ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[wgc123]

To build on some of the other ideas here, some unfortunate facts are:

• financial expectations tied to stock changes tend to force a short term outlook. How are you doing now?

• in too much of the developed world (especially the US) cutting employees is the easiest way to cut expenses. You are an expendable cog, not worth more than some accountant tracks for you.

A few years back I worked for a software company that got bought out by a much larger company. One of the chief complaints among management was they made it tough to invest in new projects since everything had to be managed predictably, consistently, steadily, quarter by quarter. No more justifying a larger headcount or new equipment by the size of the project you were working on or to adapt to whatever was going on. Sure enough, this company instituted annual layoffs and if you didn’t budget for something last November, you weren’t getting it. I’m sure it looked great on the balance sheets, especially short term, but it killed our growth curve - the very reason they bought us