• SHARE

Uber Technologies Inc. was once a poster child for Silicon Valley’s unchecked ambition. As recently as this year, the company was promising to usher in a self-driving revolution and popularize flying cars.

But Uber now says it is slashing 3,000 jobs, sidelining extraneous projects and shuttering dozens of offices after the spread of the coronavirus slammed its ride-hailing business.

The latest round of job cuts at the company brings the total since the start of the pandemic to 6,700, including thousands of layoffs earlier this month in customer support and human resources. The staff reductions now represent about a quarter of Uber’s workforce.

In an email to staff Monday, Chief Executive Officer Dara Khosrowshahi stopped short of saying the jobs will be the last of the COVID-19 casualties.

The dramatic changes represent a humbling of the ride-hailing giant, which has offices all over the world and has advertised its ambitions to become a one-stop shop for global travel. In the Monday email, Khosrowshahi said Uber will reorient the company around its two core businesses: ride hailing and food delivery.

More speculative units — including the ideas generator Uber Incubator, the artificial intelligence division AI Labs and a job-matching service called Uber Works — will be shuttered, Khosrowshahi wrote. Uber will also close or consolidate 45 of the several hundred offices it operates globally.

“We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding and innovating,” Khosrowshahi wrote to employees, while dismissing the idea that the moves were done to appease investors.

Uber shares initially rose as much as 9 percent on the news on Monday but by the end of trading in New York were up less than 4 percent. The cuts and other changes the company announced Monday will cost between $175 million to $220 million, mostly in the second quarter, according to a securities filing.

Mandeep Singh, a technology analyst at Bloomberg Intelligence, said the pandemic has accelerated Uber’s transformation from a growth company to one focused on costs. As a result, he said, even this week’s firings may not be enough.

“I wouldn’t be surprised if there’s a third round of layoffs,” Singh said. “They have a pretty bloated cost structure.”

Since the pandemic began, Uber has been moving to focus its efforts on a few key regions in addition to paring back money-losing lines of business.

The company shuttered seven food delivery operations, offloaded its cash-burning electric bike group to scooter startup Lime and permanently closed 40 percent of its driver stations. One of the offices that will close is in Singapore, which had previously served as a regional hub but was where Uber had already sold its Southeast Asia business to local rival Grab in 2018.

Even in locations where business is strong, some smaller offices will be folded into larger ones. Cities including San Francisco and New York, which have multiple Uber offices, will consolidate those spaces when workers return after lockdown orders are lifted.

Uber is far from the only company struggling during the pandemic. Social distancing and shelter-in-place orders have hobbled so-called sharing economy businesses, as customers find themselves with few places to travel and a new reticence to use the cars or homes of strangers.

Lyft Inc., the main alternative to Uber in North America, is cutting about 17 percent of staff, furloughing more and reducing salaries. Airbnb Inc. is cutting a quarter of its workforce.

Uber, which for years burned cash in exchange for user growth, was facing challenges even before the virus hit. Its food delivery operations, a bright spot in terms of adoption, loses money, and other bets like autonomous vehicles and air taxis have yet to be proven.

Earlier this month, the company reported its first-ever decline in gross ride bookings during the first quarter and pushed back a goal of being profitable to next year instead of at the end of 2020. In order to achieve that metric, Khosrowshahi said he is planning $1 billion in cost-cutting measures, including head count, real estate and other reductions.

Bloomberg’s Singh estimates that if Uber decides to divest itself of self-driving group ATG and freight, Uber could slice an additional $500 million and $100 million, respectively, in annual expenses. Khosrowshahi didn’t mention cuts at either of those two divisions in the Monday email, indicating an evaluation may still be underway.

But even as the company makes efforts to cut costs, Uber is in talks to acquire Grubhub Inc., a purchase that would make it the dominant player in the U.S. food delivery market.

Khosrowshahi told employees Monday that although Uber loses money on food delivery, it is “the next enormous growth opportunity” — an opinion reinforced by surging demand for takeout during the lockdowns.

A tie-up with Grubhub could lead to significant savings in a highly competitive industry but has raised antitrust concerns among lawmakers, including Sen. Amy Klobuchar.

On Monday, Uber also borrowed $100 million, adding to a $900 million bond sale it priced last week.

PHOTO GALLERY (CLICK TO ENLARGE)