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Technology

Uber cuts an additional 3,000 jobs and says more may follow

Uber offices
Uber may have to make even more job cuts, a company spokesman said.
(Karl Mondon / TNS)

Uber Technologies Inc. is slashing an additional 3,000 jobs and closing dozens of offices, the company said Monday, part of a series of dramatic moves intended to shore up a business that has been gutted by the coronavirus.

The latest round of job cuts come on top of the dismissal of 3,700 employees in customer support and human resources earlier this month. The staff reductions now represent about 25% of the total workforce.

In an email to staff Monday, Chief Executive Dara Khosrowshahi stopped short of saying that the jobs would be the last of the COVID-19 casualties.

The cuts at the San Francisco-based ride-hailing giant are part of a broader dialing back of ambition for a company that once promised to usher in a self-driving revolution and popularize flying cars. In the Monday email, Khosrowshahi said Uber would stop work on several of its side projects as the company reorients itself around its two core businesses: ride hailing and food delivery.

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More speculative units — including the ideas generator Uber Incubator, the artificial intelligence division AI Labs and a job-matching service called Uber Works — will be closed, Khosrowshahi wrote. Uber also will close or consolidate 45 of the several hundred offices it operates globally.

“We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding and innovating,” Khosrowshahi wrote to employees, while dismissing the idea that the moves were done to appease investors. Uber shares initially rose as much as 9% on the news Monday, but by the market‘s close were up only about 3.5%.

As a result of the changes, Uber will incur $175 million to $220 million in charges, mostly in the second quarter, according to a securities filing Monday.

Since the pandemic began, Uber has been moving to focus its efforts on a few key regions and businesses. The company shuttered a half-dozen food delivery operations, offloaded its cash-burning electric bike group to scooter start-up Lime and permanently closed 40% of its driver stations. One of the offices that will close is in Singapore, where Uber had already sold its Southeast Asia business to local rival Grab in 2018.

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Social distancing and shelter-in-place orders stemming from the pandemic have hobbled so-called sharing economy businesses as customers find themselves with few places to travel and reluctant to use the cars or homes of strangers. Lyft Inc., the main alternative to Uber in North America, is cutting about 17% of its staff, furloughing more and reducing salaries. Airbnb Inc. is cutting a quarter of its workforce.

Uber, which for years burned cash in exchange for user growth, faced challenges even before the pandemic. Although Uber’s main ride-hailing division is now profitable, the food delivery operations still lose money and other bets such as autonomous vehicles and air taxis have yet to be proven.

The company reported its first-ever decline in rides during the first quarter, and pushed back a goal of being profitable to next year, instead of at the end of 2020. In order to achieve that metric, Khosrowshahi said he planned $1 billion in cost-cutting measures, including head count, real estate and other reductions.

But even as it makes efforts to cut costs, Uber is in talks to acquire Grubhub Inc., a purchase that would make Uber the dominant player in the U.S. food delivery market. Khosrowshahi told employees Monday that although Uber still loses money on food delivery, it was “the next enormous growth opportunity,” an opinion reinforced by surging demand for takeout during the lockdown.

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A tie-up with Grubhub could lead to significant savings in a highly competitive industry but has raised antitrust concerns among leading lawmakers.


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