| Because layoffs provide profitability, rough as it is. However! What Hasbro is doing to WOTC is tremendously short term thinking. You do not prune the organizations that are providing all of your liquidity in a time of crisis for fear of pruning the wrong branch and diminishing the growth by sending a message to key people that it’s time to go, which is always possible and arguably likely when you cut. I believe that Hasbro shareholders should insist on making WOTC’s management team responsible for the whole company, as they have time and again been the backbone of profitability, progressive projects that actually ship and make actual money and have been doing a lot of good decision making in recent years. Yes I’m aware of the CEO’s criticisms around short term decision making, but he’s always had to answer to the parent company and they are very corporate and MBA-logic oriented. Now on to the answer to your question, here is the math they look at: https://www.business.com/finance/big-tech-earnings-and-layof... From the article: Key Takeaways Amazon had $2.8 million in earnings (before interest, taxes, depreciation, and amortization – or EBITDA) for every staff member they laid off in January. Meta had $3.9 million in earnings for each of the 11,000 staff members they laid off in November. In response to Meta’s cost-cutting strategy, its stock price increased by 19 percent. Tech giant Microsoft had an EBITDA of $98.8 billion in 2022. This means they earned $9.8 million for each person they laid off in January 2023. Other companies’ layoffs weren’t as difficult to understand: WeWork ended 2022 with an EBITDA of -$824 million, and Spotify ended its fiscal year with an EBITDA of -$290 million. |
I only skimmed the linked article, but they don't seem to bother justifying why this metric matters.