TCI pushes Alphabet to take 'aggressive action' on cost-cuts

Tuesday, 15. November 2022 17:41

The Children's Investment Fund Management (UK) Llp, also known as TCI, stated on Tuesday in a letter to Alphabet that the latter's management should "take aggressive action" to deal with its "cost base," as it is "too high."

TCI, which owns $6 billion worth of Alphabet stock, stressed that the tech giant "has too many employees and the cost per employee is too high." The fund further noted that Alphabet's management should "publically disclose an EBIT margin target, substantially reduce losses in Other Bets and increase share buybacks."

TCI highlighted that even though the company's revenue growth was strong, "operating leverage has been minimal over the last five years," adding that in the third quarter of 2022 revenue grew only 6% while expenses jumped 18%. The fund concluded by saying that "cost growth above revenue growth is a sign of poor financial discipline," and called for higher cost control.

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