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> Smells like corporate bulimia.' If companies have extra cash on hand, don't we want them to invest it and hire? The alternatives are stock buybacks or just s

> Smells like corporate bulimia.' If companies have extra cash on hand, don't we want them to invest it and hire? The alternatives are stock buybacks or just sitting on the cash. Obviously every bet is not going to pan out, but hiring even on the margin is probably good.

JKCalhoun 1y ago
It's the disposable side of the practice that I disagree with. Hiring should feel like a marriage or a commitment for any business. Just my opinion though. I think we've become too complacent/accepting of corporations just laying off employees with what amounts to a shrug.
- dylan604 1y ago
  > Hiring should feel like a marriage it does though doesn't it? divorce is so common that marriage no longer feels like it has any permanence like you imply it does
  - JKCalhoun 1y ago
    I guess I meant hiring should feel like I feel about marriage. Married 27 years — still on the first wife. :-)
    - cjbgkagh 1y ago
      Good for you, terrible analogy though
  - shakna 1y ago
    Divorce may be common, but a divorce without trauma is still a rarer thing.
    - dylan604 1y ago
      getting fired is without trauma?
      - shakna 1y ago
        Are you still producing your fired certificate, 17 years down the line, for every background check, rental application, and date?
        dylan604 1y ago
        I don't know what a fired certificate is unless you're making a funny about you needing to do that with a divorce certificate? I also don't know what that is either. There's a divorce decree issued by the court, is that what you mean? Have you actually had a date ask to see legal documents about your divorce or any of the other situations? I just have no experience with any of that so it seems very strange, and feels like your just belaboring the point.
        shakna 1y ago
        Yes, divorces are processed through the courts. Yes, it comes with a certificate. Yes, it affects your legal life forever more. As that's all pretty basic... Maybe you... Don't understand divorce well enough to say whether or not it fits an analogy.
        dylan604 1y ago
        Been there done that got the decree and everything. You’re right, I don’t understand your musings as not once has anyone ever asked to see proof of my divorce. Some forms that ask about marital status might have a divorced option, but not all. It does not affect my credit. It does not affect job interviews. I really just have no way to relate to what you’re saying as it has never happened to me, nor have I ever heard anyone else complain about needing to provide this certificate. You are literally the first person. That’s such an outlier that I have to question its legitimacy.
  - Dylan16807 1y ago
    The average marriage lasts about 20 years. Companies should be able to fire people, but they shouldn't be overhiring in good years and then tossing people out in the next rough patch.
- legitster 1y ago
  I'm kinda with you that in most situations corporations would probably be better off hiring slower and then riding out downturns on cash. But big picture I disagree. We kind of need creative destruction in an economy - we need to be able to lay off people in horse buggey industries so that they can be hired to make Model T's. We're better off focusing on our social safety network and having a job market that encourages some amount of transit between careers.
  - JKCalhoun 1y ago
    I agree with the social safety net. It feels as much of a long-shot though as corporations acting more responsibly. :-/
- tjwebbnorfolk 1y ago
  > Hiring should feel like a marriage or a commitment for any business. Treating the employer/employee relationship like some life-long commitment sounds like pure hell. It is a transaction. I don't want it to be anything more than that.
- zamadatix 1y ago
  I wish it weren't such a big deal in ones life they keep their current employer (from the perspective of things like health insurance plans, retirement plans, PTO balances, basic income). If it weren't so god damned painful to change jobs or have some gaps longer than a month or two then maybe we'd have a chance to just treat jobs as jobs we move between instead of a sacred vow for life lest we be thrown into chaos when broken.
chasil 1y ago
You have omitted shareholder dividends.
- toast0 1y ago
  Stock buybacks are shareholder dividends with better tax consequences and less expectations.
  - kccqzy 1y ago
    For buy-and-hold investors stock buybacks do nothing at all whereas dividends create real income.
    - toast0 1y ago
      For buy and hold investors, stock buybacks do nothing, whereas dividends create real taxable income. Either you take the income, minus taxes, and spend it, or you reinvest it into the stock, again minus taxes. If you reinvest it into the stock, you've had to pay taxes on the dividend amount, so you've lost vs a buyback. If you want to spend money and your stocks don't issue dividends, you just have to sell some of your shares. Selling $X of shares will almost always generate less taxable income than receiving $X of dividends as some of it will be a return of capital; so again, if you take $X out of the holdings, you've lost with a dividend vs a buyback and you sold $X.
      - kccqzy 1y ago
        This is disregarding the definition of buy-and-hold investors. As the name implies, they don't sell stock. Whether or not buy-and-hold is irrational or not is a completely different topic.
    - Dylan16807 1y ago
      Dividends create real income and decrease stock value. Any time you want that to happen for you, simply press the sell button for some percentage. Why would you want the company to decide the timing and the percentage for you?
mercutio2 1y ago
No. Generally speaking, I want corporations to return capital in excess of operating needs to shareholders unless they have actual high-expected-return, ready-to-be-executed plans for what to do with their money. When corporations just invest because they have money, there is a gigantic agency problem, and executives have a tendency to burn shareholder value on vanity projects and fancier headquarters. Stock buybacks are exactly what I want wealthy companies to be doing with money they don't have a high expected ROI for.
- BobaFloutist 1y ago
  Or even dividends, once they've set up a solid rainy-day fund. Anyone remember dividends?
  - ac29 1y ago
    Roughly 80% of SP500 companies pay dividends
    - throwaway2037 1y ago
      There is a good reason for it: Many pension funds and large money managers have a hard rule that they will not invest at full into a company without a dividend. I'm not saying that you have to agree with that strategy, but it is incredibly common for US pension managers. Also, some stocks pay one cent as their div, just to qualify.
- piva00 1y ago
  No stock buybacks, pay dividends, that's why the instrument exists. Stock buybacks are an aberration of hyperfinancialisation, just pay the shareholders proportionally to what they own.
  - rcxdude 1y ago
    The only reason there's a difference is because of the psychological and incentive-based effects of 'number go up'.
hopelite 1y ago
There is also a bit of strategic, defensive hiring that happens, i.e., hiring people so your competition cannot hire them, let alone at a lower salary if you were not hiring. It's a little talked about issue, because it is mostly expressed as a type of C-suite FOMO tied to their performance and stock option incentives, i.e., "we need to hire because X is hiring and we can't look like we are not growing/hiring because that will drive the stock price down and risks my stock options, even if we are doing massive buybacks to glaze the stock price". It is another significant flaw in the "capitalist", i.e., publicly traded corporate system that incentivizes all the various financial shenanigans to generate false stock performance to enrich the c-suite.
tjwebbnorfolk 1y ago
Depends who "we" is. If I'm a shareowner, if the company doesn't have any intelligent ideas on how to spend my money, they should send it back to me as a dividend, or buy me out (share buyback). Please don't waste my money trying to build some immortal empire as a shrine to the CEO's ambition.
- matthewdgreen 1y ago
  There’s an enormous amount of money being made by chipmakers, and Intel is rapidly losing access to it. That doesn’t mean hiring stupidly is good, but spending money to regain its momentum and save the company from bankruptcy is an obvious priority. Stock buybacks aren’t, unless the plan is to extract revenue and shut the place down.
  - lotsofpulp 1y ago
    TSMC as a manufacturer and Apple/Qualcomm/Nvidia as designers make an enormous amount of money. Everyone else, like AMD/Global Foundries/Samsung/Intel don’t seem to be making an enormous amount of money. The margins are all in the best chips. Less than best is commoditized.
  - tjwebbnorfolk 1y ago
    Bankruptcy can only happen if you are in debt, which Intel massively is, because they ARE spending enormously to try and catch up. I'd rather they accept reality, slim down to size, focus on making good Xeons again, and stop acting like they have a monopoly they no longer have. So far, LBT seems to have the right idea.
lmm 1y ago
> If companies have extra cash on hand, don't we want them to invest it and hire? No. Hiring should be a long-term strategic investment, not something you do whenever you have extra cash lying around. If you needed the extra people you should have been trying to hire them already, and if you don't then you shouldn't hire them now.

JKCalhoun 1y ago

It's the disposable side of the practice that I disagree with. Hiring should feel like a marriage or a commitment for any business. Just my opinion though. I think we've become too complacent/accepting of corporations just laying off employees with what amounts to a shrug.

dylan604 1y ago
> Hiring should feel like a marriage it does though doesn't it? divorce is so common that marriage no longer feels like it has any permanence like you imply it does
- JKCalhoun 1y ago
  I guess I meant hiring should feel like I feel about marriage. Married 27 years — still on the first wife. :-)
  - cjbgkagh 1y ago
    Good for you, terrible analogy though
- shakna 1y ago
  Divorce may be common, but a divorce without trauma is still a rarer thing.
  - dylan604 1y ago
    getting fired is without trauma?
    - shakna 1y ago
      Are you still producing your fired certificate, 17 years down the line, for every background check, rental application, and date?
      - dylan604 1y ago
        I don't know what a fired certificate is unless you're making a funny about you needing to do that with a divorce certificate? I also don't know what that is either. There's a divorce decree issued by the court, is that what you mean? Have you actually had a date ask to see legal documents about your divorce or any of the other situations? I just have no experience with any of that so it seems very strange, and feels like your just belaboring the point.
        shakna 1y ago
        Yes, divorces are processed through the courts. Yes, it comes with a certificate. Yes, it affects your legal life forever more. As that's all pretty basic... Maybe you... Don't understand divorce well enough to say whether or not it fits an analogy.
        dylan604 1y ago
        Been there done that got the decree and everything. You’re right, I don’t understand your musings as not once has anyone ever asked to see proof of my divorce. Some forms that ask about marital status might have a divorced option, but not all. It does not affect my credit. It does not affect job interviews. I really just have no way to relate to what you’re saying as it has never happened to me, nor have I ever heard anyone else complain about needing to provide this certificate. You are literally the first person. That’s such an outlier that I have to question its legitimacy.
- Dylan16807 1y ago
  The average marriage lasts about 20 years. Companies should be able to fire people, but they shouldn't be overhiring in good years and then tossing people out in the next rough patch.
legitster 1y ago
I'm kinda with you that in most situations corporations would probably be better off hiring slower and then riding out downturns on cash. But big picture I disagree. We kind of need creative destruction in an economy - we need to be able to lay off people in horse buggey industries so that they can be hired to make Model T's. We're better off focusing on our social safety network and having a job market that encourages some amount of transit between careers.
- JKCalhoun 1y ago
  I agree with the social safety net. It feels as much of a long-shot though as corporations acting more responsibly. :-/
tjwebbnorfolk 1y ago
> Hiring should feel like a marriage or a commitment for any business. Treating the employer/employee relationship like some life-long commitment sounds like pure hell. It is a transaction. I don't want it to be anything more than that.
zamadatix 1y ago
I wish it weren't such a big deal in ones life they keep their current employer (from the perspective of things like health insurance plans, retirement plans, PTO balances, basic income). If it weren't so god damned painful to change jobs or have some gaps longer than a month or two then maybe we'd have a chance to just treat jobs as jobs we move between instead of a sacred vow for life lest we be thrown into chaos when broken.

chasil 1y ago

You have omitted shareholder dividends.

toast0 1y ago
Stock buybacks are shareholder dividends with better tax consequences and less expectations.
- kccqzy 1y ago
  For buy-and-hold investors stock buybacks do nothing at all whereas dividends create real income.
  - toast0 1y ago
    For buy and hold investors, stock buybacks do nothing, whereas dividends create real taxable income. Either you take the income, minus taxes, and spend it, or you reinvest it into the stock, again minus taxes. If you reinvest it into the stock, you've had to pay taxes on the dividend amount, so you've lost vs a buyback. If you want to spend money and your stocks don't issue dividends, you just have to sell some of your shares. Selling $X of shares will almost always generate less taxable income than receiving $X of dividends as some of it will be a return of capital; so again, if you take $X out of the holdings, you've lost with a dividend vs a buyback and you sold $X.
    - kccqzy 1y ago
      This is disregarding the definition of buy-and-hold investors. As the name implies, they don't sell stock. Whether or not buy-and-hold is irrational or not is a completely different topic.
  - Dylan16807 1y ago
    Dividends create real income and decrease stock value. Any time you want that to happen for you, simply press the sell button for some percentage. Why would you want the company to decide the timing and the percentage for you?

mercutio2 1y ago

No. Generally speaking, I want corporations to return capital in excess of operating needs to shareholders unless they have actual high-expected-return, ready-to-be-executed plans for what to do with their money. When corporations just invest because they have money, there is a gigantic agency problem, and executives have a tendency to burn shareholder value on vanity projects and fancier headquarters. Stock buybacks are exactly what I want wealthy companies to be doing with money they don't have a high expected ROI for.

BobaFloutist 1y ago
Or even dividends, once they've set up a solid rainy-day fund. Anyone remember dividends?
- ac29 1y ago
  Roughly 80% of SP500 companies pay dividends
  - throwaway2037 1y ago
    There is a good reason for it: Many pension funds and large money managers have a hard rule that they will not invest at full into a company without a dividend. I'm not saying that you have to agree with that strategy, but it is incredibly common for US pension managers. Also, some stocks pay one cent as their div, just to qualify.
piva00 1y ago
No stock buybacks, pay dividends, that's why the instrument exists. Stock buybacks are an aberration of hyperfinancialisation, just pay the shareholders proportionally to what they own.
- rcxdude 1y ago
  The only reason there's a difference is because of the psychological and incentive-based effects of 'number go up'.

hopelite 1y ago

There is also a bit of strategic, defensive hiring that happens, i.e., hiring people so your competition cannot hire them, let alone at a lower salary if you were not hiring. It's a little talked about issue, because it is mostly expressed as a type of C-suite FOMO tied to their performance and stock option incentives, i.e., "we need to hire because X is hiring and we can't look like we are not growing/hiring because that will drive the stock price down and risks my stock options, even if we are doing massive buybacks to glaze the stock price". It is another significant flaw in the "capitalist", i.e., publicly traded corporate system that incentivizes all the various financial shenanigans to generate false stock performance to enrich the c-suite.

tjwebbnorfolk 1y ago

Depends who "we" is. If I'm a shareowner, if the company doesn't have any intelligent ideas on how to spend my money, they should send it back to me as a dividend, or buy me out (share buyback). Please don't waste my money trying to build some immortal empire as a shrine to the CEO's ambition.

matthewdgreen 1y ago
There’s an enormous amount of money being made by chipmakers, and Intel is rapidly losing access to it. That doesn’t mean hiring stupidly is good, but spending money to regain its momentum and save the company from bankruptcy is an obvious priority. Stock buybacks aren’t, unless the plan is to extract revenue and shut the place down.
- lotsofpulp 1y ago
  TSMC as a manufacturer and Apple/Qualcomm/Nvidia as designers make an enormous amount of money. Everyone else, like AMD/Global Foundries/Samsung/Intel don’t seem to be making an enormous amount of money. The margins are all in the best chips. Less than best is commoditized.
- tjwebbnorfolk 1y ago
  Bankruptcy can only happen if you are in debt, which Intel massively is, because they ARE spending enormously to try and catch up. I'd rather they accept reality, slim down to size, focus on making good Xeons again, and stop acting like they have a monopoly they no longer have. So far, LBT seems to have the right idea.

lmm 1y ago

> If companies have extra cash on hand, don't we want them to invest it and hire? No. Hiring should be a long-term strategic investment, not something you do whenever you have extra cash lying around. If you needed the extra people you should have been trying to hire them already, and if you don't then you shouldn't hire them now.