It's kind of strange that massive layoffs like these result in a stock uptick. At least for me it's a sign that the company is probably unhealthy and that its value is going to go down in the future.
It mostly just confirms my belief that fully half of all white-collar workers in the developed world are adding zero value. They hustle for their first few years, then coast as old products sell themselves to old customers they already established relationships with in their younger years...
I can't fault them for not giving their all every day... I know for a fact I would instantly put in the minimal amount of work required after achieving tenure / seniority / whatever at a large organization.
"It mostly just confirms my belief that fully half of all white-collar workers in the developed world are adding zero value. They hustle for their first few years, then coast as old products sell themselves to old customers they already established relationships with in their younger years..."
This is not necessarily true.
It's more like - as you add people to the pile, you get diminishing marginal returns on value-added for each person yo add.
Trust me - older products that are hardened, and sold through established channels - those are where the juicy profits come from! Nobody wants to mess with that!
"It's kind of strange that massive layoffs like these result in a stock uptick"
It means that the company has realized it's in a head-wind, and is cutting costs in order to deal with it. Layoffs are usually coincident with a re-structuring.
Ergo - layoffs mean 'the company is adjusting to new market realities' - which is what investors want to hear.
Layoffs usually happen after the 'crappy state' of a company has been priced into the stock ... so there's usually only upside.
Also - all things considered, a layoff simply means less cost and likely an uptick in profitability, which in a spreadsheet analysis gives a higher valuation.
Cisco is doing a major layoff because they have a new CEO who wants to wipe the board clean and start his term fresh. This is very cynical ... but often true.
Finally - some companies do layoffs long before they are truly necessary. It's 'house cleaning' for them. Cisco does this. Because Cisco is an otherwise strong company, a layoff is good.
This is not like a 'Yahoo layoff' wherein it's just sending people off a sinking ship. So - an otherwise 'strong' company doing kind of a 'ruthless' layoff is usually seen as a good thing in investors eyes.
Maybe the logic is that market is already aware that the company is not in good shape and this is reflected in the stock price. Massive layoffs tell the management is now also realising this and doing something about it, which is then thought to be a good thing.
Another explanation could be that massive layoffs has caused stock uptick in the past and therefore it makes sense to bet that the same thing will also happen this time. (Of course this only makes sense for those who are first to react to the news)
I imagine the logic is fairly simple: Same business, same products, less overhead. This should drive up profits in the short term, and if operations continue as they were previously, in the long term too. They also get to use terms like 'lean' and 'streamlined' in their investor reports. Stock bump.
I can't fault them for not giving their all every day... I know for a fact I would instantly put in the minimal amount of work required after achieving tenure / seniority / whatever at a large organization.