Tim Cook: Mass layoffs a 'last resort' and off the table for the moment
Tech companies have cut back on spending the easiest way that they know how with mass layoffs, but Apple has avoided layoffs so far, with CEO Tim Cook calling it a "last resort."
Apple isn't planning for mass layoffs
Silicon Valley hired a mass of people during the pandemic to account for increased demand. As the pandemic ended and an economic downturn began, demand for those products waned, and mass layoffs began.
So far, Apple has impressively avoided mass layoffs. The company slowed hiring and cut costs in other ways.
After Apple's expectation-beating Q2 earnings report, CNBC spoke with CEO Tim Cook about the quarter. The conversation drifted to layoffs, to which Cook responded that mass layoffs were not in the plans.
"I view that as a last resort and, so, mass layoffs is not something that we're talking about at this moment," Cook said.
Apple's positive earnings and lack of layoffs will likely be a morale boost for the American company. Google, however, is facing other issues as it's 12,000 employee mass layoff was followed by a $70 billion stock buyback program and CEO raise.
Cook calls mass layoffs a last resort, but that doesn't mean it's totally off the table. Rumors suggest that 2023 could be a muted year for Apple hardware, which might lead to more penny-pinching in the future.
Read on AppleInsider
Apple isn't planning for mass layoffs
Silicon Valley hired a mass of people during the pandemic to account for increased demand. As the pandemic ended and an economic downturn began, demand for those products waned, and mass layoffs began.
So far, Apple has impressively avoided mass layoffs. The company slowed hiring and cut costs in other ways.
After Apple's expectation-beating Q2 earnings report, CNBC spoke with CEO Tim Cook about the quarter. The conversation drifted to layoffs, to which Cook responded that mass layoffs were not in the plans.
"I view that as a last resort and, so, mass layoffs is not something that we're talking about at this moment," Cook said.
Apple's positive earnings and lack of layoffs will likely be a morale boost for the American company. Google, however, is facing other issues as it's 12,000 employee mass layoff was followed by a $70 billion stock buyback program and CEO raise.
Cook calls mass layoffs a last resort, but that doesn't mean it's totally off the table. Rumors suggest that 2023 could be a muted year for Apple hardware, which might lead to more penny-pinching in the future.
Read on AppleInsider
Comments
No need to lay off anyone with that amount of revenue.
The emphasis that cannot be overlooked here is on “mass” layoffs, which mean that the controlled, closed loop feedback mechanisms for establishing the right size workforce no longer apply and the company must take more drastic measures that are more along the lines of “damage control” to avoid crashing the company, at least in the eyes of the stock market and investors.
Apple will very likely continue to reduce their workforce size through attrition, reduced hiring, and selective layoffs in certain parts of their business. Apple has the luxury, from a Wall Street perspective, of not having a large part of their production and manufacturing capacity under their direct control. Responding to reduced product demand and cutting back on capacity in these areas isn’t viewed as Apple undergoing mass layoffs because the people doing that part of the work aren’t Apple employees.
The most likely, but still sub-massive, scale layoffs at Apple will likely take the form of existing, and especially underperforming, product investments being cut back or cancelled and future product investments, most of which we know nothing about, being postponed or even abandoned. Apple will have layoffs, perhaps some substantial ones, but the ones that are more obviously “massive” ones tied to reductions in required capacity due to the falloff in demand are largely hidden from public perception.
Tim Cook and Apple got it the worst. The Googles and Metas (formerly Facebook) and Teslas, which spent like druken sailors could do no wrong in the eyes of the tech media. In the eyes of the tech media, the more a company spent, the better. Spending money willy nilly was a sign of having the courage to pursue bold bets. Meanwhile, Apple, which would generate billions in cash flow, was derided as being too afraid to make big bets. Google spent several billions on Motorola, a money losing company, and Google was called one of the most courageous companies out there, in contrast to Apple led by bean counter Cook, which shied away from such splashy deals. Facebook spends $20 billion on WhatsApp (and that too using shareholder money) and Mark Zuckerberg is crowned the next great CEO. I still remember a news article which contrasted Apple's M&A strategy which shunned such massive acquisitions, to the splashy deals that had taken place around that time. The author claimed that if Musk or Zuckerberg were in charge of Apple, they would be "more acquisitive with Apple's cash," not being afraid to use Apple shares to make acquisitions.
Look how the tables have turned. The companies that basked in the tech media spotlight for supposedly having the courage to invest in innovation are the very companies that executed mass layoffs. Let's also not forget that Google and Facebook were trendsetters in creating classes of public stock designed to concentrate power in the hands of founders-supposedly so that the company could focus on innovation and protect itself from short-sighted shareholders. The irony is that those same companies executed mass layoffs mainly to appease the same shareholders they endeavored to protect themselves from, to show them that they were doing something to weather the coming uncertain times.
I think there are two reasons behind the mass layoffs. First of all, the economic climate has gotten more uncertain with rising rates and the possibility of a recession. During such times, companies do have to focus on pursuits that are yielding cash flow. But I think there's another factor here. Tech companies' can't afford to have long periods of depressed or stagnating stock prices, not when employee compensation is tied to stock. Mass layoffs were tech companies' way of telling the market that they were serious about getting their costs under control and generating cash flow.
The jury is still out on Apple, IMO. Apple may have to lay some people off. But by Apple's being careful with how it spends its money in the first place, Apple hasn't had to do mass layoffs yet like its peers.
I think Apple is in a good spot with the cash reserves, but they've also bought into some of this with their services division. They also benefitted from the pandemic-effect in terms of phones/computers, which will now likely take a hit/correction. I guess it depends on how deep the recession gets, but they are about as well setup to survive as anyone.