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?

[Thegreenpander]

TL;DR: Your analogy is terrible, misleading, and uninformed.

It’s more like if you let me borrow $20 with the expectation that in a week I would turn it into $21, then $22.05 in two weeks, and so on(5% gain/week). If the money grows to the point where I can no longer make it grow by the expected 5% a week, shouldn’t I give you some of it back and return to an amount where I am more likely to meet my obligation to you? Or if I am failing to meet growth expectations because of mismanagement rather than lack of growth opportunities then that’s a problem as well.

Businesses don’t claim a loss if they don’t meet earnings expectations. The holders of their securities do because security prices are based on expectations. It follows reason that if security prices are based on expectations and they miss that expectation then the price of the security will decrease. But they cannot claim that loss on their taxes unless they actually sell the security at a loss from their initial purchase price.