It was a sharply lower session on Wall Street where we had a lot of aggressing, aggressive selling that was mostly tied to macro conditions, very aggressive commentary from the FED, but also a lot of interesting individual stories. One we're about to talk about at Facebook Corp. Metta and also at Apple with that stock down nearly five percent, and often we can say that as Apple goes, so goes the NASDAC and the broader indexes. Well, let's take a
look at this meta story though. The CEO Mark Zuckerberg outlining plans to reorganize the company, reorganized teams and reduce the headcount for the first time ever, and joining us to discuss this is Sarah Fryer, Bloomberg News, Big Tech team leader. So this is a big story, first time since two thousand and four, I guess to see this sort of restructuring. It also has some big implications about
advertising revenue growth. Maybe save that for a moment and just walk us through if you could share how they're going to do this is just through um sort of you know, just people leaving and not being replaced, or will they actually lay off people. Well, I think it's a little bit the same thing Basically, what they're saying is that teams across the board at Meta are going to have their budgets reduced, and how the teams manage
that is going to be up to them. UM, but they are going to rely, as you said, eleettrition, if people believe their jobs, they may not fill those roles.
In Overall, they do ext to be a smaller company by the end of This is significant because, as you noted, Meta for its entire history has been growing and growing and growing UM using it's it's advertising business, which essentially prince cash to fund these grand visions like like growing into the metaverse, which is Mark Zuckerberg's idea of how we'll all be hanging out in virtual reality in the future.
Now that, it's a lot harder when a few factors come to account, namely UM, the economy is slowing, so advertisers spending less UM, there have been some privacy restrictions by Apple Inc. On iPhones that make it harder for Meta to target advertising effectively. And UM people are being drawn away from from Facebook and Instagram to new products like TikTok. So you have this this UM, this the set of factors that make it difficult for this company
to grow revenue in the way that they used to grow. Plus, they're spending billions on this metaverse vision that is unlikely to contribute to the bottom line for years now. During let's during the first quarter, earning school better so that the annual expenses would be roughly three billion dollars low than initially projected. And what was the reading from that, Well, the reading from that was that you know, they were they were being responsible. Investors were UM, you know, pleased
to hear at UM. Now it's a little different. I mean, I think this with this announcement, we're seeing an era of UM a lot of limited opportunities for Meta. They don't really have a backup plan for the way their business is working right now. UM they need to grow advertising revenue, but their their legacy services are not adding users the way they used to. UM they need to come up with their next big business model after advertising, but things like e commerce haven't worked and they haven't
come up with a new blockbuster idea. UM. They've basically acquired UM they're big growth areas like like Instagram and WhatsApp, and they can't make a major acquisition like that again because of antitrust pressure. So so they're really in a tough spot here. Uh and they've lost more than half of their value this year, um and and it is it is a sort of an existential moment for this company. And you know, it's not surprising that they're going to have to cut cost, but how they recover from it
is going to be what's worth watching. Well, it's a tough period of time for sure. I mean other companies also reducing headcount and struggling with how to get leaner going into the next year. Out of time now, Sarah, but thanks very much for joining us. Sarah Fryar, Bloomberg News Big Tech team Leader,