Micrsooft just announced that it will be
firing 5000 people. It really comes as no surprise that Microsoft would lower operating costs in response to lower than expected revenues. The worldwide economic downturn and the rising popularity of netbooks (those may not be mutually exclusive, but Windows Vista sales are in the tank) took a billion dollar bite out of its projected revenue.
AMD and Intel are also suffering due to a
10 percent reduction in seminconductor sales over the past year. Intel and Microsoft have remained profitable, and are responding to shareholders and have a fiduciary duty to maximize shareholder value (AMD is another story). The chipmakers are also in a capital intensive business.
I know executives at these companies: They good people that work extremely long hours, and they are compensated for it. Investment banker friends of mine receive large bonuses because they live for their jobs, and they deal with a lot of risk.
Regardless, I have come to believe that some of the folks at the top of the ladder should sacrifice some of their perks for the good of their employees (AMD did cut back on executive pay). 5000 layoffs means that 5000 lives are acutely affected. Those are 5000 people that need healthcare, and many have families to look after.
Some companies emerge from recessions leaner and meaner, and poor business models sometimes fail. Great, but the human cost of that is enormous and mass layoffs are not the only way to reduce operating expenses. When management makes decisions exclusively by the numbers, it isn't invoking Solomon like wisdom.
Management is working for its shareholders, but does management ever stop to think that shareholders might not approve of mass layoffs? I'm cautiously optimistic that many shareholders (excluding large institutions) would think about more than just short term profit if they were given the opportunity to decide the fates of thousands of employees.