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Dropbox had pledged to maintain job security through 2020.
A dream time
Dropbox
stocks are falling in response to news that the cloud-based data storage company is cutting 11% of its employees, and that chief operating officer Olivia Nottebohm is resigning.
The stock slipped 5.5% to $ 22.31 by early afternoon.
“Last spring I made a pledge to all of you to maintain job security through 2020, and it was important to me that we honored that pledge,” Dropbox (DBX) CEO Drew Houston said in a letter to staff. work. “But looking ahead to 2021 and beyond, it is clear that we need to make changes to create a healthy and prosperous business for the future. ”
The job cuts are partly due to the company’s decision to take a “first and foremost” approach to staffing, reducing the need for people such as café staff. Dropbox deletes 315 posts.
Houston said the job cuts will make the company more flexible, allow it to focus on improving its customer experience, invest in products “built for distributed work,” and promoting operations,
William Blair analyst Jason Ader, who has an Outperform rating on Dropbox shares, said in a research note that the announcement “confirms that the Dropbox business is in a state of transition, as Dropbox moves from growing at around 20% to around 10% growth as the industry prioritises margins and free cash flow. ”
But Ader is still bullish on the stock. “Our view remains that the importance and sustainability of Dropbox technology is not fully understood, particularly as a workstation storing business critical content and enabling team collaboration on that content – at a time when those abilities are more important than ever, ”he wrote.
Write to Eric J. Savitz at [email protected]