By Anita Hamilton
When a firm is struggling, layoffs come as little surprise. But culling staff when things are flush is another story.
That's what makes recent layoffs from companies doing well, including Microsoft and BlackRock, worth noting. But layoffs don't just happen when there are problems. Sometimes companies pare staff simply to boost profit or make room for workers with expertise needed for a new initiative.
While unemployment in the U.S. has ticked up over the past year, it remains relatively low at 4.2% as of November. Nonetheless, January layoffs are something of a tradition as companies do periodic purges. Here's what's driving the cuts at five companies that have announced workforce reductions since New Year's Day.
BlackRock
With $11.5 trillion of assets under management -- up from $9.1 trillion a year earlier -- and a stock that has kept pace with the S&P over the past year, BlackRock isn't feeling much pain. That hasn't kept it from trimming 1% of its 21,000 employees this month, according to a report from Bloomberg. When reached by Barron's, the company declined to provide additional information but didn't dispute the report.
A strong stock market has been good for the asset manager, which offers a wide range of funds. Its popular ETFs had $97 billion in net inflows in the third quarter and $248 billion for the first nine months of 2024. It next reports earnings on January 15.
Microsoft
The software giant and OpenAI backer confirmed to Barron's Wednesday that it is "planning terminations related to performance," adding that the company typically backfills such roles. "When people are not performing, we take the appropriate action," a Microsoft spokesperson said. It didn't provide a specific number of people affected.
It's last big layoff came in January of 2024 when it let 1,900 employees go in its Activision Blizzard and Xbox operations, a few months after acquiring Activision Blizzard. The company has 228,000 employees total, including 126,000 in the U.S.
Microsoft is still the third largest publicly traded company in the U.S. by market value, but its stock has lagged behind the broader market. Shares rose 13% over the past 12 months, about 11 percentage points less than the S&P. While it beat earnings expectations in October, its stock price fell as the company reported higher spending on artificial intelligence. It has said it would spend $80 billion on AI data centers during the current fiscal year ending in June.
Bridgewater
The Connecticut-based investment management company with $172 billion in total assets under management is also making cuts, trimming 7% or about 90 of its 1300 employees.
It's hard to know exactly what's going on at the giant hedge fund because it is privately owned and doesn't publicly share its investment returns. However, Bridgewater's assets have declined notably since its founder, Ray Dalio, left the company in 2022. Pension & Investments reported a 15% decline in its hedge fund assets from December 2021 to Dec. 2024. Likewise, its total assets under management have declined more than 25% from 2021, according to FactSet.
Ally Financial
Bank and lender Ally Financial is profitable but has been under pressure. In announcing Wednesday that it was cutting 5% of its 11,000 employees -- about 550 workers -- it also said it would stop issuing new mortgages. It's also looking at "strategic alternatives for our credit card business," company spokesperson Peter Gilchrist said.
Although Ally beat analyst estimates in its last earnings report in October, shares fell as CEO Michael Rhodes warned of elevated charge-offs for its car loans, which contribute most of its revenue. Its stock is up less than 3% over the past year, versus the S&P 500's 24% gain.
Washington Post
The Washington Post started culling less than 100 employees, or about 4% of its staff, earlier this week. "Changes across our business functions are all in service of our greater goal to best position The Post for the future," a company spokesperson told Barron's.
The publication, which Amazon founder Jeff Bezos bought in 2013 for $250 million, has long lost money and offered buyouts to employees in 2023. More recently, it faced controversy for nixing an editorial endorsement of Kamala Harris for President and a political cartoon showing Bezos and other tech titans holding bags of money up to President-elect Donald Trump.
Write to Anita Hamilton at anita.hamilton@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 09, 2025 17:33 ET (22:33 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Comments