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Alphabet Unit Cuts Jobs at Cloud-Computing Business -- WSJ

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02/15/2020 | 02:48am EDT

By Aaron Tilley and Robert McMillan

Google said it is cutting jobs at its cloud-computing unit as part of a reorganization aimed at improving operations at the business that has become more central to parent Alphabet Inc.

Google on Friday said "a small number of employees" have been notified their roles have been eliminated. Google didn't specify how many roles are being cut and said it was working with affected employees to find them new positions in the company.

The move comes as Google has been boosting its efforts in the booming cloud-computing market to close the gap to market leaders Amazon.com Inc. and No. 2 Microsoft Corp. The battle to dominate the market to supply corporate customers with remote computing power has become among the fiercest among tech giants.

Google has had a long history operating in the cloud. For years, it rented some of its data-center capacity to other companies to process and store information. It also offered services such as email, documents and spreadsheets that store data in the cloud.

Google, in recent years, has sharpened its focus to sell such services to big corporate customers where Amazon and particularly Microsoft were securing lucrative deals. It hired Thomas Kurian, a longtime veteran of enterprise software giant Oracle Corp., to run Google Cloud.

After taking over about a year ago he set out to boost the sales and support staff to better cater to corporate clients. He bolstered management ranks by hiring executives with expertise in selling to enterprise buyers, including recruiting as president of cloud sales Robert Enslin from German software giant SAP SE and naming former Microsoft executive John Jester to run customer relations at Google Cloud.

Google this month reported fourth-quarter sales of $2.6 billion for its cloud business, up 53% from the year prior. Google generated $8.9 billion in cloud sales last year, up 52.7% from $5.8 billion in 2018 and $4.1 billion the year prior.

Google Chief Executive Sundar Pichai in July said the company was planning to triple the sales force in the next few years. The cloud business was the area Google added the most staff during the fourth quarter, Alphabet Chief Financial Officer Ruth Porat told analysts this month during an earnings call.

"Dealing with large enterprises is different than [small businesses] and consumers," said Ray Wang, founder of the Silicon Valley-based advisory firm Constellation Research Inc. The layoffs are likely part of Google's shift toward focusing on large enterprises, he said.

Write to Aaron Tilley at aaron.tilley@wsj.com and Robert McMillan at Robert.Mcmillan@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -2.98% 1127.47 Delayed Quote.-13.25%
MICROSOFT CORPORATION -1.14% 156.02 Delayed Quote.0.01%
ORACLE CORPORATION -4.06% 46.76 Delayed Quote.-8.78%
SAP AG -4.49% 98.2 Delayed Quote.-14.56%
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Financials (USD)
Sales 2020 180 B
EBIT 2020 37 381 M
Net income 2020 32 992 M
Finance 2020 129 B
Yield 2020 -
P/E ratio 2020 23,7x
P/E ratio 2021 19,7x
EV / Sales2020 3,73x
EV / Sales2021 3,04x
Capitalization 799 B
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