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Uber To Cut 23% Jobs, To Focus On Its Core Business Only


05/20/2020


Uber To Cut 23% Jobs, To Focus On Its Core Business Only
In its efforts to become profitable, Uber Technologies Inc plans to completely focus on its core business if ride hailing and food delivery, said the company’s  chief executive officer Dara Khosrowshahi said in an email to employees. He also informed that the company will cut down on about 23 per cent of its workforce as it tries to make sustained profits even in the face of the novel coronavirus pandemic.
 
Khosrowshahi said that in addition to the 3,700 job cuts that it had announced earlier this month, the company will slash another 3,000 more jobs. He added that investments in several "non-core projects" will also be reduced by the company.
 
The announcement pushed the share price of the company by 6.9 per cent.
 
In the second quarter, the company will have to take a one-time and mostly cash-based charge of between $210 million and $260 million because of the layoffs and restructuring measures, Uber said in a regulatory filing on Monday. The company expects to be able to save a total of $1 billion annually on the overcall compared ot the costs it incurred before the pandemic.
 
According to a regulatory filing by the company at the end of the first quarter, it had total staff strength of 28,600 people before the pandemic hit its business severely. The initial round of layoffs of 3,700 people in the company was mainly targeted at the customer support and recruiting teams whose salaries were relatively low. On the other hand, the additional 3,000 job cuts that the company announced most recently will comprise of employees from all of the departments of the company.
 
The United States based rival of Uber, Lyft also announced a 17 per cent reduction in its workforce last month.
 
Uber needs to develop into a self sustaining company which that will not require funding and capital from outside sources, Khosrowshahi said. He believes that the "next enormous growth opportunity" for the company lies with its food delivery business Uber Eats.
 
By the end of the current year, Uber aims to become profitable on the basis of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), the company said prior to the breakout of the pandemic. But as the pandemic severely hit its business globally because of the lock down measures imposed all across the world, Uber was forced to withdrew that guidance.
 
In April, there was an 80 per cent drop in the number of ride-hailing trips which accounts for the majority of the revenues of the company. Uver Uber however said that it was noting a slow growth in demand. 
 
The aim of the company now it to make consistent profits on an adjusted basis sometime in 2021, Uber said on May 7, partly because of an increase in demand for food home delivery orders from restaurants.
 
Describing Uber Eats as the silver lining for the company during the crisis, Khosrowshahi said he believed that one day this business unit which is currently loss-making, will start making profits.
 
(Source:www.cnbctv18.com)