I remember when steel and autos were the backbone of the US economy.
When lay-offs started there, The national mood was pretty dour. “Wow that’s out backbone what are se gonna do?”
Today’s mood is more optimistic.
Technology is now the backbone of our economy and when it gets slashed 5, 10 or 15% the attitude is “Doesn’t matter. It’s just tech.”
I guess we’ll see if the new attitude is the correct one.
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Anyway,
Zoom Video Communications Inc. is eliminating 15% of its workers. It up-sized during the pandemic and thus is laying off a larger amount.
Ebay is laying off 5%. which is more in keeping with the recent layoffs at Microsoft, Amazon, google, Salesforce etc.
In a pattern that was once unheard of in stock trading, the news of trouble at Zoom was cheered by investors who bought more of the stock sending its price UP 10% to $84.66/share.
Flooding the country with millions of the world’s uneducated impoverished unskilled non English-speaking unemployed labor to hopefully find work in low wage dead end jobs is the economy of the future.
I remember asking this question of the VP of our division in a QnA session, many years ago when I was at Oracle. We lay off scads of people in (some quarter), costing a bunch of severance money, but then we hire just as many back in (some subsequent quarter), resulting in training costs, and ending up with a loss of experienced personnel… How does that make business sense?
The answer: In the short-term, for quarterly reporting purposes, it’s a positive move for the bottom line, and the stock responds positively. When we’re hiring back, it’s robust times, so the stock is responding positively.
And just today I came across this article saying essentially the same thing.
" But one Wharton professor has a different view: It’s how U.S. accounting rules force companies to classify human capital that makes them seem like an expense to be cut, rather than an asset to be protected. "
When i read the news reports on this yesterday my first thought was wonder what Gaius will say. Hmm think that tells me I am spending way too much time here….
