They just got a new CEO, so this is the new guy coming in and cleaning up the mess, so to speak. He's doing what needs to be done to get back to profitability, so it appears he's doing his job properly.
Like if you have a round of layoffs, but you have employees with faith in the management and the product, you're going to have remaining employees that stick around and work hard. Generally people that don't fall in that mold are going to get laid off in a situation like this.
If you have employees that are sitting there with an expectation that the cpmpany will fail, however skilled they might be, they're going to start looking at other options.
I think what I'm saying is: the initial tipping point in a case like this isn't the layoff, it's the ensuing fallout. One strategy that I've seen fail is using fear to keep people working. A "you're lucky you're still here" attitude has had people (like myself) out the door on the first other offer they find. An attitude of "this sucks, but we have to do it to stay around, no one is to blame" (which Digg seems to be going with) prevents things from going further south. Something like that can even unite the remaining group in difficult times.