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> Stock rises after company announces broad restructuring plan focused on driving ‘profitable growth’ Could someone explain how layoffs lead to stock rises in

• jdhn 4y ago
  Lowering costs --> higher profits.
  • missedthecue 4y ago
    Why not fire 100% of employees in that case?
    • raziel2701 4y ago
      You guys always take it to the extreme. It's an optimization problem. The market thinks 10% is a pretty good number that will translate into higher profits, likely because they believe the people laid off are non-essential to the business. I don't know what percentage is too much, all I know is that the stock market is not the economy, and things that tend to be good news for workers and main street tend to be bad for the stock market. For instance, in the past ~6 months the labor market continues to be strong reporting many job openings, which is good for workers as this allows them to seek higher-paying wages. But the market went down after each report because it meant that JPow would further increase interest rates, which are bad for the majority of businesses since they don't have positive free cash flows and rely on zero interest rates to continue operating with debt. We've been living in the upside down for a while now. And gravity is coming back :)
    • HDThoreaun 4y ago
      Salesforce employee count doubled since the pandemic started. Doesn't seem unreasonable to believe some of those employees can be cut without affecting revenue too much.
    • paxys 4y ago
      Because then the company can't operate? Is it really that hard to understand?
      • missedthecue 4y ago
        Well I understand it, but the analogy I was trying to illustrate is that in theory, 10% of a workforce produces something, and while it costs something to employ them, it also costs something to lose their employment. In theory. Otherwise, why were they hired to begin with?
        • paxys 4y ago
          There are inefficiencies in every organization. It's not like 100% of the workforce is 100% productive and critical to operations. You can cut a lot more than 10% before it starts to affect the business in a meaningful way.
          • missedthecue 4y ago
            Makes one wonder why they were ever employed if they don't impact the business in a meaningful way
• heywhatupboys 4y ago
  same explanation on how a PR that removes more lines of code than it writes can be good for the overall system
• danielfoster 4y ago
  Stockholders likely think Salesforce had too much fluff and can get the same results with fewer staff. For example I believe they were working on some sort of solution for managing NFTs.
  • xenadu02 4y ago
    I've never seen the market react negatively to layoffs themselves. As far as I can tell most traders and fund managers believe all employees are interchangeable widgets.
  • bajirao 4y ago
    Ex employee here. Salesforce was the most laid back, rest and vest, coasting culture in my experience. Generous employee benefits, absolutely no work pressure. They took pride in their work life balance. Many employees (in product and marketing) were just focusing on (flavor of the day) activism - BLM, AAPI, GLBT, Homelessness in SFO. I always wondered if these employees had any 'actual job' in the company or their managers even cared what their team delivers. As an employee it was great. As an ex employee whose vested RSUs are more than 50% down from it's peak, it sucked. While I feel bad for those who are laid off, this downsizing was written on the wall.
    • neon_electro 4y ago
      Can you describe what changes you think should be made to that culture? How do you balance what sounds like great work/life balance and awareness of Salesforce's impact outside of strictly its business activities, which is something I'd expect from a "good" employer, with the potential downsides of (paraphrasing your words) "employees focusing on [not an "actual job"]"? Do you think those colleagues didn't contribute anything as far as their job title?
      • bajirao 4y ago
        Yeah IMO those colleagues didn't pull their weight to justify their titles (Sr. Director whatever). While Salesforce's titles are very inflated (Director at Salesforce maps to L6 in other companies), these were still senior talented folks drawing good salaries. I never saw if actually delivered something. Salesforce ecosystem (Salesforce partners, consultants, customers etc) is great. but I am not very convinced by Salesforce's impact outside of its business activities. Their 1-1-1 pledge or stakeholder capitalism model isn't genuine. These are PR stunts where Salesforce could post some rainbow flag pictures or Matthew Mc's videos about global warming on social media. During my tenure at Salesforce it was possible to work for single digit hours per week and still be a top performer. The rest of the 'work' time was occupied by team socials, VTO activities and other shenanigans. Having said that the number one thing Salesforce should culturally do is put more focus on what it's customers need. It is a sales and marketing organization, which it is very very very good at. But you can't just keep up by upselling stuff to customers. If you don't keep your customers happy, all this WLB doesn't really help.
• neilv 4y ago
  It suggests greater profitability due to lower ongoing headcount costs? Or decisive changes towards increased profitability? Also, sometimes I suspect that the market moves on news -- not because the news actually affects some prospects so much -- but because some other people can make money on the movement, and the news is just an excuse/tool.
• brookst 4y ago
  Company makes $2B/year profit with 75k employees. Company lays off 7500 people, saving ~$1.5B / year in payroll / benefits / office space / etc. Company takes one-time ~$1.5B charge for severance and other layoff costs. Investors believe company will see ~$1B more net profit in subsequent years, assuming 10% staff reduction can be absorbed with little profit impact. Share price reflects NPV of future profits, so stock rises.
  • wil421 4y ago
    At my first job they would lay off employees, then systems would fail and the person who could fix it was laid off. Eventually a big customer would complain and the company would incur monetary SLA penalties for the systems being down. They would have to hire the laid off guy back as a contractor and pay some company $100+ an hour for a $30 (at the time) an hour salary employee. Eventually someone with a brain would realize they are hemorrhaging money and hire the guy back full time and even make it look like he was never laid off for 2 years contracting so he would keep his seniority benefits. My coworkers with 20+ years said this happened over and over again. I left and everyone was laid off in 6 months…
    • bombcar 4y ago
      It SOMETIMES works. You lay off 50 people and only have to contract back one or two and it’s a net savings. But often it’s just boardroom machinations for various reasons that can change as quickly as the weather. I know people who made a good living being the layoff/callback dude for years. Basically considered it a 3-6 mo vacation every couple years. “Oh you want me to come in to consult? I’m in the Bahamas- it’s gonna costya”
      • prottog 4y ago
        > I know people who made a good living being the layoff/callback dude for years. That's hilariously inefficient. I would be mad if I were a shareholder in this business, but good for those employees in question who were savvy.