Splunk and Rivian cut jobs amid biggest layoffs since the end of the dot-com bubble

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Data analytics firm Splunk Inc. and electric car maker Rivian Automotive Inc. announced layoffs today amid what is shaping up to be the biggest job cuts in the tech industry since the end of the dot-com bubble in the early 2000s.

Splunk is cutting 4% or about 325 employees, most in its North American offices. In a U.S. Securities and Exchange Commission filing, the company said that the decision “is another step in a broader set of proactive organizational and strategic changes that include optimizing the company’s processes, cost structure and how the company operates globally to ensure the company continues to balance growth with profitability through these uncertain times and drive success over the long term.”

Citing broader macroeconomics trends would have been more straightforward than the word salad explanation in the SEC filing and, like other tech companies, that’s the real reason behind the job cuts. The company said it would incur about $28 million in charges and future cash expenditures in connection with its plan, including cash expenditures related to severance payments, certain retention payments, employee benefits and employee transition costs.

In an email to employees, Chief Executive Officer Gary Steele said U.S. employees would receive severance pay, healthcare benefits, career and job placement services, the March equity vest and fiscal year 2023 bonus payouts, and access and guidance to pursue other roles within Splunk.

Electric car maker Rivian is laying off 6% of its workforce, citing a need to conserve cash ahead of a possible industry-wide price war. In an email sent to employees, CEO R.J. Scarine said that “we must focus our resources on ramp and our path to profitability.”

As of its last earnings report, the company said it was on track to produce 25,000 vehicles in 2022, after having only produced around 15,000 vehicles as of the end of the third quarter. It said at the time that it was looking to slow spending, delaying the launch of its smaller vehicle, the R2, to 2026 rather than 2025 as previously planned.

The macroeconomic outlook — the fear of worldwide recession, 40-year high inflation and the ongoing war in Ukraine — is driving broader market uncertainty, but the economy is not the only problem facing Rivian.

Along with burning staggering amounts of money — the company is expected to report an adjusted loss of $5.45 billion in 2022 — it’s also facing a price war in the electric car market. Tesla Inc. and Ford Motor Co. have cut the retail price of their electric vehicles, putting pressure on all players in the industry to follow suit to keep market share.

Rivian hasn’t cut prices yet, but with Tesla’s Cybertruck due to hit the market later the year and more companies entering the market, particularly Chinese startups, the company will be under pressure to cuts its prices. Cutting prices may increase market share, but it also hurts a company’s bottom line and Rivian is not a company that has extra cash to absorb reduced margins.

“They’re bleeding cash and would like to grow at a much faster rate, but they continue to struggle with their EV production ramp and have been unable to meaningfully drive down unit costs,” CFRA Research analyst Garrett Nelson told Reuters. “We think that is what’s behind this decision.”

Other companies to announce layoffs today include sports betting company DraftKings Inc. with 4% of employees, legal governance software provider Exterro Inc. with 3% of employees, virtual care company Wheel Health Inc. with 28% of employees, and digital media company Verticalscope Inc. with 22% of employees.

Layoffs yesterday included PayPal Holdings Inc., Workday Inc., HubSpot Inc. and NetApp Inc.

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