Monday, January 24, 2011

The mixed message of quarterly profit earnings.

Paul Krugman is spot on with this comment in today's editorial:

A corporate leader who increases profits by slashing his work force is thought to be successful. Well, that’s more or less what has happened in America recently: employment is way down, but profits are hitting new records. Who, exactly, considers this economic success?
Many CEOs of late, have taken to following this through the end of the recession, to continue to post growing profits, namely Carol Bartz of Yahoo.  Last December, Yahoo announced it would cut 4% of its workforce.  As an AP article stated, "This marks the fourth time in three years that Yahoo has resorted to mass firings to boost its earnings."  Steve Ballmer of Microsoft is following the same line as well.

It is the destructive side of Capitalism, that says CEOs may reap the rewards of cutting back its workforce to hide its failures in leadership.

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