April 15, 2024
Mark Zuckerberg says Meta will 'keep things in order,' takes big step forward in AI with hiring freeze

Meta Founder and CEO Mark Zuckerberg speaks during the Meta Connect event at Meta headquarters in Menlo Park, California on September 27, 2023.

Josh Adelson | AFP | getty images

The headcount, which was well above 86,000 in 2022, declined 22% last year to 67,317 as Meta cut costs extensively to appease an investor base that has seen the company struggle to keep pace with changing market conditions. had lost confidence in his ability. At the time, Meta was facing a tough digital advertising market and the lingering effects of Apple’s 2021 iOS update.

Exactly a year ago, Zuckerberg told analysts on an earnings call that management’s theme for 2023 would be “the year of efficiency” and that Meta would become a “stronger and more agile organization.”

Wall Street has since rewarded him. The stock nearly tripled in value last year, making it the second-best performer in the S&P 500, behind only Nvidia. It hit a record last month, and the continued rally has pushed Meta’s market cap to more than $1 trillion.

On Thursday, Meta reported fourth-quarter sales growth of 25%, the fastest rate of expansion since mid-2021, to $40.1 billion. Net income increased 201% to $14 billion, and the company’s operating margin more than doubled to 41%. The stock jumped 15% in extended trading.

Add it all up, and Meta is showing it can grow at a healthy clip while also dramatically cutting costs, which were down 8% from a year ago. The company is so confident about its financial position that it authorized a $50 billion share buyback and said for the first time that it would pay a 50 percent quarterly dividend.

It is not that Zuckerberg is not willing to spend money. He doesn’t want to put it on people.

Zuckerberg said on the call that his playbook includes building a “world-class compute infrastructure,” which means spending billions of dollars on Nvidia’s artificial intelligence chips needed to train Meta’s AI models.

Zuckerberg said, “We are playing to win here and I look forward to continuing to invest aggressively in this region to build the most advanced clusters.” “We are also designing innovative data centers and designing our own custom silicon specifically for our workloads.”

Total spending for the year will be $94 billion to $99 billion, up from $88.15 billion in 2023, Meta said. Finance chief Susan Lee said capital spending would be between $30 billion and $37 billion, “an increase of $2 billion at the high end of our prior range.”

But when it comes to hiring, Zuckerberg said the days of extreme growth are in the rearview mirror. Meta still plans to add people for higher-paying, technical roles this year, Zuckerberg said, but the headcount increase “will be relatively small compared to what we would have done historically.”

He added, “Until we get to the point where we’re really in the water on our ability to execute, I want to keep things slow because I think that’s the right thing for us culturally.” “

And if Zuckerberg is to be believed, this is not just this year’s story.

“I hope the next period will extend beyond 2024,” he said.

Meanwhile, Meta’s Reality Labs unit, which is tasked with developing virtual reality and augmented reality technologies, continues to be short of cash and doesn’t seem to be slowing down. The division incurred a record operating loss of $4.65 billion in the fourth quarter and has now lost more than $42 billion since the end of 2020. Revenue, mostly driven by Quest VR headsets, has exceeded $1 billion for the first time.

Meta said Reality Labs’ losses “will continue to grow meaningfully year over year”, underscoring Zuckerberg’s ongoing belief that the Metaverse is the computing platform of the future.

Zuckerberg said he was no longer worried about scaring away investors, acknowledging that major cost cutting had enabled Meta to “make differentiated investments where necessary”.

“That was the theme I laid out at the beginning of the Year of Efficiency last year, to make us a stronger technology company and give us the flexibility and stability to execute on our long-term goals,” he said.

Watch:Meta announces first-time dividend of $0.50.

Source: www.cnbc.com

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