Musk Announces 8th Round of Twitter Layoffs... "Service Disruptions Due to Staffing Shortages"

[Asia Economy Reporter Yujin Cho] Elon Musk has carried out the 8th round of layoffs just four months after acquiring Twitter. Aggressive cost-cutting measures are continuing amid financial difficulties caused by declining sales and the burden of repaying high-interest debt.

According to major foreign media such as The Information on the 26th (local time), Twitter laid off an additional 50 employees over the weekend.

Reports indicate that Twitter notified engineering staff supporting technical infrastructure, apps, and advertising technology of their termination. Foreign media reported that this layoff is the eighth reduction since Musk acquired Twitter.

Foreign media diagnosed that ruthless cost-cutting measures have continued at Twitter since Musk took control of management. Musk conducted a massive layoff of about 3,700 employees, half of the total workforce, immediately after acquiring Twitter in November last year.

This means that more than 70% of the total employees have been reduced since Musk's acquisition of Twitter in October last year. Employee reductions have continued due to resignations following the end of remote work. The Information reported that this layoff is known to be a plan to respond to declining sales caused by advertiser departures and to reduce the workforce to around 2,000 employees.

Earlier reports also indicated that Twitter is experiencing severe financial difficulties to repay high-interest debt amid declining sales. At the end of last month, The Wall Street Journal (WSJ), citing sources, reported that Twitter discussed a capital increase of up to $3 billion (about 3.7 trillion KRW) in December last year to repay part of its high-interest debt.

Last year, due to the Federal Reserve's (Fed) aggressive monetary tightening, interest rates rose, increasing Twitter's interest repayment burden. Musk acquired Twitter for $44 billion in October last year, financing the purchase through leveraged buyout, at which time Twitter took on $13 billion (about 16 trillion KRW) in debt.

In particular, some of the debt carried an annual interest rate in the 4% range plus an additional spread in the 10% range. Jeffrey Davis, founder of data provider InnerSection, recently estimated that Twitter's total annual interest cost would reach $1.25 billion.

Meanwhile, as technical defects continue amid the drastic reduction in workforce, service users are experiencing inconveniences. The U.S. economic media Fortune reported on the 8th that Twitter experienced access outages across North America. When users attempted to log in, an error message stating "You have exceeded the daily limit for sending tweets" appeared, causing ongoing disruptions.

In response, the company announced, "Twitter may not be functioning normally. We are aware of this issue and are working to resolve it quickly."

[Image source=Reuters Yonhap News]

This content was produced with the assistance of AI translation services.