NetApp: Cloud Data Management Specialist Caught In Layoff Frenzy

As the wave of layoffs continues to roll amongst tech giants, NetApp, a specialist in cloud data management, says it will lay off about 8%, or around 960, people, citing economic climate.

Recently, Microsoft also revealed plans to lay off about 10,000 people citing customer slashes in cloud services as reasons.

Under similar circumstances, NetApp, one of the big players in cloud data management, yesterday announced that it would lay off 8% of its staff, citing “macroeconomic challenges and the reduced spending environment” in the current market. 

NetApp is known for having about 12,000 people globally in its employ, translating to about 960 people soon to join the labour market. 

NetApp's plan is to commence the process within this first quarter of 2023 in order to take a charge of $85 million to $95 million related to that. 

Inquiries directed to the company regarding the product lines or job types to be affected reveal the likelihood of cuts in multiple geographies, including Asia Pacific and EMEA.

Listed on Nasdaq, the San Jose-based firm boasts a market cap of a little above $14 billion. 

Under related industry trending of tech stocks, the share price of NetApp tasted a rollercoaster pattern last year resulting in an overall drop in value during the season.

It is now glaring that businesses are drastically cutting down on IT spending at the moment. This situation has been weighing heavily on tech companies that count them as customers. 

During the COVID-19 pandemic, cloud services provisioning companies enjoyed a massive surge in demand.

This peak demand not only came from the world of more digital channels for work and leisure, but also from such businesses that invested in “digital transformation” initiatives and updating systems for exploring newer technologies. 

Within the era, NetApp, in a grandiose fashion, acquired Spot.io for a whopping $450 million as part of that push. 

By and large, statistics have shown that cloud businesses have not been spared of the more recent economic recessions that have given rise to a drop in demand for cloud products and services, too. 

“Companies are facing an increasingly challenging macroeconomic environment, which is driving more conservatism in IT spending.

"We are not immune to these challenges,” CEO George Kurian wrote in a memo to employees today.

“Against this backdrop, we must be agile, deliver on our near-term commitments, while positioning ourselves for long-term success.

"This means sharpening our strategy to focus on the areas of our business best positioned for growth, adapting our cost structure to reflect focus and market conditions and raising the bar on our performance.

"Having successfully navigated similar challenges together with you before, I am confident that sharp focus on our strategy and strong execution will enable us to capture the opportunity ahead.”

But from the records, NetApp cannot be said to be non-customary to layoff practices. 

In 2016, under Kurian as its CEO, NetApp laid off the first 12%, and then a further 6%, of its employees within months of each other. 

Some might reason this move in line with an ongoing bigger wave of reductions seemingly across all tech giants, encapsulating not only major enterprise vendors but those in consumer, as well.

Notably, the recent layoff waves have engulfed tech giants including Google (12,000), Amazon (18,000), Groupon (5,00), SAP (3,000), IBM (3,900), and more. 

According to Layoffs.fyi, with this recent inclusion of NetApp in the layoff dramas, the world is smarting from over 76,000 layoffs in the technology sector this year alone. 

This is, no doubt, a harrowing job loss rate.

All of 2022 alone had 159,684 job losses and we are only two months into the year.