Didn’t they just have record-breaking profits?
By ELIZABETH LOPATTO / @mslopatto
There’s an eerie similarity to the statements tech companies have made about their recent layoffs. Mainly, if the press releases are to be believed, the C-suite of every Big Tech company on Earth — well, with the notable exception of Apple, which has not announced layoffs — figured no one would ever go outside or spend money offline again after the pandemic and their various online businesses would stay just as big as they were during the heights of covid.
I do love a heavily lawyered statement that was clearly written by the public relations department! In fact, these are all so similar that they might as well have come from the same PR person. It kind of seems like tech firms are laying off workers because… other tech firms are laying off workers.
Let’s be real, none of these companies are teetering on the edge of bankruptcy — in fact, they were recently minting money. That money did not evaporate. And as any person who’s been through job cuts can tell you, it’s generally not about performance, either! Essentially, someone went through a budget and zeroed out a bunch of line items that happened to be, you know, people’s jobs. The question, then, is why a company might make job cuts that don’t seem especially necessary.
The answer is that investors have changed how they’re evaluating companies, says Michael Cusumano, the deputy dean at the MIT Sloan School of Management. Generally, when companies are growing really fast — like when revenue is shooting up 20 percent or 30 percent a year — nobody cares about profits, Cusumano says. But we’re not in a growth period right now, so investors are being more cautious.
[Read on]
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