Twitter Inc. is making plans for broad layoffs, according to people familiar with the matter, days after the social media platform was taken private by billionaire Elon Musk for $44 billion.
The proposed layoffs are expected to cut engineering positions and affect other areas of the business, one of the people said. Twitter has about 7,500 employees, according to a disclosure earlier this year. The extent of the cuts being discussed could not be determined.
Earlier this year, Twitter said it was looking for ways to cut costs due to the macro environment, adding that it slowed hiring significantly in the second quarter, according to a Securities and Exchange Commission filing in July. Social media companies have faced market disruptions that have weighed on digital ad spend this year, including soaring inflation, recession fears and war in Ukraine.
Twitter has posted a loss in eight of its last 10 fiscal years, according to FactSet. The New York Times previously announced Twitter’s plans for company-wide job cuts.
Mr Musk told employees in June that he thought costs were “not a good situation” on Twitter, according to people who viewed a virtual meeting at the time. He did not rule out layoffs, adding that anyone who is a major contributor shouldn’t worry, people say.
Several employees said they were concerned that Mr. Musk might decide to cut jobs before November 1, when Twitter’s compensation package was acquired. Employee grants were to be paid in cash after Mr. Musk’s acquisition, according to people familiar with the matter. A number of employees said they feared Mr Musk would try to avoid those payments if they were terminated before November 1.
Prior to the settlement, the employees whose jobs were cut generally expected to receive funds in exchange for equity that would have been acquired within three months of leaving the company, along with the rest of their severance package, according to an internal memo reviewed by The Wall Street Journal.
As part of Mr. Musk’s takeover, Twitter added $13 billion in debt, which analysts say will increase pressure to cut costs and boost revenue. Analysts estimate, based on terms previously set out in transaction-related documents, that Twitter will have to pay more than $1 billion in annual interest, up from some $51 million in 2021. Twitter reported average annual earnings before interest, taxes, depreciation and amortization of approximately $700 million over the past five years.
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