4 ms·

What does stock value have to do with company profits or income? Why would a profitable company fire employees because it's stock value is low? Do you actually

What does stock value have to do with company profits or income? Why would a profitable company fire employees because it's stock value is low? Do you actually understand the concept of stock and what is happening when people trade stock on the market?

iamdave 18y ago
What Stock values tell you how much your company is worth. Company worth tells you how likely you are to get people to invest in you. Stock value is very relevant, though I personally hate the way we go about depending on it as a performance metric, which I think is how you're looking at it. Stocks are reflective of performance, rarely (if not) the other way around. Doesn't mean it never happens that way, although.
- maxklein 18y ago
  Stock values represent outside perception of a company, and if the stock of a company declines, it has no effect on the workforce. The stock price has nothing to do with getting people to invest in you. If your stocks are sold, they are gone, and have nothing to do with the company anymore. If you are publicly traded, people don't invest in you apart from through your stick. Stocks are just things on the side. They sync with what is happening inside, but a stock price dropping will NOT cause a company to fire workers. So the argument I addressed is silly, because it is then as if the company will start firing people as soon as stock goes low.
SwellJoe 18y ago
Why would a profitable company fire employees because it's stock value is low? I took his statement to mean, "If employees are looking at their options tank, while seeing their friends at MS and GOOG options rising, the best are more likely to abandon the sinking ship." In the valley stock is often a big part of a compensation package, and so a company whose stock is doing very poorly cannot hire or keep the best talent. It has nothing to do with profits or income and everything to do with whether people want to work there. Of course, in a depression, people keep their jobs far more often, and people tend to choose steady work over risky but higher reward positions. So, as long as Yahoo can prove they aren't going to have to let anybody go, and that a hostile takeover (which seems more likely by the day, by a Chinese or Russian or European holding company...since the dollar is so weak, and Yahoo's shares are so depressed) isn't going to result in a mass downsizing, they'll probably hang on to their great stable of nerds, and they'll probably keep increasing value in subtle, but real ways, on a day by day basis. I think it's a company that lost focus, and failed to ever quite recover from the drubbing it took during the first bust, and has had some vision problems...but it's also a company with a great innovation culture. Yahoo builds and launches new stuff all the time, tons of it Open Source, lately, though their APIs are important, too. All that Open Source leads to them having a giant pool of possible hires who already know their infrastructure (while GOOG has to train), and a huge bunch of websites that rely on Yahoo for existence (anything that uses their APIs needs Yahoo). Those are good things for Yahoo's long term prospects.
joshu 18y ago
That might be true if people's compensation wasn't heavily option-oriented.

iamdave 18y ago

What Stock values tell you how much your company is worth. Company worth tells you how likely you are to get people to invest in you. Stock value is very relevant, though I personally hate the way we go about depending on it as a performance metric, which I think is how you're looking at it. Stocks are reflective of performance, rarely (if not) the other way around. Doesn't mean it never happens that way, although.

maxklein 18y ago
Stock values represent outside perception of a company, and if the stock of a company declines, it has no effect on the workforce. The stock price has nothing to do with getting people to invest in you. If your stocks are sold, they are gone, and have nothing to do with the company anymore. If you are publicly traded, people don't invest in you apart from through your stick. Stocks are just things on the side. They sync with what is happening inside, but a stock price dropping will NOT cause a company to fire workers. So the argument I addressed is silly, because it is then as if the company will start firing people as soon as stock goes low.

SwellJoe 18y ago

Why would a profitable company fire employees because it's stock value is low? I took his statement to mean, "If employees are looking at their options tank, while seeing their friends at MS and GOOG options rising, the best are more likely to abandon the sinking ship." In the valley stock is often a big part of a compensation package, and so a company whose stock is doing very poorly cannot hire or keep the best talent. It has nothing to do with profits or income and everything to do with whether people want to work there. Of course, in a depression, people keep their jobs far more often, and people tend to choose steady work over risky but higher reward positions. So, as long as Yahoo can prove they aren't going to have to let anybody go, and that a hostile takeover (which seems more likely by the day, by a Chinese or Russian or European holding company...since the dollar is so weak, and Yahoo's shares are so depressed) isn't going to result in a mass downsizing, they'll probably hang on to their great stable of nerds, and they'll probably keep increasing value in subtle, but real ways, on a day by day basis. I think it's a company that lost focus, and failed to ever quite recover from the drubbing it took during the first bust, and has had some vision problems...but it's also a company with a great innovation culture. Yahoo builds and launches new stuff all the time, tons of it Open Source, lately, though their APIs are important, too. All that Open Source leads to them having a giant pool of possible hires who already know their infrastructure (while GOOG has to train), and a huge bunch of websites that rely on Yahoo for existence (anything that uses their APIs needs Yahoo). Those are good things for Yahoo's long term prospects.

joshu 18y ago

That might be true if people's compensation wasn't heavily option-oriented.