Warner Bros. studios announced that they'll will be laying off around 800 people (h/t Nikki Finke) or around 10% of their worldwide workforce. This comes on the heels of what looked like a pretty damn good year for the venerable studio, especially with the billion dollars (yes I said BILLION) raked in by The Dark Knight.
Now the company cited the usual reasons for these layoffs, the weak economy, reducing expenses responsibly, etc., etc., yadda, yadda, yadda, the usual buzz-words and double speak.
Their critics think it's all just a ploy to plead poor during the SAG negotiations, and just to be evil, and while they may have a point, I think there's another reason for it all.
Analysts.
No, I'm not talking about psychoanalysts, I'm talking about stock analysts. In theory, these are guys on Wall Street who do nothing but look at companies and try to predict whether or not they're going to make money, and hopefully take the guesswork out of stock choices.
That is in theory.
In theory, communism works.
You see the problem with stock analysts, is that they've gone from trying to predict stock performance, to actually affecting stock performance.
If you pay any attention to the business media you've seen reports about how a company only made $999,999,999.99 in profits when the analysts predicted that they would make an even billion and suddenly the stock value crashes. It's as if the the $999+ million in profits didn't happen, they didn't please the analysts, so everyone acts as if the company's going under.
That's nuttier than a pound of squirrel turd.
And it's not as if stock analysis is an exact science. A scientist picked stocks by how a chimp through his feces at the business page, and he outperformed all the "expert" analysts.
Basically, stock analysis is glorified guesswork, at least it is in a perfect world where unicorns prance in green fields, and Alyson Hannigan does nude scenes. You see analysts are not hyper-rational Vulcans working only with accurate data, and with no interest in anything but the truth, they're human beings. And human beings make mistakes at best, and operate with hidden, and possibly malicious agendas at worst.
We see their predictions, but we're not really given either the data they use to make these predictions, or the motives that lay behind them.
Now how is it responsible for the layoffs at Warner Bros.?
Well, if the analysts aren't all hot for your stock, then your stock is not going to do well, and if you're a CEO, it's going to affect your bonus. If you want to buy your daughter a new yacht for her Sweet 16, you're going to have to get that stock to tick up, and they can only think of one way to get that tick.
That's layoffs.
Yep, mass firings are automatically chalked up as savings in the cold equations of the analysts. The analysts start singing your praises, your stock ticks up for about 5 minutes, and voila, your daughter gets her new boat.
And I think I'll give the last word to the inestimable Barry Diller and his opinion of profitable companies having layoffs...
Now the company cited the usual reasons for these layoffs, the weak economy, reducing expenses responsibly, etc., etc., yadda, yadda, yadda, the usual buzz-words and double speak.
Their critics think it's all just a ploy to plead poor during the SAG negotiations, and just to be evil, and while they may have a point, I think there's another reason for it all.
Analysts.
No, I'm not talking about psychoanalysts, I'm talking about stock analysts. In theory, these are guys on Wall Street who do nothing but look at companies and try to predict whether or not they're going to make money, and hopefully take the guesswork out of stock choices.
That is in theory.In theory, communism works.
You see the problem with stock analysts, is that they've gone from trying to predict stock performance, to actually affecting stock performance.
If you pay any attention to the business media you've seen reports about how a company only made $999,999,999.99 in profits when the analysts predicted that they would make an even billion and suddenly the stock value crashes. It's as if the the $999+ million in profits didn't happen, they didn't please the analysts, so everyone acts as if the company's going under.
That's nuttier than a pound of squirrel turd.
And it's not as if stock analysis is an exact science. A scientist picked stocks by how a chimp through his feces at the business page, and he outperformed all the "expert" analysts.
Basically, stock analysis is glorified guesswork, at least it is in a perfect world where unicorns prance in green fields, and Alyson Hannigan does nude scenes. You see analysts are not hyper-rational Vulcans working only with accurate data, and with no interest in anything but the truth, they're human beings. And human beings make mistakes at best, and operate with hidden, and possibly malicious agendas at worst.
We see their predictions, but we're not really given either the data they use to make these predictions, or the motives that lay behind them.
Now how is it responsible for the layoffs at Warner Bros.?
Well, if the analysts aren't all hot for your stock, then your stock is not going to do well, and if you're a CEO, it's going to affect your bonus. If you want to buy your daughter a new yacht for her Sweet 16, you're going to have to get that stock to tick up, and they can only think of one way to get that tick.
That's layoffs.
Yep, mass firings are automatically chalked up as savings in the cold equations of the analysts. The analysts start singing your praises, your stock ticks up for about 5 minutes, and voila, your daughter gets her new boat.
And I think I'll give the last word to the inestimable Barry Diller and his opinion of profitable companies having layoffs...
“The idea of a company that’s earning money, not losing money, that’s not, let’s say ‘industrially endangered,’ to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one’s counting is really a horrible act when you think about it on every level. First of all, it’s certainly not necessary. It’s doing it at the worst time. It’s throwing people out to a larger, what is inevitably a larger unemployment heap for frankly no good reason.”Amen Brother Barry. Amen.
“It’s not that you don’t want to earn as much money as you can — it is your obligation, of course — but companies have obligations beyond that and they certainly have obligations beyond that at certain times, in the times in which they operate. And they also certainly ought to know that meeting and beating expectations is probably yesterday’s game and it will be increasingly so, which would be by the way very healthy for companies. Running a company that meets and beats expectations, and that runs their company accordingly, are companies that I would question why anyone would invest in.”
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