold its first meeting of the year, and Fed Chair Jerome Powell’s press conference could offer some important clues on where things are headed, former Fed economist Claudia Sahm said. In short, it’s not so much what Powell says as much as how he says it. 2. So today I’m gonna invest like it’s 1999. The booming stock market is looking awfully similar to the one that preceded the dot-com crash of the early 2000s, according to JPMorgan. From market composition to valuations, here are all the ways the two eras are eerily alike. 3. China’s economy is an absolute mess. The collapse of real-estate giant Evergrande is the latest blow to the country, which is also fighting deflation. A lack of foreign investment and a stock-market slump aren’t helping matters.

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Tech X CEO Linda Yaccarino.Jerod Harris/Getty Images 1. Congress is set to grill some of the biggest names in tech today. Leaders from Meta, X, TikTok, and other tech companies will face questions over their platforms' efforts to protect children from sexual exploitation online. This will be X CEO Linda Yaccarino's first time testifying before lawmakers. 2. A judge struck down Elon Musk's $55 billion Tesla pay package. The judge sided with a shareholder who argued in a lawsuit that the Tesla CEO’s massive pay plan was "beyond the bounds of reasonable judgment."  3. Jack Dorsey's Block is the latest tech firm to lay off staffers. Dorsey told employees on Tuesday the fintech would be laying off a ”large number” of staffers. A person familiar with the company told BI the number was near 1,000.

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Business Brooks Kraft LLC/Corbis via Getty Images 1. WTF is “burrito season”? Chipotle has pointed to the months between March and May — aka “burrito season” — as a time when business booms for the fast-casual Mexican chain. It’s even planning to hire thousands of people to help staff the surge in sales, leaving some to wonder: Is that really a thing? 2. The economy is roaring. So why do we keep hearing about layoffs? January marked a month of layoffs for employees at companies like The Los Angeles Times, UPS, and Microsoft, to name a few. But data from the Bureau of Labor Statistics show that the nation's layoffs and discharges rate has been steadily low, hovering at about 1%. 3. Amazon Prime membership is bouncing back in the US. While there appears to be more chatter about people canceling their Prime subscriptions, new data suggests that membership growth may have actually increased after a dip in 2022.

In other news PayPal lays off 2,500 workers one week after CEO announces 'new chapter'. The first full reviews are in for Apple's Vision Pro. Here's what people are saying. UPS is cutting 12,000 jobs as CEO cites soft demand and high labor costs following historic contract deal. Boeing's 737 Max 9 jet is flying again. Here's what experts say about its safety. Ken Griffin says Harvard is producing 'whiny snowflakes' — and he's done donating to it. Russia accidentally bombed itself again, the fourth time this month, UK intel says. China just revealed plans to take on Elon Musk's Neuralink. Meta used copyright to protect its AI model, but argues against the law for everyone else.

What's happening today Today’s earnings: Boeing, Mastercard, and other companies are reporting. The Federal Open Market Committee is set to make a decision on interest rates.

The Insider Today team Dan DeFrancesco, deputy editor and anchor, in New York. Hallam Bullock, editor, in London. Jordan Parker Erb, editor, in New York.  Get in touch insidertoday@insider.com To read unlimited articles, subscribe to Business Insider. Download the Insider app Email sent to: mrkay@idiot.cloudns.cc Manage your email preferences | Unsubscribe | Terms of service | Privacy policy | Advertise with us © 2024 Insider Inc. 1 Liberty Plaza, New York, NY 10006