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The stock fell in response to news that the cloud-based data storage company is cutting its workforce by 11% and that Chief Operating Officer Olivia Nottebohm is stepping down.
« Last spring, I made a commitment to all of you to keep job security by 2020 and it was important to me that we keep that promise, « said Drew Houston, CEO of Dropbox (DBX), in a letter to employees. « Looking ahead to 2021 and beyond, it is clear that we need to make changes to create a healthy and thriving business for the future. »
The downsizing partially reflects the company’s decision to take a “virtual first” approach to staffing, thereby reducing the need for staff such as cafeteria staff. Dropbox eliminates 315 positions.
Houston said the downsizing will make the company more agile and allow it to focus on improving the user experience, investing in products that are « built for distributed work, » and that Operations to improve.
William Blair analyst Jason Ader, who has an outperform rating on Dropbox stock, said in a research report that the announcements “underscore that Dropbox’s business is in a transition state is growing by moving Dropbox from about 20% to about 10% from a producer as the company prioritizes margins and free cash flow. “
But Ader remains optimistic about the stock. « We continue to believe that the importance and stickiness of Dropbox technology is underestimated, especially as a hub in the workplace that stores business-critical content and makes it easier for the team to collaborate on that content – at a time when those features are more critical are more than ever, « he wrote.
Dropbox shares are falling in response to news that the cloud-based data storage company is cutting 11% of its workforce and that Chief Operating Officer Olivia Nottebohm is stepping down.
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