[Asia Economy Reporter Yujin Cho] Elon Musk, CEO, has carried out the 8th round of layoffs just four months after acquiring Twitter. Controversy is expected to continue as employees have shared experiences of being abruptly notified of their termination via email on the very day of their dismissal.
On the 26th (local time), The Wall Street Journal (WSJ) reported that Twitter laid off dozens of employees via email the previous day. According to a copy of the layoff email obtained by WSJ, the company informed the affected individuals that "after extensive review, your role has been eliminated," and "today will be your last day of work."
Martin de Kiper, a senior product manager at Twitter who planned the newsletter platform 'Revue,' shared his layoff news, saying, "I woke up to find that my company email was locked," and added, "Now my Revue journey is truly over."
Among those laid off this time were so-called 'hardcore Musk loyalists,' including Esther Crawford, CEO of Twitter Payments, according to IT specialist media Platformer's Joe Schipper via his tweet.
The scale of this layoff is reported to be about 50 engineering staff supporting technical infrastructure, apps, and advertising technology, according to U.S. IT specialist media The Information. This marks the 8th round of layoffs since Musk acquired Twitter in October last year.
Previously, Musk was sued for violating the law by abruptly notifying employees of their layoffs via email on the day of dismissal during mass layoffs. At that time, the laid-off employees claimed in their complaint that "Twitter violated U.S. federal law requiring written notice 60 days prior to mass layoffs."
Foreign media have diagnosed that ruthless cost-cutting measures have continued at Twitter since Musk took control. Immediately after acquiring Twitter, Musk laid off about 3,700 employees, half of the total workforce, in November last year.
Since then, employee numbers have continued to decline due to resignations following the end of remote work and additional layoffs. The Information reported that this round of layoffs is believed to be a plan to respond to revenue decline caused by advertiser departure and to reduce the workforce to around 2,000 employees. Aggressive cost-cutting continues amid financial difficulties caused by declining revenue and the burden of repaying high-interest debt.
Earlier last month, The Wall Street Journal (WSJ) reported, citing sources, that Twitter discussed a capital increase of up to $3 billion (about 3.7 trillion KRW) in December last year to repay some of its high-interest debt.
Due to the Federal Reserve's aggressive monetary tightening last year, interest rates rose, increasing Twitter's interest repayment burden. Musk acquired Twitter for $44 billion in October last year, financing the purchase through leveraged buyout, which left Twitter with $13 billion in debt.
In particular, some of the debt carried an annual interest rate in the 4% range plus an additional spread in the 10% range. Jeffrey Davis, founder of data provider InnerSection, recently estimated that Twitter's total annual interest expense would reach $1.25 billion.
Despite the intense workforce reductions, Musk expects profitability to improve by the end of this year. He stated, "Through cost-cutting and other measures, we will reach the break-even point by the end of this year," and "We expect to generate about $3 billion in revenue." This is more than a 41% decrease compared to Twitter's 2021 revenue of $5.1 billion before it was delisted.
Meanwhile, service disruptions such as outages continue amid the chaos caused by the sharp decline in staff. On the 8th, U.S. economic media Fortune reported that Twitter experienced access outages across North America. When users attempted to log in, an error message stating "You have exceeded the daily limit for sending tweets" appeared, preventing service access. The company announced, "Twitter may not be functioning normally. We are aware of this issue and are working to resolve it quickly."
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