Sure, and most (not all) consider that a horrible practice that encourages backstabbing politics. And it's definitely bad for morale. And the people that defend the idea say it's nice to cut the flak once a year, but it's obviously better to just fire people for being bad as needed rather than create this constant annual layoff. The main reason it's done it's because it's so much easier than managing companies correctly.

That's one of the policies that destroyed Microsoft's reputation for years.

You could argue that they did it in the stupidest way though.