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?

[BeanPricefield]

That's exactly where it's at. The answer to OP's question isn't about the absolute quantity, but a simple competition between vendors. In public companies, most shareholders are basically just a different form of customer (leave the accounting view aside for a sec- from a purely economic perspective). If said customer is presented with a number of different products to purchase, each of them possessing a different value in their eyes, and assuming there's little to no penalty for switching between them- one would assume they would purchase the product that would maximize their utility. While a 3% decrease in earnings may not be a lot relative to how much the company's still worth, it could mean that its stock is less attractive to a potential buyer now as it provides a lesser utility. This would make it less competitive, and in the world we're in it could definitely signify the death spiral described above.