Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss the rise in stock for Roku and the company’s plans to layoff 6% of its workforce.
Video Transcript
JULIE HYMAN: All right, let's take a look at some other movers here. We've got Roku. It's looking to further trim its headcount. It's got a second round of job cuts happening right now. This time announcing it is laying off 6% of its workforce. The shares are trading higher here.
So this is a restructuring plan. It seems like it is more than just the cutting of headcount here. They're also going to decrease their office footprint, right? And that continues in line of what we've been hearing recently from a lot of different companies.
The company says an unspecified amount of unused office space, they're going to vacate it. They're going to sublet it out and will save money as a result of this. It's going to have some severance costs as a result of these layoffs of $30 to $35 million but then in the longer term aims to save some money with these moves.
BRAD SMITH: Yeah, and this really ties back to that advertising division and the revenue that they're able to see come into it from advertising and their efforts there. Of course, typically a very high-margin and profitable business.
However, for the broader ad market, I kind of hearken back to one of the reports that had come out earlier this week or at least the study from Magna and their forecasts. They're still projecting growth, 3.4% ad growth, but that is lower than their prior forecasts. And this affects a range of companies. It can affect anyone from Roku to even a Netflix ad-supported tier all the way into the social-media companies as well.
And so that for the broader ad market could potentially be a headwind that they are facing in the near term. But for Roku, this comes, as you mentioned, as they had already made some significant workforce reductions prior to this as well as the rest of the tech space as well.
JULIE HYMAN: Yeah, although the stock's up 57% this year and got upgraded by Susquehanna earlier in the week. So that did not hurt matters.
