(CapitalWatch, June 23, Hong Kong) Tencent Holdings will reportedly see more rounds of layoffs through the rest of 2022.
According to a report from tech news outlet 36Kr (Nasdaq: KRKR), inside sources said Tencent's (OTC: TCEHY; HKEX: 0700) human resources department created the plan in response to feedback from multiple sources.
The internet and gaming giant is among many major companies that have been seeing rounds of large layoffs as companies struggle with tumultuous economic conditions.
Tencent released disappointing first quarter financials last month. Between Covid-19 lockdowns and Beijing's regulatory crackdown on tech, the company saw its slowest revenue growth on record.
Tencent drew in around $21 billion in sales, showing almost stagnant growth from the same period last year.
Ad segment revenue decreased 18% year-over-year, the games segment was down 1%, and its fintech and business services improved 10%. First quarter profit reached $3.7 billion, down 52% year-over-year.
CEO Huateng Ma said in the statement that the company has reduced spending and "rationalized certain non-core businesses," and that Tencent "continued investing in strategic growth areas including enterprise software, Video Accounts and international games."
The company is also hampered by China's recently-ended freeze on approving new game licenses. Although regulators have begun giving out licenses again, no Tencent titles have made the cut.
Some of Tencent's several business groups have already axed 10% of their staff between March and June. The Platform & Content Group (PCG) may be over 10%.
Now 36Kr reported that the business groups will continue to lay off staff, and segments under the PCG could lose as much as half of their headcount. Some units may also be completely wiped.
Alongside Tencent, major Chinese companies are seeing massive rounds of layoffs as growth remains sluggish. Alibaba (NYSE: BABA; HKEX: 9988), social media platform Xiaohongshu, and JD.com Inc. (Nasdaq: JD; HKEX: 9618) have all reported similar layoffs as Tencent's in the first half of 2022. And this trend isn't exclusive to China.
The news of Tencent's layoffs came in tandem with the announcement that Netflix () would be cutting 300 positions, about 3% of its workforce. The streaming giant reported losing subscribers for the first time in 10 years in April, and company shares have plummeted over 70% this year.
Layoffs and low profits are plaguing the companies that have dominated the tech sphere for years. Between poor economic conditions and previous overextension of resources, tech companies are facing what could be the end of their golden age of profits and growth.
Tencent shares were trading up by around 1.3% in Hong Kong and over the counter Thursday.