© Reuters. FILE PHOTO: Letters spell out the word “Alphabet” as they are seen on a computer screen with a Google search page in this illustration taken in Paris, France, August 11, 2015. REUTERS/Pascal Rossignol /File Photo
(Reuters) – Activist investor TCI Fund Management has called on Alphabet (NASDAQ:) Inc to cut costs by reducing headcount and reducing losses in its Waymo self-driving unit, saying Google’s parent company needs to adjusted to an era of slower growth.
The fund, which has invested in Alphabet since 2017 with a stake worth $6 billion, said the company had “too many employees and the cost per employee was too high.”
TCI says Alphabet pays some of the highest salaries in Silicon Valley, noting that the company has grown its headcount by 20% annually since 2017 and has more than doubled since.
Alphabet did not immediately respond to Reuters’ request for comment.
Shares of Alphabet, which has a market capitalization of $1.24 trillion, were up nearly 5% in midday trading.
Many technology companies, including Meta Platforms Inc., are recently making drastic cuts to their staff as part of a restructuring effort to navigate a recessionary economy after years of rapid hiring.
Alphabet, which is also struggling with advertisers’ spending cuts, said in late October that it plans to cut hiring by more than half.
“Cost discipline is now required when revenue growth is slowing. Increasing expenses above revenue growth is a sign of poor financial discipline,” the fund wrote in a letter to management and the board. Administration of Alphabet.
TCI also called on Alphabet to disclose operating profit margin targets and reduce losses in Other Bets, which includes Waymo and other special projects.
TCI said investments in Waymo were unreasonable and losses must be reduced “significantly,” adding that the autonomous vehicle technology unit generated $3 billion but recorded a loss. operation is 20 billion dollars to date. TCI requires the unit to reduce operating losses by at least 50%.
