Lenovo Is Laying Off 3,200
techcrunch.com
techcrunch.com
"in a move that should trim its wage bill by an estimated $1.35 billion per year."
$1,350,000,000 / 3,200 = $421,875
I need a payrise.
The "arbetsgivaravgift" (i.e. taxes that your employer pays) is about 30% of your salary, so if you're going to get a salary of 100 that costs your employer about 130. The cash you get in hand varies depending on your personal tax rate, but normally you would receive between 50 and 70.
Edit: This is for Sweden. YMMV. :)
(Example "non-gross" income tax: patronal national insurance tax, corporation closure insurance tax, tax on vacation pay, tax for employment of permanently disabled persons, ... It totals ~18% in Germany, up to 38.5% in Belgium, depending on the sector (specific sectors have specific taxes - yes really))
These sorts of measures make sure that taxation is a lot less visible for "normal" people (ie. voters) in Europe than it is in America. Employers have to advertise "net pay", which is the amount you generally negotiate for. Also, for instance, the prices displayed in stores have to be tax-inclusive (there's a VAT of 18-25% as well), the prices displayed at the pump include all taxes (not just VAT), tobacco and alcohol have to be advertised with prices including all taxes.
That means a European kid might very well not hear the word "tax" until they're 24-25 and get a real, first job, and will likely think they're only paying an income tax of 40-55%, when in fact they are paying a tax of 1/1.200.60.82 = 61% (and up to 76%) (money that they can spend divided by money that is paid for their labour, inverted). And that still doesn't include property tax, car tax, and the like.
Edit: scratch that, I read it as "the company has an additional cost of 200" for some reason. Yeah, something is wrong with the math.
Many software engineers do. Considering how much value they create with their work, they are massively underpaid.
You could ask why? I'd argue it's anchoring to the magical 150k. For some reason SEs think that's peak engineering pay. It's not, and if you're doing meaningful work that adds top tier value you should be paid a lot more, or at a minimum given equity.
I hear this a lot, but what is your reference point that allow you to conclude that the engineers are underpaid. Do you use a percentage of profit generated from your contribution? (would you also pay the company for products that made a loss?)
Really, how is this measured?
An employer might make a million pounds from your work but if the going rate for the skills they need is £50K then that is what they will pay.
Nothing preventing them from starting their own business if they believe they can earn much more.
Sadly, not everything rolls neatly into a startup.
http://arstechnica.com/civis/viewtopic.php?p=29497693&sid=dd...
http://arstechnica.com/information-technology/2015/08/lenovo...
Coming after Superfish, this is totally unacceptable.
Leonovo is working REALLY REALLY hard to lose loyal technical customers.
Imagine doing a clean install and still finding crapware installed on your laptop. Unbelievable.
They already lost me after Superfish, but now with this instead of passively not buying I'm going to actively recommend that others not. It's absolutely unacceptable.
Of course there is always Apple, which has consistently high quality, but I prefer to run Linux, so that's out.
You know, back in the day when buying a new Thinkpad was a thing I would consider doing.
Speaking as somebody who's current laptop is a Lenovo Thinkpad and who has had three other Thinkpads in the past: This will be my last.
Much as I love Thinkpads, the only reasonable stance from here on out is to presume that every Lenovo computer is compromised by default.
As long as they keep and listen to their engineering force ThinkPads will be fine, the market isn't huge, but the competition is below I believe.
And yet they fire people.
I really hate these MBAs with the politic that "Oh well we didn't achieved our continuous growth, let's sack some people".
Back in the day, companies would be happy to have any profit at all.
EDIT: Being downvoted by MBAs it seems.
Their quarterly profit was just $105m so it isn't exactly a high margin business. That number was a 51% drop compared to the same quarter last year. [0]
It is hardly surprising that they want to shed staff if the profit dropped that much. Nor was the 3% revenue increase anything spectacular.
A business is sound if it can pay its employees and running expenses with a little savings on the side, not trying to achieve increase multiplication factors in profit.
Even historically business have been motivated by profit and increasing said profit. This is nothing new and certainly has nothing to do with MBAs. No private (i.e. not state run) business has ANY obligation to employ more people than they need/want just for the sake of it.
If Lenovo is to grow out of this, it will have to do it with the manufacturing and design/IT departments. Yet a voice within me seems to be very certain that these departments are going to find themselves cut down far more than the sales and general management departments. At one company, when this happened, they actually increased sales commissions while cutting engineering jobs. At that point, you know it's time to get out. Out of the company's stock, primarily.
IBM is the prime example of this attitude.
And maybe, at the rate it's going, it won't be sound next quarter? Should it wait until the final hour, before it can't make payroll, then lock the doors and lay off the entire staff, like this genius plan?
Lenovo's market cap at the start of this year was $13bn. A $0.4bn profit is a 3% return on equity, in the middle of a strong global growth phase. Normal ROE in the tech sector is 7-10%, so unless they can double or triple this, investors are better of selling up and putting their money in a bond fund (or Lenovo's more profitable competitors).
If they have dead-weight departments it's best both for owners and the remaining employees to cut that off.
If it were a private company I'd agree to a certain extent, assuming that they could see an alternative way to stop this downward trend. However as a public company, constant growth is a must.
I don't think it's as clear cut as that.
Isn't blindly cutting costs just effectively destroying company infrastructure?
"However as a public company, constant growth is a must."
But just laying people off does not guarantee growth.
That said, I have no idea how the company is structured or operates. Sometimes laying people off is kinda necessary, i.e. a company with a factory that manufactures product X, suddenly there is no market for X , and the factory cannot be reconfigured to create profit - yeah, that's clear cut.
IMO, generic sweeping statements like "removing n percent of personnel is necessary to cut costs" is impossible to gauge in negative or positive light without detailed understanding of the business or it's operations.
Free markets are nice - but there is a historically proven need for government control (pollution and child labour, etc). This means not all things are business' own business.
All actions have an ethical dimension into them. Financials are a very good indicator of the long term business prospects of an enterprise but they are not the only thing that matters when evaluating their impact in the greater human context.
Each business has a varying group of stakeholders who are impacted by the decisions made by the business - employees and shareholders are the obvious subgroups. The community where the business operations are situated is often a secondary stakeholder as well.
As an example before environment protection acts came along, companies polluted carelessly, thus causing a massive negative externality which impacted the surrounding communities. Flaming river? Not so nice.
The environmental effects were considered to be such a high impact problem that the companies were forced to modify their operations to seize pollution. Creating this legislation most assuredly required negative judging of the operations of a large number of business.
Like I said - I have no idea of this Lenovo business - but claiming all external judgement of third parties null by a blanket statement is not necessarily the best way to look at things.
Being down-voted for being financially illiterate and detached from reality.