Mark Zuckerberg, chief executive officer of Meta Platforms Inc., center, leaves federal court in San Jose, Calif., on Dec. 20, 2022.

David Paul Morris | Bloomberg | Getty Images

One simple slogan, Meta CEO Mark Zuckerberg temporarily quelled investor discontent over his company’s multibillion-dollar investment in a futuristic meta universe.

“Our management theme for 2023 is ‘The Year of Efficiency,’ and we’re focused on becoming a stronger and more agile organization,” Zuckerberg said as part of Meta’s fourth-quarter earnings release.

After Meta’s share price fell 64% in 2022, Wall Street cheered the report, sending shares up nearly 20%, extending a rally that began late last year. Based on after-hours pricing, the Meta is trading at its highest since July.

Growth is not something investors are excited about. Meta reported better-than-expected fourth-quarter revenue, but sales still fell 4% from a year earlier, marking its third straight quarterly decline. The forecast range for the first quarter suggests that revenue may increase year-over-year, but may decline again.

Rather, Zuckerberg’s commitment to cost-cutting and efficiency is a sign that increasing profitability is important to Meta, which before last year’s downturn was known as a growth machine.

“I think every year for the first 18 years we grew it by 20%, 30% or a lot more,” Zuckerberg said during the earnings call. “And obviously that changed very dramatically in 2022, when our revenue was negative for growth, the first time in the history of the company.”

Looking to the future, Zuckerberg struck a realistic tone.

“We don’t expect that to continue,” he said of the recent drop in revenue. “But I also don’t think things will go back to the way they were before.”

Meta lowered its estimates for total spending in 2023 to a range of $89 billion to $95 billion, down from a previous forecast of $94 billion to $100 billion. In November, the company announced it would lay off more than 11,000 employees, or 13% of its workforce.

Zuckerberg said Meta will be more “actively cutting projects that are inefficient or no longer critical” and that it will focus on “removing middle management layers to make decisions faster.”

Meta is also cutting costs by building new data centers that are meant to be more efficient but still able to power the company’s various AI technologies. Capital spending in 2023 is expected to be in the range of $30 billion to $33 billion instead of $34 billion to $37 billion.

Zuckerberg is selling investors the story they want to hear, admitting the company is bloated and needs more financial discipline. One of Zuckerberg’s top deputies, CTO Andrew “Boz” Bosworth, wrote a personal essay just days ago echoing that sentiment.

However, Meta has many challenges ahead in terms of both costs and recovery of its core ad business.

Meta Reality Labs, the division responsible for developing the nascent meta universe, lost $13.7 billion in 2022. CFO Susan Lee told analysts that the company has no plans to cut the division anytime soon. Zuckerberg still sees this as the company’s future.

Digital advertising, meanwhile, is suffering from a tough economic climate, and Lee gave no indication that companies plan to dramatically increase their spending in the new year.

The meta hasn’t recovered yet either Apple iOS 2021 privacy update that made it more difficult to target users with ads. Lee said Meta is improving its online advertising system, but Apple’s update “is still definitely an absolute drag on our revenue.”

During the Q&A, Zuckerberg was asked about Meta’s progress in generative artificial intelligence, which has become the latest buzz in Silicon Valley. His response indicated that Meta is looking for opportunities there, but would be cautious about how quickly it happens. These programs are expensive to run, and Meta needs to make sure it can develop them affordably, he said.

Zuckerberg said that while Meta explores how best to incorporate the technology, he wants to “be careful not to get too far ahead of its development.”

WATCH: Meta is growing in number of daily active users, shares are growing with income

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