Meta remains on a shrinking course.

The parent company of the social networks Facebook reported a decline in sales and profits for the fourth quarter and also for the full year 2022 on Wednesday after the market closed.

"2022 was a challenging year," CEO Mark Zuckerberg said in a conference call.

The figures were better than expected, however, and Meta held out the prospect of returning to growth in the first quarter.

Roland Lindner

Business correspondent in New York.

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The stock market was satisfied.

The share price rose 18 percent in after-hours trading.

Meta looks back on a difficult time in the stock market.

In the past year, the price fell by 65 percent.

But it's up more than 20 percent since the start of the new year, and the business results now provide another boost.

Meta announced the first major job cuts in its history shortly after reporting its last quarterly results in the fall.

A total of 11,000 jobs are to be lost.

The number of employees reported when the business results are presented has not changed much, at the end of the year it was almost 86,500, three months earlier it was around 87,300.

According to the company, most of the job cuts will only be reflected in the figures for the first quarter.

Less advertising revenue

The downsizing comes after the company has expanded its workforce at a rapid pace in recent years.

Even after the cuts that have now been announced, there will still be more employees than at the end of 2021, when there were almost 72,000.

For the fourth quarter, Meta reported a 4 percent decline in revenue to $32.2 billion.

Adjusted for currency effects, growth would have been 2 percent.

Analysts had expected an average of $31.5 billion.

Net income fell 55 percent to $4.7 billion.

For the full year, sales fell 1 percent to $116.6 billion and net income fell 41 percent to $23.2 billion.

Earnings in the final quarter and for the year as a whole were impacted by high expenses for the restructuring program.

Meta put them at a total of $4.2 billion.

Of that, $975 million was for severance payments and the rest for other expenses, such as early lease terminations.

Meta is struggling with a difficult economic environment that is allowing advertisers to cut their budgets.

But the challenges go beyond that.

Facebook and Instagram are facing increasing competition from the smartphone app Tiktok, which is known for short videos.

In addition, changed data rules from the electronics group Apple make it more difficult to collect user information.

As a result, advertising, Meta's primary source of revenue, is less easily tailored to individual users.

Meta counters the threat posed by Tiktok with the comparable video function Reels on Facebook and Instagram.

Zuckerberg said the company is making progress here.

Reels are viewed more than twice as often on meta services as they were a year ago.

Zuckerberg wants to cut costs

Meta wants to continue the austerity course in the new year.

Zuckerberg said 2023 should be a "year of efficiency" for the company.

The layoffs are just the beginning, not the end, of a greater focus on efficiency.

For example, Meta also wants to be more “proactive” in projects that are not making sufficient progress.

Costs of between 89 billion and 95 billion dollars are now being targeted for this year, previously 94 billion to 100 billion dollars had been expected.

For the first quarter, the company predicts sales of between $26 billion and $28.5 billion.

Last year, sales for the comparable period were $27.9 billion.

At the upper end of the range mentioned, Meta would again show sales growth.

Despite the austerity measures, Meta plans to continue aggressively investing in the Metaverse.

This means a kind of digital living and working space in which users immerse themselves in the Internet, so to speak.

Technologies such as virtual reality and augmented reality should make this possible.

So far, however, this has brought little sales, but all the more loss.

For its Reality Labs division, which houses these businesses, Meta reported full-year 2022 sales of $2.2 billion and an operating loss of $13.7 billion.

Debra Aho Williamson of market research group Insider Intelligence said the meta numbers are slightly better than expected, but that's "not necessarily a good sign."

Overall, the business results in 2022 would have deteriorated dramatically.

And with the increasing loss of activity around the metaverse, Zuckerberg has to accept an "uncomfortable reality": "Businesses and consumers don't want virtual worlds right now."