PayPal to Cut Around 2,500 Jobs as Rivals Snag Market Share


 Payments firm PayPal Holdings (PYPL.O), opens new tab is planning to cut about 2,500 jobs, or 9% of its global workforce, this year, a letter from CEO Alex Chriss, seen by Reuters, showed on Tuesday.
In the letter to staff, newly appointed CEO Chriss said the decision was made to "right-size" the company through both direct cuts and the elimination of open roles throughout the year. The staff that will be affected are expected to be notified by the end of the week.
"We are doing this to right-size our business, allowing us to move with the speed needed to deliver for our customers and drive profitable growth," Chriss wrote in the letter.
The company also posted the letter to its website after market close. Paypal's shares ended the day down 0.13%.
In November, Chriss said he expects to increase revenue outside of purely transaction-related volume and pledged to turn the fintech firm leaner by reducing its cost base.
Though the announcement had helped rally the stock after third-quarter results, analysts have remained focused on PayPal's margins in recent quarters.
The company's low-margin business products have risen strongly, while growth in its branded products has slowed due to increased pressure from competitors such as Apple (AAPL.O), opens new tab.
Investors hope Chriss, who was previously a senior executive at software company Intuit (INTU.O), opens new tab, will revive PayPal's stock. It fell nearly 14% last year and missed a broader sector-wide rebound in high-growth technology shares.
Last week, the payments firm announced it was launching new artificial intelligence-driven products as well as a one-click checkout feature.
Meanwhile, rival Block (SQ.N), opens new tab, led by Twitter co-founder Jack Dorsey, also began to cut jobs this week as part of its previously disclosed plans to trim headcount and reduce costs, a source told Reuters.
Consumer confidence jumped in January to a three-year high of 114.8, a survey showed, reflecting slower inflation, a record stock market, and improved growth in the economy.

The closely followed index advanced from a revised 108.0 in December, the Conference Board said Tuesday.
Economists polled by the Wall Street Journal had forecast the index to register 115.0.
Consumer confidence tends to signal whether the economy is getting better or worse. A similar survey known as consumer sentiment also rose this month to the highest level since the summer of 2021.
Both indexes are still well below their pre-pandemic peak, however.
The Dow Jones Industrial Average DJIA and the S&P 500 SPX fell slightly in Tuesday trades.

Parcel delivery firm UPS has said it will cut 12,000 jobs after it was hit by a softer economy and a labor fight that scared away some customers.

Chief executive Carol Tomé said 2023 was a "difficult and disappointing year", and the firm was investing in artificial intelligence (AI) as it pushes to become more efficient.

She has also called staff back to the office five days a week.

The job cuts are expected to reduce costs by $1bn (£790m) this year.

UPS, whose business is seen as an indicator of wider economic health, struggled last year with a fall in sales and profits, as the number of packages handled by the firm declined.

The company said that reflected economic weakness in Europe and parts of Asia, as well as disruption in the US, where a strike threatened by staff over the summer led some customers to shift their business to rivals.

UPS said it had since won back about 60% of that business and expected modest growth to start to return this year, with average daily volumes flat or up 2% in the US and flat or up 3% internationally.

But its forecast was weaker than analysts had expected, sending shares down more than 7%.

It also warned that costs associated with its new contract with the Teamsters Union would continue to weigh on the company over the next six months.

As part of that deal, the average full-time driver won a pay and benefits package worth about $170,000  a year.

The 12,000 planned job cuts represent about 2.5% of the company's global workforce, which has already shrunk since the pandemic when a surge in online shopping prompted business to boom.

Executives said most of the positions would be cut from the ranks of its 85,000 management staff, as well as some contractors. Those positions will not return, even as the business mends, executives said.

"It's a change in the way we work," said chief financial officer Brian Newman.

The company is also exploring a potential sale of Coyote, a truck load brokerage business it purchased in 2015, which matches truckers to customers.

Ms Tomé said the firm sees many opportunities in the years ahead to boost productivity.

"Technology has changed so much in the past year when you think about the advent of generative AI and applications inside our business," she said. "I'm really excited about what the changes will mean."

On its busiest days, UPS sorts 50 million packages in the US and delivers more than 30 million parcels worldwide.

Ms Tomé said the firm was worried about how shipping would be affected by disruption from conflict in the Red Sea, as well as drought in the Panama Canal, which has made it hard for ships to travel typical routes.

U.S. job openings unexpectedly rose in December to the highest level in three months, underscoring the resilience of the labor market even in the face of higher interest rates.

The Labor Department said Tuesday there were 9 million job openings in December, an increase from the upward-revised 8.9 million openings reported the previous month. Economists surveyed by Refinitiv expected a reading of 8.7 million.

"The report boils down to no news is good news," said Robert Frick, corporate economist with Navy Federal Credit Union. "Job openings are still a healthy level above those seeking work, and the other numbers remain where a healthy labor market should find them. While openings did tick up, the increase is well within the margin of error."

The Federal Reserve closely watches these figures as it tries to gauge labor market tightness and wrestle inflation under control. 

The central bank responded to the inflation crisis by raising interest rates at the fastest pace in decades. In two years, officials approved 11 rate hikes, lifting the federal benchmark funds rate to the highest level since 2001. 

But policymakers have signaled that their rate-hike campaign has finally come to an end – and that they could soon pivot to reducing rates.

"The job market holds the keys to future Fed policy," said Jeffrey Roach, chief economist at LPL Financial. "In addition to the solid job market, uncertainty over the impact from Red Sea shipping disruption adds pressure to the Fed as they prepare markets for rate cuts. As of now, markets expect only a 39% chance of a rate cut in March."

Still, job openings remain historically high. Before the COVID-19 pandemic began in early 2020, the highest on record was 7.6 million. There are roughly 1.5 jobs per unemployed American. 

The number of Americans quitting their jobs, meanwhile, ticked lower to 3.4 million, or roughly 2.2% of the workforce, indicating that workers remain confident they can leave their jobs and find employment elsewhere.

Switching jobs has been a windfall for many workers over the past year: Job-switchers saw their real hourly wage increase 6.6% in September, compared to a 5.3% pay increase for workers who stayed in the same job, according to recent Atlanta Fed data.

The report also indicated that layoffs were largely unchanged last month, hovering around 1.6 million.

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