The Metamass layoffs show that Mark Zuckerberg is rattled

A Two weeks ago, Meta told its shareholders that it expected headcount at the end of 2023 to be “roughly in line with the levels for the third quarter of 2022”. Now 11,000 ex-Facebook employees – 13% of the total – will get a layoff email, the brutal American way of making layoffs. The cartoon avatars, on the other hand, survive. There was no hint of a step back by Mark Zuckerberg to spend on his precious virtual reality metaverse, despite protests from angry investors about how much it costs and how the returns are uncertain.

But the job destruction — so soon after a suggestion that an end to the hiring freeze would be enough — suggests Zuckerberg is rattled. He messed up monumentally, which he weakly acknowledged, by adding nearly 20,000 employees in the past 12 months in anticipation of an advertising boom that didn’t materialize. The share price has fallen by three quarters this year. If ever there was a moment for non-Zuckerberg shareholders to insist on equal voting rights, this is it.

Meta is not unique among US tech and media companies in having a voting structure that gives the founder excessive control, but the lack of consistency is extreme: Zuckerberg’s 13% stake holds 54% of the votes. Outside shareholders should never have accepted the arrangement in the first place and, as argued here last week, inexcusably created the cult of the godlike tech pioneer. The relevant question now, however, is whether they want to try to undo their mistake.

There is no way to know for sure that Zuckerberg would have made better decisions if he had been more accountable to outside interests, but the chances would certainly have been greater. Boardrooms need fresh air and challenge. Meta’s external investors should let go of resolutions that demand governance reform, or else keep their mouths shut.

Vodafone sales lack fanfare

Vodafone’s frustrated shareholders have been waiting ages for CEO Nick Read to deliver a big deal and (they hope) breathe life into a sluggish share price. And here comes a big part of the restructuring – the €15bn (£13.2bn) sale of part of the mobile phone mast business for what looks to be a decent price. The stock price reaction? Zilch. Actually a small drop of the day.

The lack of enthusiasm probably has three sources. First, the divestment of part of the Vantage Towers business is complicated, as it usually is at Vodafone. The FTSE 100 company will transfer its 82% holding (it sold the rest via a listing of the unit in Germany in 2020) to a new joint venture with private equity firms KKR and GIP. The joint venture will then make an offer to buy out minority shareholders and Vodafone should eventually emerge with a reduced holding of around 50%. But the many variables mean that cash payments on day one could only be described as somewhere between €3.2 billion and €7.1 billion. A lot depends on how many minorities are selling.

Second, it will take ages for the money to arrive – completion won’t happen until the second half of next year. Third, the complexity underlines how difficult it is to get anything done in telecom countries. Selling part of Vantage ranks as one of the easier deals being pursued or rumored. A UK combination of Vodafone and Three – currently under negotiation – will have competition regulators all over the place.

Still, Read over-delivered on price with the Vantage. The IPO was at €24 and the latest deal is priced at €32. A one-third improvement on the current climate is not bad for an infrastructure asset. But the implicit message from the market remains: if Vodafone is to emerge as a leaner, less indebted and easier-to-love investment, smarter business is required.

The National Audit Office digs up the Bulb affair

Well done, the National Audit Office: it will investigate the shady arrangements that will see Bulb, the bust energy supplier, transfer to Octopus Energy later this month. Someone had to.

The Council of Ministers’ boast about how the government is ensuring the “best possible outcome” for taxpayers is outrageous as no evidence has been offered to support the claim. We have not been told what Octopus is paying and how the temporary “profit share” arrangement with the government will work. The secrecy is indefensible when everyone knows that, even on the most optimistic forecast, the semi-nationalisation of Bulb will cost the exchequer at least £1 billion.

We trust that the NAO will not be fooled by the Government’s feeble pleas of “commercial confidentiality”. Octopus may prove to be the best home for Bulb – but we need to know that the transfer process was fair and competitive.

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