Job Cutting = Stock Price Rising?
I had always heard that when a big multi-national company announced they were cutting a signifcant number of jobs, their stock price would rise. Something to do with lower costs, better ROI. Today IBM announced job cuts for 13,000 workers and their stock rose 1 percent. I wonder however if they figure in the longer term cost of loss of domain expertise, higher training costs, mistakes made by rookies, and burn out from the remaining over-worked staff?
I'm not advocating against job cuts, by any means, as I will be first to admit that I do not know all the details involved, but I wonder how they weight all the criteria before making a decision like this. It is going to cost them somewhere between 1.3 and 1.7 billion dollars to do the cuts so I wonder how many years it will take to cover that expense. Perhaps it results in tax deductions that lessen the blow.
They stated the cuts were made to focus on higher growth markets. Where exactly are those higher growth markets, and why not offer relocation to some of the skilled workers in Europe where the cuts are being made. Is it rather that they are going to focus on higher growth markets with lower cost resources from places like India and China?
I'll ponder that for awhile...
I'm not advocating against job cuts, by any means, as I will be first to admit that I do not know all the details involved, but I wonder how they weight all the criteria before making a decision like this. It is going to cost them somewhere between 1.3 and 1.7 billion dollars to do the cuts so I wonder how many years it will take to cover that expense. Perhaps it results in tax deductions that lessen the blow.
They stated the cuts were made to focus on higher growth markets. Where exactly are those higher growth markets, and why not offer relocation to some of the skilled workers in Europe where the cuts are being made. Is it rather that they are going to focus on higher growth markets with lower cost resources from places like India and China?
I'll ponder that for awhile...
posted by Global Trade Traveller at 3:25 PM
9 Comments:
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sri lanka
Actually I was just thinking that all the countries and the economic authorities should have more discussions to speak about the problems about the economics happening now.
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Thushara
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