Uber Is On Reset Mode Yet Again, Expels Hundreds Of Employees

During that time, Dara Khosrowshahi, CEO had said the step was an attempt necessary to restructure the operations and make it more worthwhile.

The ride-providing company Uber has once again fired almost hundreds of employees. Now, the cut has been made in product and engineering departments in order to reset. The company made a formal announcement where they have mentioned that 435 employees have been fired, 265 from the engineering team and the rest 170 from product department. Uber also informed that layoffs account to 8% of engineering and product teams. However, the layoffs have remained unaffected to both engineering and product staff who work on the other venture by Uber: UberEats, the food delivery service.

This news has made to the headlines and the company is under tremendous pressure to cope up with their finances after a lackluster start at Wall Street during May. The company has experienced sharp losses in the past and even the revenue growth is very slow. Although stocks of Uber has increased by 4% after the news, it is still 25% less than what it used to be.

This employee cut is the second in a row since the company went public just 6 weeks ago. Few days prior to the last earning report which was published in July, Uber eliminated approximately one-third of the staff from global marketing team. 400 lost their jobs. During that time, Dara Khosrowshahi, CEO had said the step was an attempt necessary to restructure the operations and make it more worthwhile.

Dara said that people in general tend to believe that they have grown quite fast, but now is the time for them to slow down. He also said that initially, Uber had hired people without selection and judgment just to meet the demands of a fast growing startup. But, now, organizing the teams in receive maximum efficiency is mandatory for Uber to grow in the business. Uber has denied commenting on whether or not any other departments are being considered for layoffs.

Related Posts:

  • No Related Posts

Uber Sells $1.2 Billion in Junk Bonds to Help Fund its Acquisition of Dubai-based Careem

Uber said it would buy Careem in March, marking the largest deal of Chief Executive Officer Dara Khosrowshahi’s tenure. The deal is expected to …
Uber Sells $1.2 Billion in Junk Bonds to Help Fund its Acquisition of Dubai-based Careem

resource from: Bloomberg

Ride-hailing giant Uber Technologies is selling junk bonds to help finance its acquisition of Careem in its first debt offering as a public company.

Uber sold a larger-than-expected $1.2 billion of bonds rated in the lowest tier of junk. Strong demand for the notes, which mature in 2027, allowed Uber to raise more than the $750 million it originally targeted. The ride-hailing company priced the bond at a yield of 7.5% after receiving orders worth around $2 billion, according to Bloomberg.

Junk bonds are typically issued by a company seeking to raise capital quickly. The proceeds of the bonds will be used to help fund its $3.1 billion purchase of Dubai-based ride-hailing company Careem, Uber’s biggest competitor in the Middle East region.

It’s only the second bond sale in Uber’s 10-year history, and the first since it went public earlier this year. The firm issued $2 billion of debt in its debut offering last October, increasing the size of the two-part deal as orders for the private placement swelled.

Uber announced in March that is reached an agreement to acquire Careem for $3.1 billion, consisting of $1.7 billion in convertible notes and $1.4 billion in cash. The transaction is expected to close in Q1 2020. Careem, which operates in over 100 cities in the Middle East, Africa and South Asia, was valued at over $2 billion as of 2018.

Uber is acquiring all of Careem’s mobility, delivery, and payments businesses across the greater Middle East region, ranging from Morocco to Pakistan, with major markets including Egypt, Jordan, Pakistan, Saudi Arabia, and the United Arab Emirates.

Upon closing, Careem will become a wholly-owned subsidiary of Uber, preserving its brand.

Uber marketed its latest offering broadly to investors as the newly public company struggles to make money. Uber said it would buy Careem in March, marking the largest deal of Chief Executive Officer Dara Khosrowshahi’s tenure. The deal is expected to close in the first quarter of 2020.

Bloomberg reports that Morgan Stanley, Bank of America, Goldman Sachs Group, Citigroup, Barclays, HSBC Holdings, SunTrust Banks and Royal Bank of Canada are managing the bond sale.

Since becoming a public company in May, Uber’s stock price is down about 25% since its IPO of $45 per share and the company has been burning through cash at a high rate. The stock closed at $33.25 on Friday.

Last month, Uber reported a $5.2 billion loss for the second quarter of this year.

resource from: Bloomberg

Uber’s regulatory nightmare continues — with no end in sight

Uber is likely particularly interested in seeing the proposal fail: Earlier this year, CEO Dara Khosrowshahi said it was “toss up” as to whether Uber Eats …

In 2012, Uber’s then-CEO Travis Kalanick lamented, “Every city we go to, eventually the regulators will make something up to keep us from rolling out or continuing our business.” This sentiment appears to pervade Uber to this day, underlying the company’s adversarial relationship with regulators around the world.


Shutterstock

In 2014, for instance, Uber began the “ Greyball” program, whereby it programmed its app to identify and evade law enforcement in cities — including Boston, Paris, and Las Vegas — where regulation curtailed or banned its service. These sorts of aggressive tactics have, in turn, garnered pushback from governments worldwide.

In 2017, Transport for London placed Uber on a 15-month probation, warning the company to address public safety concerns or risk further restrictions. And just this year, Uber suspended service in Barcelona after the regional government mandated a 15-minute delay for ride-hailing pickups to protect the interest of taxi drivers.

Tensions between Uber and regulators have no end in sight, and, in fact, appear to be escalating. Just this week, Uber responded in an adversarial fashion when faced with two disruptive regulations:

  • New York restaurants push back against Uber Eats. The New York State Liquor Authority issued a proposal which would see food delivery fees capped at 10% of order revenue. The cap would affect restaurants holding a liquor license, constituting approximately half of the market in New York City. This could significantly reduce Uber Eats’ margins, as delivery companies typically take a 25% cut of orders, according tothe Wall Street Journal. An Uber lobbyist and former aide of New York City Mayor Bill de Blasio petitioned at least three community boards to reject the bill, without disclosing her relationship to Uber. Uber is likely particularly interested in seeing the proposal fail: Earlier this year, CEO Dara Khosrowshahi said it was “toss up” as to whether Uber Eats ultimately becomes larger and more profitable than the company’s core ride-hailing segment. As of Q2 2019, monthly active platform users on Uber Eats had grown 30% year-over-year.
  • California wants Uber to give its drivers benefits. Lawmakers in California passed a landmark bill this week which would reclassify millions of contract workers as full-time employees, beginning in 2020. Uber categorizes its drivers as contract workers, allowing the company to skirt laws that would impose a minimum wage and require employee benefits such as health insurance. Uber was one of the main targets of the legislation, according to the New York Times. However, in a response issued by Uber’s Chief Legal Officer Tony West, the company denies that the bill will impact its treatment of drivers. The drivers, West argues, perform work that “is outside the usual course of business” because Uber “is serving as a technology platform for several different types of digital marketplaces.”

Uber’s driver costs will likely increase in an effort to appease regulators, exacerbating the difficulty of achieving profitability. Uber maintains that the California legislation does not automatically reclassify its drivers, but the company is likely to receive considerable pushback on this front. Already, Uber has advocated for legislation giving drivers an earnings floor and “access to benefits.”

While this would increase Uber’s labor costs, it would not be as significant as the increase associated with reclassifying drivers as full-time employees. Either way, Uber’s increased driver costs will follow its cut of 435 technical employees (8% of the workforce in engineering and product) in September. The convergence of these trends creates a difficult landscape for Uber to maneuver, particularly as it attempts to achieve profitability after accruing a $5.2 billion loss in Q2 2019.

Interested in getting the full story? Here are three ways to get access:

  1. Sign up for the Transportation & Logistics Briefing to get it delivered to your inbox 4x a week. >> Get Started
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Transportation & Logistics Briefing, plus more than 250 other expertly researched reports. As an added bonus, you’ll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
  3. Current subscribers can read the full briefing here.

Related Posts:

  • No Related Posts

Uber layoffs: ‘Some’ impact in India after company let go 435 employees globally

Uber CEO Dara Khosrowshahi will visit both engineering centres next month to meet employees and underscore our strategic investment in building …
A source said the firm has about 600 staff across product and engineering teams in India. The spokesperson, however, declined to comment as to how many jobs have been lost in the country.A source said the firm has about 600 staff across product and engineering teams in India. The spokesperson, however, declined to comment as to how many jobs have been lost in the country.A source said the firm has about 600 staff across product and engineering teams in India. The spokesperson, however, declined to comment as to how many jobs have been lost in the country.

Uber, which let go of about 435 employees across product and engineering teams globally, on Wednesday said “some jobs in India have been impacted”.

“India is a global engineering hub for Uber and we remain committed to significantly scaling up our teams in Hyderabad and Bengaluru to around 1,000 people. Uber CEO Dara Khosrowshahi will visit both engineering centres next month to meet employees and underscore our strategic investment in building the finest technology in India for the world,” an Uber India spokesperson said.

A source said the firm has about 600 staff across product and engineering teams in India. The spokesperson, however, declined to comment as to how many jobs have been lost in the country.

Of the 435 employees, over 85% are based in the US, 10% in Asia-Pacific and 5% in Europe, West Asia and Africa, international media reported citing sources.

“…We’re making some changes to get us back on track, which include reducing the size of some teams to ensure we are staffed appropriately against our top priorities. These were incredibly difficult calls as it means some of our employees no longer have a role, specifically around 170 people in our product group and 265 in engineering, which is roughly 8% of those two organisations,” Uber said in a statement.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Related Posts:

  • No Related Posts

Uber sheds employees….again

Although CEO Dara Khosrowshahi reportedly talked about “overlapping work” and “mediocre results” in explaining the current layoff cycle, many …
Uber

A new round of layoffs at ride-sharing service Uber is creating more concern about the longevity of the groundbreaking company after the front-runner revolutionized transportation over the last few years by bringing key competition to the old ‘yellow cab’ service model.

In July, Uber announced layoffs of around 400 people – now it’s cutting another 435 employees, or 8% of two critical departments, according to breaking reports.

Where the layoffs are occurring is also a troubling sign – the move will affect the company’s engineering and product teams.



“We need to shift how we design our organizations: lean, exceptionally high-performing teams, with clear mandates and the ability to execute faster than our competitors,” an Uber spokesman said in a statement according to reporting yesterday at CNet. “Today, we’re making some changes to get us back on track, which include reducing the size of some teams to ensure we are staffed appropriately against our top priorities.”

Although CEO Dara Khosrowshahi reportedly talked about “overlapping work” and “mediocre results” in explaining the current layoff cycle, many outsiders see the layoffs as simply a key indicator of weakness for the company.

Uber stock has also fared somewhat poorly compared to its breaking IPO price of over 40 dollars per share. As of last month, the equity was dipping under that starting point and fell precipitously down to a current value of around $33 per share.

Then there are also rumblings of federal efforts to reclassify Uber drivers as employees rather than independent contractors, where current IRS criteria has many companies questioning whether they can get away with issuing 1099s for workers.

Uber and other ride sharing companies will face an uphill battle to meet (requirements for legally supporting a contractor classification),” writes Sachi Barreiro at Nolo. “In particular, drivers will have a strong argument that their services are central to Uber’s business—providing transportation to consumers—and that they aren’t engaged in an independent occupation.”

If recent stock losses at Uber are tied to layoffs and other troubling indicators, expect them to fall further as the market ingests the new reports of these large belt-tightening moves, and the market assesses the staying power of Uber against its competitors.

Related Posts:

  • No Related Posts