Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) self-driving unit, Waymo, laid off more than 130 employees yesterday according to reports. These Waymo layoffs represent 8% of staff, bringing the total number of Waymo workforce cuts this year to 209 jobs eliminated, per Forbes.
Most of the employees dismissed from Waymo are engineers. According to the company, these latest job cuts will enable the unit to utilize a “fiscally disciplined approach.”
Here’s what else investors should know about the Waymo layoffs.
What to Know About the Waymo Layoffs
Despite the recent layoffs, the self-driving unit is expected to continue enhancing its technology and implement its software in an increasing number of U.S. cities. Most recently, Waymo — which has already deployed driverless operations in Phoenix and San Francisco — began testing its autonomous vehicles in Los Angeles.
Members of the public can use Waymo’s ride services in the Greater Phoenix area and in parts of San Francisco in exchange for payment. Last month, the company started offering paid rides in additional areas of San Francisco. Late last year, it also started providing services to Phoenix’s main airport and downtown area.
Back in December 2021, I took several Waymo rides during a visit to the Phoenix area. The service was flawless, save for a few seconds when one of the vehicles hesitated before making a turn at an intersection.
An Activist Investor Called on Alphabet to Cut Waymo’s Losses
Back in November 2022, activist investor TCI Fund Management called on Alphabet CEO Sundar Pichai to lower the size of the company’s workforce. Quoting well-known tech investor Brad Gerstner, TCI wrote that “it is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people.”
In the letter, TCI noted that it owned more than $6 billion worth of Alphabet stock. The activist investor added the following:
“Over the last five years, Other Bets has generated only $3 billion of cumulative revenues but incurred a massive $20 billion of cumulative operating losses […] Alphabet should reduce annual operating losses in Other Bets (which we expect to amount to $6 billion this year) by at least 50% […] The biggest component of Other Bets is Waymo.”
TCI contended that “enthusiasm for self-driving cars has collapsed and competitors have exited the market.” According to the activist investor, “Waymo has not justified its excessive investment and its losses should be reduced dramatically.”
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.