5 ms·
Large technology companies won’t hesitate to layoff employees to protect their stock price.
by unicornmama 4y ago
Large technology companies won’t hesitate to layoff employees to protect their stock price.
- puranjay 4y agoRemember that debt fuelled stock buybacks were a huge reason for propping up stock prices for these companies as well. Now that cheap debt is off the table, that buyback strategy will have diminishing impact as well, forcing companies to find other ways to keep stock up (such as cutting costs)
- FooBarBizBazz 4y agoI don't think VC-backed startups typically do stock buybacks? That's more of a Fortune 500 thing, AFAIK. "Startups" (of whatever size) are always concerned about the next funding round; I don't think they're going to burn runway to prop up the share price. It's companies like GE and IBM that do that, AFAIK.
- puranjay 4y agoI was referring to the OP’s comment that established publicly traded tech companies too will be under pressure to keep the stock price up and thus, aren’t immune to layoffs
- FooBarBizBazz 4y agoI see. You have a point there. That would cement, in my mind, their transition from "growth" to "utility" companies, though, and I would expect them to start paying dividends.
- colinmhayes 4y agoI mean the established big tech companies are sitting on mountains of cash. I suspect they’ll start ramping up buybacks even more aggressively due to what they see as undervalued equity.
- datavirtue 4y agoYep, blowing the cash on stock buybacks. And then layoffs when the cash gets uncomfortably low.
- ethbr0 4y agoThe cash won't get "uncomfortably low" for profitable money printing machines (e.g. Apple) for quite a long time. They just won't have quite as obscenely large of a dragon-esque hoard to sleep on.
- unicornmama 4y agoHammer and anvil.
- schoolornot 4y agoOr their bonuses.
- aleksiy123 4y agoI'm genuinely curious. Is there any other options? By this point it's too late, right? And even if they played it safe there is always some risk.
- tuckerpo 4y ago> Is there any other options? Have a compelling product that generates revenue. Unless your workforce is 100% saturated and you don't really _need_ that many engineers, lay-offs are one step above cutting free snacks on the usefulness scale when it comes to trying to stop bleeding.
- scarface74 4y agoHave a compelling product that generates profit. Any product is compelling when subsidized heavily enough by VCs.
- unicornmama 4y agoVC money is there until it isn’t. See the YC message from last week. Packaged dreams and hopes as a product ceases to be investible with high interest rate / high inflation.
- dev_tty01 4y agoI think you mean profit, not revenue. In terms of surviving difficult economics, revenue is useless if not accompanied by profit. Cutting 33% of their workforce will at least temporarily stop an awful lot of bleeding. Long term effect, probably not good. If losing 33% doesn't hurt them long term, then they have been doing some incredibly bad hiring. They might make it to the other side of this and I know nothing about their specific situation, but judging from the history of other failures, this is sadly often the first step in a death spiral.
- unicornmama 4y ago1. Startups without runway will die. 2. Public companies will cut the fat, cut “dream” projects, to protect their stock price. The further the money, the more risk to the employee. 3. Things could get a lot worse.
- scarface74 4y agoLarge profitable tech companies don’t lay off staff when they see opportunities to grow. I know that three of the Big 5 tech companies (FAANG - Netflix + Microsoft) are throwing money and headcount at cloud just from the aggressive recruitment I’m seeing - I work for one of the big 3 in the consulting department and I’m constantly getting solicitations from the other two. Apple also is still hiring where it sees growth Facebook? Who knows? I don’t follow adTech
- DeathArrow 4y agoFAANG - Netflix + Microsoft started development centers in my Eastern European country. Apart from Google which is about the decent level, the rest aren't offering very good salaries or work conditions compared to competition so they aren't attracting the top talent. Their strategy here is not the same as in US. They came here for cheap workforce, but cheap for them means REALLY cheap.
- unicornmama 4y agoThe bigger the machine the slower their wheels turn. But they will turn.
- amusedcyclist 4y agoLarge companies make tons of money and will hire talent for cheap from startups
- unicornmama 4y ago> Large companies make tons of money and will hire talent for cheap from startups How would staglfation impact digital advertisement and retail revenues?
- eoerl 4y agothey don't need to layoff, just freeze the hires and wait for the churn