Activist investor TCI Fund Management has called on Google parent Alphabet to cut costs by lowering its head count and reduce losses in its self-driving unit Waymo, saying the company needs to adjust to an era of slower growth.
The fund, an investor in Alphabet since 2017 with a $6 billion (€5.8 billion) stake, said the company had “too many employees and cost per employee is too high”.
TCI said Alphabet pays some of the highest salaries in Silicon Valley, noting that the company has increased employees by 20 per cent annually since 2017 and more than doubled it since then.
Alphabet did not immediately respond to a Reuters request for comment.
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Alphabet, which is also struggling with advertisers cutting back on spending, said in late October that it plans to cut hiring by more than half.
“Cost discipline is now required as revenue growth is slowing. Cost growth above revenue growth is a sign of poor financial discipline,” the fund said in the letter to Alphabet’s management and board.
TCI also called on Alphabet to disclose operating profit margin targets and reduce losses in Other Bets, the unit that includes Waymo and other special projects.
Investments into Waymo were not justified and losses should be reduced “dramatically”, said TCI, adding that the autonomous vehicle technology unit has generated $3 billion but recorded operating losses of $20 billion so far. TCI demanded the unit reduce operating losses by at least 50 per cent. — Reuters
