WebProNews

Category: CFOTrends

  • Amazon Is Taking Half of Sellers’ Revenue

    Amazon Is Taking Half of Sellers’ Revenue

    Many e-commerce companies rely on Amazon for the bulk of their business, but it is a costly proposition with Amazon taking half of their revenue.

    According to research by Marketplace Pulse, Amazon has increased its fulfillment fees and mandatory advertising, increasing the percentage it takes from sellers. This has resulted in an increase in Amazon’s cut from 40% five years ago to 50% today.

    Interestingly, the base transaction fee has remained a steady 15%. Fulfillment fees, however, have grown to 20-35% and advertising can rack up another 15%. What’s more, the advertising is not optional, meaning sellers are going to pay for it whether they want it or not.

    Credit: Marketplace Pulse

    As the research firm highlights, this is leaving many companies making far less than they planned:

    Sellers are combating fee increases by either raising prices, diversifying from FBA, or diversifying from Amazon altogether. However, sometimes it’s only at the end of the tax year that they realize how little net profit they have left. A few sellers showed paying 60% and even 70% of their revenue to Amazon in fees. They still had to pay for inventory, freight, employees, and other expenses.

    To make matters worse, there are not many good options for companies that want to avoid Amazon’s fees. Walmart is cheaper for new sellers, but doesn’t have nearly the reach that Amazon does. Shopify and eBay, while significantly cheaper, also require the seller to handle more of their own logistics.

    With an economic downturn, only time will tell if Amazon is squeezing its sellers too much.

  • Move Over Subscription Economy, Usage-Based Billing Is Here

    Move Over Subscription Economy, Usage-Based Billing Is Here

    Subscription pricing models may be an unforeseen casualty of the economic downturn, paving the way for usage-based billing.

    Subscription pricing models have permeated everything from cloud services to mobile apps and are a far cry from the early days of computing and the internet. For those old enough to remember, software was sold — often in a box — for a one-time fee for that major version of the software. When a major new version was released, users could usually pay a cheaper upgrade fee to move to the latest and greatest.

    With the rise of the internet, however, subscription models quickly dominated the market and all but supplanted the one-time fee model. Thanks to the economic downturn, however, Business Insider makes the case that subscription pricing may be on the verge of going the way of its predecessor.

    In place of subscriptions, usage-based billing is the new hot thing in the software market. Rather than a flat monthly rate, usage-based billing only charges customers for what they actually use. As Insider points out, this is not uncommon among cloud providers but is poised to spread out to other areas of the industry.

    The model could be a viable and appealing option for much wider use, especially as businesses are looking to rein in expenses wherever possible.

    “If you think about the evolution of business models, it’s always trended more and more towards being more friendly to the customer,” Rishi Jaluria, an RBC software analyst, told Insider. “It is very likely, in my opinion, that there will be more companies that are either on a consumption model or offer a consumption element to the model.”

    Jaluria’s views are shared even by those entrenched in the subscription model approach.

    “The best companies are saying, ‘We want to have a mix of models that really accommodates all our different customers,’” said Tien Tzuo, CEO of Zuora, a subscription-billing-management company. “Different customers might want different things as well.”

  • Twitter Payments Head Esther Crawford Has Been Laid Off

    Twitter Payments Head Esther Crawford Has Been Laid Off

    The carnage at Twitter continues, with Twitter Payments head Esther Crawford laid off, along with most of her team.

    Esther Crawford was head of Twitter Payments, putting her in charge of Twitter Blue. According to Platformer’s Zoë Schiffer, Crawford is the latest to be purged from Twitter since Elon Musk’s takeover.

    Crawford’s departure is especially surprising since she was viewed as a Musk loyalist. in fact, she was one of those employees that answered Musk’s call to fully commit to the company.

    The Verge’s Alex Heath says the layoff extends to most of “product org.”

    Crawford’s departure makes one thing crystal clear: No one is safe in Musk’s Twitter.

  • Amazon Reports First Unprofitable Year in Almost a Decade

    Amazon Reports First Unprofitable Year in Almost a Decade

    Amazon delivered its quarterly report and it was bad news as the company turned in its first unprofitable year in almost a decade.

    Amazon reported net sales for 2022 of $514.0 billion, an increase of 9% year-over-year. The company’s AWS cloud business came in at $80.1 billion for the year, an increase of 29%.

    Despite the increased sales, the company posted a net loss of $2.7 billion for the year, or $0.27 per share, its first since 2014. While a $2.7 billion loss is bad enough on its own, it’s even worse when compared to the $33.4 billion net income the company posted in 2021.

    Much of the company’s loss can be attributed to its investment in electric vehicle maker Rivian.

    2022 net loss includes a pre-tax valuation loss of $12.7 billion included in non-operating income (expense) from the common stock investment in Rivian Automotive, Inc., compared to a pre-tax valuation gain of $11.8 billion from the investment in 2021.

    “Our relentless focus on providing the broadest selection, exceptional value, and fast delivery drove customer demand in our Stores business during the fourth quarter that exceeded our expectations—and we’re appreciative of all our customers who turned to Amazon this past holiday season,” said Andy Jassy, Amazon CEO.

    Jassy also was optimistic about the future, especially given the cost-cutting measures the company has already taken.

    “We’re also encouraged by the continued progress we’re making in reducing our cost to serve in the operations part of our Stores business,” Jassy continued. “In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon. The vast majority of total market segment share in both Global Retail and IT still reside in physical stores and on-premises datacenters; and as this equation steadily flips, we believe our leading customer experiences in these areas along with the results of our continued hard work and invention to improve every day, will lead to significant growth in the coming years. When you also factor in our investments and innovation in several other broad customer experiences (e.g. streaming entertainment, customer-first healthcare, broadband satellite connectivity for more communities globally), there’s additional reason to feel optimistic about what the future holds.”

  • Intuit Lobbying Congress to Protect Its Tax Filing Business

    Intuit Lobbying Congress to Protect Its Tax Filing Business

    Intuit is going all-in in its lobbying efforts to protect its lucrative tax filing business at a time when Congress is threatening it.

    US law guarantees taxpayers earning less than $69,000 a year can file their taxes for free. Unfortunately, Intuit and other companies often make it difficult for users to find free filing options. Lawmakers wrote a letter to Intuit CEO Sasan K. Goodarzi in April 2022, demanding answers about what they called the company’s “Free File scams.”

    Intuit’s problems got worse in September 2022 when the Inflation Reduction Act set aside $15 million to help the IRS develop an easier platform for taxpayers to file for free.

    According to OpenSecrets, Intuit has responded by spending a whopping $3.5 million in 2022 lobbying Congress. That sum is more than the company spent any previous year. Intuit claims that a government-run tax preparation service represents a conflict of interest.

    “Unquestionably, a government-run tax preparation system that makes the tax collector the investigator, auditor, enforcer, and now also the preparer, is a conflict of interest,” Goodarzi told Business Insider.

    What Goodarzi conveniently omits, however, is that government-run tax filing services work very well in almost every other developed country in the world. In fact, taxpayers in many other countries look with amazement at the state of the US tax industry.

    It’s probably a safe bet that Goodarzi’s comments are more self-serving than a demonstration of genuine concern for the American taxpayer.

  • Reddit’s IPO May Be on Track for the Second Half of 2023

    Reddit’s IPO May Be on Track for the Second Half of 2023

    Reddit may finally be moving forward with its IPO after laying the groundwork for nearly two years.

    Reddit hired its first CFO in early 2021 in what many saw as one of the first major steps toward an IPO. At the end of 2021, the company filed paperwork with the SEC to go public, but little forward movement has happened since then, thanks to the economic downturn and other factors.

    According to The Information, however, it appears the social media company is once again moving forward. The outlet’s sources say the company plans to move forward later this year, likely in the second half.

    Interestingly, unlike other tech firms — ServiceTitan, StockX, and Cohesity — that have allowed their IPO paperwork to lapse, thereby taking the option off the table in the short term, Reddit has been maintaining its filing with the SEC. This would support The Information’s sources, essentially keeping Reddit in a ‘holding pattern’ until the market improves.

  • Tesla’s Net 2022 Bitcoin Losses Totaled $140 Million

    Tesla’s Net 2022 Bitcoin Losses Totaled $140 Million

    Tesla executives may be regretting the company’s investment in Bitcoin, with its losses totaling a whopping $140 million in 2022.

    Tesla surprised the industry with a $1.5 billion Bitcoin purchase in early 2021. The company initially announced plans to accept the cryptocurrency as payment before reversing course over environmental concerns. In the wake of the crypto crash, it appears the electric vehicle maker’s investment has taken quite the hit.

    According to an SEC filing, Tesla recorded a $204 million loss as a result of Bitcoin’s price drop. Despite this, the company was able to make $64 million in profits from Bitcoin trading, leaving it with a net loss of $140 million.

    For example, in the year ended December 31, 2022, we recorded $204 million of impairment losses resulting from changes to the carrying value of our bitcoin and gains of $64 million on certain conversions of bitcoin into fiat currency by us.

  • Snap Is Cutting Google and AWS Cloud Spending

    Snap Is Cutting Google and AWS Cloud Spending

    Snap is cutting back its cloud spending, reducing how much it pays both Google Cloud and AWS.

    Snap relies on both cloud providers to power its operations. Like many tech companies, however, Snap is looking to cut costs and operate more efficiently. According to Business Insider, CFO Derek Andersen said the company had identified its cloud contracts as an area to cut back, with cloud expenditures second only to employee pay in cost.

    As a result, the company has “restructured and renewed to achieve lower pricing and better ongoing leverage in those relationships,” Andersen said.

    There was likely quite a bit of room for negotiation, with the company signing a five-year, $2 billion deal with Google in 2017. Similarly, the company had signed a $1 billion deal with AWS that lasted through December 2021.

    “We’ve focused intently on efficient unit-cost management by engineering our products efficiently, and by migrating among cloud services and products to drive down our unit costs,” Andersen said.

    The efforts appear to be paying off. While Andersen did not say exactly how much the company had reduced its cloud costs, he did say that infrastructure cost per daily user had dropped from $2.78 two years ago to $2.31 today.

    Snap’s actions illustrate the dilemma many companies now face. The pandemic helped fuel a record-breaking rush to adopt cloud services in an effort to better support remote and hybrid work. The pandemic also helped drive record sales for many tech companies. As the pandemic has waned, however, many companies are now paying for massive cloud contracts at a time when business is nowhere near as profitable as it was a year ago.

    While the cloud segment has been relatively insulated from the economic downturn, that could quickly change as more companies follow Snap’s lead.

  • Intel Slashes Employee Pay Rather Than Reduce Dividend

    Intel Slashes Employee Pay Rather Than Reduce Dividend

    Intel is showing where its priorities are, slashing employee pay in an effort to maintain its quarterly dividend.

    Intel is in trouble, with the company losing $8 billion of its market value in what has been described as a “historic collapse” that was triggered when the company warned it would miss analysts’ revenue expectations by billions.

    According to SemiAnalysis, the company has now resorted to cutting employee pay in an effort to make its quarterly dividend. Principal Engineers, grades 7 to 11, will see a 5% cut. VPs will see a 10% cut and executive leadership will see a 15% cut. CEO Pat Gelsinger’s pay will drop by 25%.

    According to The Oregonian, hourly employees’ pay won’t be cut, nor will their annual bonuses. They will, however, lose out on other incentives, such as merit-based raises, quarterly profit-sharing bonuses, and more.

    “These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy,” Intel spokesperson Will Moss said. “We are grateful to our employees for their commitment to Intel and patience during this time as we know these changes are not easy.”

    Intel’s strategy is an incredibly dangerous one since it risks alienating the very employees and engineers the company needs to turn things around. Cutting employees’ pay, in the middle of an economic downturn no less, sends a clear message to employees that they are not as important to leadership as lining investors’ pockets.

    Our money is on this decision coming back to haunt Intel, with the company likely to start losing its top talent to companies that won’t sell them out.

  • Adobe’s Figma Purchase May Be In Jeopardy

    Adobe’s Figma Purchase May Be In Jeopardy

    Adobe’s $20 billion Figma deal may be in trouble, with EU Commission weighing whether to launch an antitrust probe.

    Adobe announced in September that it had struck a deal with Figma to acquire the startup for $20 billion. Figma has been gaining in popularity, providing a web-based competitor to Adobe’s tools at a fraction of the cost. Almost immediately, the deal was met with angst and anger from users, many of whom were using the product specifically because they did not want, or could not afford, to use Adobe’s products.

    According to Bloomberg, the European Commission has received a number of requests from member states to probe the deal. The number of requests evidently fell below the threshold that would normally trigger a probe, but the Commission did acknowledge that the deal could “significantly affect competition.”

    The Commission will ask Adobe to notify the transaction, meaning the companies will need EU clearance to proceed.

    “We look forward to working constructively with the European Commission to address its questions and bring the review to a timely close,” a Figma spokesperson told Bloomberg.

  • Liz Coddington, Former AWS VP of Finance, Joins Peloton As CFO

    Liz Coddington, Former AWS VP of Finance, Joins Peloton As CFO

    Peloton has scored a major win in its recruiting efforts, hiring Liz Coddington to be the company’s new CFO.

    Peloton has been struggling after being the darling of the pandemic bubble. As people sheltered and quarantined at home, the company’s fortunes skyrocketed, only to come crashing back down as things returned to normal. The company clearly hopes Coddington can help get things back on track.

    Coddington formerly served as VP of Finance for Amazon Web Services. She will begin her job at Peloton on June 13. According to a regulatory filing, Coddington’s compensation will include an annual salary of $1 million, as well as $9 million in stock equity. The company will also provide $150,000 for relocation.

    Coddington served as VP at Amazon since January 2021, and worked at the company for a total of six years. Prior to that, she held senior leadership roles at Adara, Walmart, and Netflix.

    “Liz is a deeply talented finance executive and will be an invaluable addition to Peloton’s leadership team,” said Peloton CEO Barry McCarthy. “Having worked at some of the strongest and most recognizable technology brands, she not only brings the expertise needed to run our finance organization, but she has a critical understanding of what it takes to drive growth and operational excellence. I have seen her intellect, abilities, and leadership firsthand and am excited to work closely with her as we execute the next phase of Peloton’s journey.”

  • Andreessen Horowitz Wants to Manage the Finances of Startups It Invests In

    Andreessen Horowitz Wants to Manage the Finances of Startups It Invests In

    VC firm Andreessen Horowitz (a16z) may be looking to expand its services by managing the finances of startups it invests in.

    According to Bloomberg, the company recently hired Michel Del Buono as chief investment officer. His duties will include overseeing a range of wealth-management services.

    Providing wealth-management services could be a highly profitable business for the firm. Companies usually charge 1% of a client’s assets, with profits reaching as high as 50%.

    While a16z did confirm Del Buono’s hiring to Bloomberg, it declined to comment on any future business plans.

  • GM Investing $650 Million in Lithium Americas for Lithium Mining

    GM Investing $650 Million in Lithium Americas for Lithium Mining

    General Motors is investing $650 million in Lithium Americas to help develop the Thacker Pass lithium mine in Nevada.

    As automakers transition to electric vehicles, the lithium needed for battery production is quickly becoming one of the most important elements to the automotive supply chain. GM wants to ensure it has access to all the supplies it will need and is willing to invest in Lithium Americas to make that happen.

    “GM has secured all the battery material we need to build more than 1 million EVs annually in North America in 2025 and our future production will increasingly draw from domestic resources like the site in Nevada we’re developing with Lithium Americas,” said GM Chair and CEO Mary Barra. “Direct sourcing critical EV raw materials and components from suppliers in North America and free-trade-agreement countries helps make our supply chain more secure, helps us manage cell costs, and creates jobs.”

    “The agreement with GM is a major milestone in moving Thacker Pass toward production, while setting a foundation for the separation of our U.S. and Argentine businesses,” said Lithium Americas President and CEO Jonathan Evans. “This relationship underscores our commitment to develop a sustainable domestic lithium supply chain for electric vehicles. We are pleased to have GM as our largest investor, and we look forward to working together to accelerate the energy transition while spurring job creation and economic growth in America.”

    GM has imposed certain conditions to its investment, however, including court approval for the mining operation to move forward, as well as a reorganization of Lithium Americas.

    GM’s investment will be split between two tranches. The funds for the first tranche will be held in escrow until certain conditions are met, including the outcome of the Record of Decision ruling currently pending in U.S. District Court. If those conditions are met, the funds will be released and GM will become a shareholder in Lithium Americas. The escrow release is expected to occur no later than the end of 2023. The second tranche investment is expected to be made into Lithium Americas’ U.S.-focused lithium business following the separation of its U.S. and Argentina businesses and is contingent on similar conditions, including Lithium Americas securing sufficient capital to fund the development expenditures to support Thacker Pass.

    GM’s investment will likely be followed by similar measures from other automakers as demand for lithium continues to skyrocket.

  • PayPal Is Laying Off 2,000 of Its Workforce

    PayPal Is Laying Off 2,000 of Its Workforce

    PayPal has announced it is laying off roughly 2,000 employees, representing approximately 7% of its staff.

    PayPal has been working over the last couple of years to transform its business to adapt to changes in the technological and business landscape. The company has explored the possibility of stock-trading platform, and added support for cryptocurrency.

    In a company announcement, President and CEO Dan Schulman painted the layoffs as the next — albeit unfortunate — step in the company’s transformation.

    Addressing these changes requires us to make hard decisions that will impact some of our colleagues. Today, I’m writing to share the difficult news that we will be reducing our global workforce by approximately 2,000 full time employees, which is about 7% of our total workforce. These reductions will occur over the coming weeks, with some organizations impacted more than others. We will treat our departing colleagues with the utmost respect and empathy, provide them with generous packages, engage in consultation where required, and support them with their transitions. I want to express my personal appreciation for the meaningful contributions they have made to PayPal.

  • Impossible Foods May Lay Off 20% of Its Workforce

    Impossible Foods May Lay Off 20% of Its Workforce

    Impossible Foods may be poised for a second round of layoffs, with a report putting the number at 20%.

    Impossible Foods makes plant-based “meats.” It’s product is sold in stores and used in Burger King’s Impossible Whopper, as well as other fast-food meals. Despite its success, the company appears to be on the verge of additional layoffs.

    According to Bloomberg, via TechCrunch, the company is planning to let roughly 20% of its workforce go. With a total of 700 employees, this would impact more than 100 workers.

    Impossible Foods already let 6% of its staff go in October, well before some of the biggest layoffs in the tech industry. The most recent report is somewhat surprising since Impossible Foods appears to be doing well financially, with strong sales, positive growth, and good cash flow.

  • EV Startup Arrival Appoints New CEO, Lays Off 50% of Staff

    EV Startup Arrival Appoints New CEO, Lays Off 50% of Staff

    Electric vehicle startup Arrival has undergone a major shakeup, appointing a new CEO and announcing layoffs of 50% of its staff.

    Arrival has a deal with UPS to provide 10,000 electric delivery vans through 2024. Despite the high-profile contract, the company has struggled financially and is now announcing its second round of layoffs in a year.

    Following a detailed review of its operations and its markets, Arrival is now announcing immediate actions to further reduce its operating costs and to optimize the deployment of its current cash resources. This includes the difficult decision to reduce its global workforce by approximately 50% to 800 employees. When combined with other cost reductions in real estate and third-party spending, the company expects to halve the ongoing cash cost of operating the business to approximately $30 million per quarter.

    Simultaneously, the company also announced a new CEO, Igor Torgov. Torgov has a long history in the tech industry, with stints at Microsoft, Bitfury, Columbus A/S, and Yota. Most recently, before serving as Arrival’s EVP of Digital, Torgov served as CEO of Atol.

    “Accepting this important role at a critical point in Arrival’s journey is a significant responsibility,” said Torgov. “Arrival has developed unique technologies in a market that has huge growth potential and can play a key role in addressing climate change. To unlock these opportunities, we need to make difficult decisions and to take swift action. Following a detailed evaluation of Arrival and the wider EV market during the past two months, the leadership team and the Board have taken decisive action to ensure the most effective use of our current resources and optimize the efficiency of the business. The actions support our journey to become a champion in innovative products and new, more efficient methods of vehicle production, particularly in the important US market for commercial electric vehicles. We are keenly aware that these decisions, while necessary, will have a profound impact on a significant number of our colleagues. We are 100% committed to supporting our employees during this difficult process.”

  • Salesforce Bows to Investor Pressure, Appoints New Board Members

    Salesforce Bows to Investor Pressure, Appoints New Board Members

    Salesforce is bowing to investor pressure, appointing new board members shortly after activist investor Elliott Management invested in the company.

    Sales announced it had appointed three independent board members late last week “as part of its ongoing board refreshment process.” The new board appointments go into effect March 1, 2023.

    The new board members are:

    • Arnold Donald, former President and Chief Executive Officer of Carnival Corporation & plc;
    • Sachin Mehra, Chief Financial Officer of Mastercard; and
    • Mason Morfit, Chief Executive Officer and Chief Investment Officer of ValueAct Capital

    “We’re excited to welcome Arnold, Sachin and Mason to the Salesforce Board,” said Marc Benioff, Chair and CEO of Salesforce. “As highly respected business leaders, they each bring valuable experience to further enhance and balance the diverse skills on the Board and advance our value creation initiatives. We look forward to benefiting from their expertise and insights as Salesforce continues to drive durable top- and bottom-line growth and build on our position as the world’s #1 CRM.”

    “The addition of these three new independent directors to our Board demonstrates Salesforce’s commitment to ongoing refreshment in action,” said Robin Washington, Lead Independent Director of the Board. “Arnold’s proven cross-industry leadership experience, Sachin’s expansive financial, technology and operational expertise and Mason’s investor perspective and record of helping public companies build sustainable, long-term value will further strengthen our Board’s depth of expertise and diversity of thought. Ensuring we have the right Board in place to guide the Company’s strategy and oversee its ambitious goals continues to be a top priority. Over the past year, we have benefited from the valuable input of our investors and look forward to continuing that dialogue as we drive value for Salesforce shareholders.”

    Salesforce’s decision to appoint additional board members is likely in response to Elliott’s multibillion-dollar investment in the company, and may be an effort to avoid an all-out proxy fight. Elliott has a long history of heavily investing in companies and then aggressively pushing for executive and board changes.

    According to The Wall Street Journal, that appears to be exactly what Elliott is doing with Salesforce, with the investment firm preparing to nominate its own slate of directors.

    “Salesforce is one of the pre-eminent software companies in the world, and having followed the company for nearly two decades, we have developed a deep respect for [Co-Chief Executive] Marc Benioff and what he has built,” said Jesse Cohn, managing partner at Elliott, at the time of investment.

    “We look forward to working constructively with Salesforce to realize the value befitting a company of its stature,” added Cohn.

    Elliott’s involvement comes at a difficult time for Salesforce. The company has seen the departure of some of its top executives in recent weeks, as well as layoffs that have impacted roughly 10% of its employees.

  • Major Banks Joining Forces to Take on Apple Card, PayPal

    Major Banks Joining Forces to Take on Apple Card, PayPal

    Major banks are reportedly joining forces in an effort to better take on Apple Card and PayPal in the digital wallet market.

    In the era of digital transactions and wallets, traditional banks have found themselves playing second fiddle to tech companies. According to CNBC, several of the biggest banks want to change the status quo and exert more direct influence.

    Bank of America, JPMorgan Chase, and Wells Fargo are among those reportedly looking to work together to create their own digital wallet that will link to customers’ debit and credit cards.

    The new cards reportedly could launch later in 2023, with both Visa and Mastercard on board.

    The banks are likely driven by a desire to maintain a more direct relationship with the customer, along with the possibility of selling them additional services as a result of that relationship. Banks are probably also somewhat leery of tech deals that leave them with the short end of the stick. For example, Goldman Sachs has reportedly lost somewhere between $1 to $3 billion on the Apple Card deal.

    Nonetheless, entering the market and competing with established tech companies won’t be easy, experts warn.

    Bernstein analyst Harshita Rawat said banks have “likely always had PayPal envy,” but that didn’t mean the way forward is going to be easy.

    “It simply takes a very long time, a killer customer experience (which needs to be better than incumbents, not just similar), and a compelling merchant value proposition to build the two-sided network effects in payments to achieve scale,” Rawat said in a note to clients.

  • Intel Loses $8 Billion Market Value in ‘Historic Collapse’

    Intel Loses $8 Billion Market Value in ‘Historic Collapse’

    Intel’s recovery hit a major speed bump Friday as the company saw $8 billion of its market value wiped away, surprising analysts.

    Intel has been working to reclaim its spot as the world’s top chipmaker but has been experiencing setbacks in recent months. The company announced a surprise $500 million loss at the end of July, but that doesn’t begin to compare with the bloodbath resulting from the company’s latest announcement.

    Late Thursday, Intel gave guidance for the upcoming quarter that was billions below analysts’ expectations. Analysts were expecting $14 billion in revenue, but Intel’s guidance for Q1 was in the $10.5 to $11.5 billion range.

    “No words can portray or explain the historic collapse of Intel,” said Rosenblatt Securities’ Hans Mosesmann, according to Reuters, who says the analyst was among 21 analysts that cut Intel’s price target.

    Intel, like many companies, is struggling with a slump in the computer market as post-pandemic demand has significantly slowed. The company is also facing a slowdown in the data center market, a segment it has traditionally dominated.

    Read More: AMD Continues to Chip Away at Intel’s Server Dominance

    None of that, however, compares to the challenges Intel faces catching up with its rivals in the technology department. TSMC has a significant technological lead over virtually every other chipmaker. What’s more, Intel’s biggest rival, AMD, relies on TSMC to manufacture its chips. This has helped AMD make major headway against Intel, both in the computer and data center space.

    “AMD’s Genoa and Bergamo (data center) chips have a strong price-performance advantage compared to Intel’s Sapphire Rapids processors, which should drive further AMD share gains,” said Matt Wegner, an analyst at YipitData, told Reuters.

    Unfortunately, analysts believe Intel’s troubles may be just beginning.

    “It is now clear why Intel needs to cut so much cost as the company’s original plans prove to be fantasy,” brokerage Bernstein said.

    “The magnitude of the deterioration is stunning, and brings potential concern to the company’s cash position over time.”

  • Stripe May Go Public Within the Next Year

    Stripe May Go Public Within the Next Year

    Stripe’s IPO may be on the horizon, with the company telling employees it will decide within the next year whether to go public.

    Stripe was riding high during the pandemic, one of many tech companies that benefited from the switch to remote work and e-commerce. As spending slowed and interest rates crept up post-pandemic, Stripe was forced to delay any plans to go public.

    According to The Information, via CNBC, the company’s founders, John and Patrick Collison, have told employees they will make a decision within the next year. The goal is to either either go public, or give employees the chance to sell their shares via secondary offering.

  • IBM Laying Off 3,900 Employees

    IBM Laying Off 3,900 Employees

    Big Blue is joining the list of tech companies laying off employees, announcing it would cut 3,900 jobs.

    Virtually all of IBM’s larger rivals in the tech space have engaged in layoffs, numbering in the tens of thousands in 2023 alone. According to Reuters, IBM is now adding to that number, with plans to lay off 3,900 employees.

    The news comes following the company’s quarterly report in which it fell short of its annual cash target.

    CFO James Kavanaugh told the outlet IBM was still “committed to hiring for client-facing research and development.”

    Despite the news, CEO Arvind Krishna put a positive spin on the company’s overall results.

    “Our solid fourth-quarter performance capped a year in which we grew revenue above our mid-single digit model. Clients in all geographies increasingly embraced our hybrid cloud and AI solutions as technology remains a differentiating force in today’s business environment,” said Krishna. “Looking ahead to 2023, we expect full-year revenue growth consistent with our mid-single digit model.”