ROKU Announces Laying Off Over 6% of Its Workforce to Cut Costs
Roku, Inc. ROKU approved a restructuring plan to lower the company's year-over-year operating expense growth and prioritize projects that it believes will have a higher return on investment.
The decision is expected to impact approximately 200 employees, which is around 6% of the company's workforce. Shares of Roku rallied 2.7% in premarket trading on Mar 30, after the streaming-media company announced its cost-cutting plan.
The company estimates that it will incur non-recurring charges of approximately $30 million to $35 million in connection with the plan, primarily consisting of severance payments, notice pay, employee benefits contributions and related costs and impairment charges related to the exit and sublease, or cease use, of certain office facilities that the company does not currently occupy.
This Zacks Rank #3 (Hold) company expects that the majority of the restructuring charges will be incurred in the first quarter of fiscal 2023 and that the implementation of the headcount reductions, including cash payments, will be substantially complete by the end of the second quarter of fiscal 2023.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Roku, Inc. Price and Consensus
Roku, Inc. price-consensus-chart | Roku, Inc. Quote
Roku Joins Other Industry Players
Roku's restructuring follows a wave of staff reductions and cost-cutting moves that various companies across technology and other industries have implemented in recent months amid persistent inflation, rising interest rates and uncertainty over how tightening financial conditions will affect the economy. Roku announced similar job cuts in November when it slashed its workforce by 200 jobs.
Earlier this month, Citigroup Inc. C initiated a round of job cuts, wherein it is cutting hundreds of jobs across the firm, which account for less than 1% of its total workforce. In its investment banking division, the company is struggling because of an industry-wide slowdown in deal-making. Citigroup recorded a 53% decline in IB revenues last year with additional declines expected in the first quarter of 2023.
Salesforce CRM could see another round of job cuts while the company continues to focus on improving profitability. The company announced in January this year that it will be laying off around 10% of its workforce, a decision that impacted around 7,000 people across the globe. The latest round appears to be hitting go-to-market roles in sales and marketing.
Recently, Meta Platform META announced a second round of layoffs which has impacted around 10,000 employees. Meta Layoffs 2023 also resulted in the elimination of 5,000 open roles.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Citigroup Inc. (C) : Free Stock Analysis Report
Salesforce Inc. (CRM) : Free Stock Analysis Report
Roku, Inc. (ROKU) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
To read this article on Zacks.com click here.