One of the reasons why corporate profits are bouncing back so quickly is that companies have done some serious payroll trimming during the downturn.
Cynics can argue that corporations could have done this sooner. Many of the companies doling out pink slips haven't necessarily been slapped with slowdowns in productivity, even if workforce morale issues are harder to gauge.
Following the logic that layoffs come in response to companies hunkering down for an economic lull, shouldn't we be in a hiring boom if the recession is roadkill in the rearview mirror?
It certainly doesn't appear that way going by some of the staff-slashing moves this week.
- RealNetworks (NASDAQ:RNWK) is laying off 4% of its workforce today, according to Kara Swisher's BoomTown column.
- Microsoft (NASDAQ:MSFT) turned heads by announcing its first wave of layoffs in company history back in January. It dismissed 800 hires this week. Even if this is part of the original 5,000 jobs targeted for elimination back in January, an improving economy, the success of Bing, and the release of Windows 7 haven't been enough to sway Mr. Softy.
- Johnson & Johnson (NYSE:JNJ) will be saving as much as $900 million next year, primarily by letting more than 7,000 employees go. No more tears?
- Time Warner (NYSE:TWX) is restructuring its struggling magazine publishing subsidiary with 280 casualties in the way.
- Sprint Nextel (NYSE:S) is cutting dozens of jobs in its wholesale business.
So what's the deal, Corporate America? Is this just the recession's final gasp or are some of these companies expecting a double-dip recession?
It's important to point out that some companies are going the other way. Google (NASDAQ:GOOG) is in hiring mode again. And some of the jobs being slashed -- Sprint Nextel's languishing landline business and Time Inc.'s magazines -- are in industries that aren't expected to grow, regardless of the economic turnaround.
However, there comes a point where enough is enough. Companies that are fine tuning their payrolls today probably could have -- and should have -- done this a year ago when folks were bracing for the worst.
I guess it'll mean more paranoia in the workforce, but with chunkier-than-expected bottom lines.
