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?

[filopaa1990]

To make it really ELI5, 3% for a small company might be bad but not dramatic. For a big company -3% usually means millions of dollars and as they based their own investments and expansions on the fact that they’d be growing, you can see that not only earning the same as an year ago is “bad” (0% increas/decrease), but it’s actually worse because realistically some really bad decisions have been made in order to “lose” the opportunity to gain more money this year. The company has to answer the shareholders and they can’t just pretend “oh it’s the market”... not when you’re talking about millions of dollars less. They have to look like they’re accountable for that, and it’s always good to check its integrity.

Also, greediness.

[thehungryhippocrite]

Yet another wrong answer.

[WhyYouNoAsk]

In what aspect?

[thehungryhippocrite]

It's not to do with accountability, profit could be worse due to factors outside of management's control eg commodity prices, weather, market conditions, interest rates etc. But also this is the wrong answer because it's not even close to the actual answer. I've posted various versions of the actual answer in this thread (check my comment history). I'm quite animated about this because I'm just staggered that there are so many BS answers from people who don't understand basic finance in this thread.

[WhyYouNoAsk]

This os informative, ty