Thread regarding Cengage layoffs

If you’re still at Cengage these days it’s likely because you can’t find a job anywhere else. That’s how Michael has developed such sycophantic behavior. He makes employees feel like they matter with empty gestures while they are simultaneously disrespected with 0.5% merit increases and no bonuses while leadership fills their pockets.

@6pba+15vmuvpp Not really. I haven't seen many white collar layoffs lately...its mostly in the retail and service sector. But I guess lowered employee expectations is how Cengage keeps its current workforce intact.

At least we keep our jobs for the next few months. That’s something in this economy.

@6fbb+15vmuvpp Yep. Or put another way....private equity got giant yearly bonuses while we suffered layoffs, merit increases that were lower than the rate of inflation and no bonuses.

There is no benevolence in private equity. You and everything that matters to you are expendable in pursuit of $$$.

@5kgh+15vmuvpp Of course he doesn't seem like a horrible person. All the C level execs are very polished and articulate – especially the ones who came up through the Ivy Leagues and into consulting and investment banking. It's their philosophy on managing companies that is despicable. Private equity's entire approach is to load companies down with debt and "strip and flip" them to make a short term profit. I understand reality and that companies can and will fire you for no reason at all, but its the fact that private equity can take perfectly healthy companies and destroy their long term health for a quick buck. Our private equity owners (including Kermit) forced the company to take on debt in bad financial years in order to pay out dividends. Anyone who has taken basic finance knows this violates every rule about responsible corporate finance, but private equity doesn't care. If they company goes under they walk away because they didn't have any of their own money in there in the first place. If they can pocket a few more million its worth it – never mind the pain the company feels in the long term. They are bottom feeders.

You mean Michael wasn’t being honest when he told the SF staff that he had to close the office and lay off nearly everyone “for the students?” Wow.

I've been around enough of these (Private Equity) people. They all talk like they are virtuous and altruistic and "care" about education. Trust me. They don't. They look at their education investments the same as any other investment.

Investment banks and private equity ruined publishing...the internet didn't actually help either. Prior to that it was an oligopoly with a controlled supply chain. The internet blew all that apart.

@5kgh+15vmuvpp He's a private equity vulture. They make their living on destroying companies and lives. Who do you think has been behind the layoffs of the past decade? Michael is simply carrying out orders.

Kermit does not seem like a horrible person to me. What makes you think he’s so bad?

@4ltj+15vmuvpp That is fascinating. However, as bad as that deal was don’t forget that APAX bought up tons of secured Cengage debt weeks before the company went into bankruptcy for pennies on the dollar. This ensured that their snouts were first in the trough to get an outsized amount of equity in the new Cengage which would have been wiped out in normal bankruptcy proceedings. It was challenged in court because other creditors rightly claimed that APAX had insider knowledge about the bankruptcy, which was correct. APAX absurdly claimed they were not at all involved in the company’s decision making and it held up. That’s what people like Kermit do all day long....think up crooked schemes to turn $1 into $1.10 with a thin veneer of respectability. And you are correct that it is a club. As long as you went to the right schools and worked at the right consulting houses failure is not something you’ll ever have to deal with no matter how horrible you are at your job. Just look at Michael. People like him and Kermit are the most despicable human beings on earth.

Even Kermit is not going to be able to figure out this train wreck. But he doesn't care. Guys like him and MH are sociopaths who have no real regard for others, while also having unbridled narcissism.

To give you an idea, there are plenty of ex-APAX people on Linkedin who proudly trumpet that they were part of the Cenage deal from Thomson. A deal that will go down as one of the worst private equity fiascos in history.

But they don't care. It truly is a club and once you are in it, no matter how much money you waste or how many lives you destroy, you're always in.

Wall Street Kermit is your god now.

In these times of uncertainty, anxiety and fear of what the future may hold I turn toward the light, get on my knees and pray to Hansen and Cengage and express joy and hope to her employees whether large or small, brown or white, g– or straight, male or female, or bisexual or furries or non s-xual or non binary, pan, even the lowly third gender. This uplifts me to praise the worthiness of all Cengage partners and employees. I am here for you, I believe in you. :)

The very notion that Hansen and/or Cengage is in any way "honorable" is a welcome injection of levity. At least you've got a future on the comedy circuit. Hilarious!

@2jvh+15vmuvpp Not at all happy. I'm pointing out that your company is sick and evil. Why do you stay at a place that mistreats you and throws away a good chunk of its workforce every year?

Holy c-ap ! Some of you are evil. The name calling and overall happiness that people are losing jobs. It is pretty sick.

You avoided layoffs for 4-5 months. Congratulations! At Cengage that is a massive accomplishment.

The only true "dummies" are those who are such dillusional Kool Aid drinkers that they somehow believe that massive layoffs aren't ahead. Right before the holidays is their usual motis operende.

Cengage has very much become a "use you then lose you" type of operation.

They'll lay off to hire someone cheaper, to reduce personnel in a particular area of the company, or simply to reduce headcount. The reasons will vary, but Cengage excels at finding opportunities to cut the company down.

Hansen's comments are quite easy to parse if one understand how to, you know, read...

Key comment is: "and then prepare for the structural adjustments longer term throughout the year."

That comment was preceded by talking about how they had to keep people in place through September to service and maximize sales. And then they will return to their regularly-scheduled programming. In other words: "we need you right now to protect our interests during the summer season, then we'll start cutting people loose again.

The message should be quite clear to dummies and non-dummies alike.

@1vmp+15vmuvpp Haha haha....you work for a company that has layoffs EVERY SINGLE YEAR! Who’s the dummy?! No offense, but anyone who has willingly stayed at Cengage is a loser. If you couldn’t find a better paying job in the buyer’s market of a job market the past 5 years you are doomed. But keep thinking that Michael’s vague reassurances will keep you safe. Enjoy your 0.5% merit increases!! Hahahahaha haha

Where are all those dummies who said there would be layoffs in June?

The call transcript has been released and, in terms of potential layoffs this portion of the Q&A was of interest. I will paste partial quotes below, but in essence the investor asks what the company is doing in terms of costs and cost structuring as related to the health crisis. In response, MH replies that they are keeping things in place for now in order to be able to train faculty & service adoptions, and there are additional cost-related adjustments available once the fall term launches, based on results and the situation. Here is the (partial) dialogue:

Q: . . . It sounds like the admissions picture is hard for all the reasons you've already outlined, but maybe walk us through how you feel about the cost structure going into the uncertainty, are you guys able to position yourselves in a way where there is upside to the margin profile of the business and how you think about that going into September and beyond?

MH: . . . what we didn't want to do is kind of go in and in response, as it was slash and burn the cost structure and then not be able to help our customers in the fall. So instead what we opted is to take some pretty significant temporary measures in terms of the cost structure and then prepare for the structural adjustments longer term throughout the year that we're making gradually as we are seeing how the year is going to unfold. So that was the overarching and guiding philosophy that we had with regards to that. . .

So it seems there will be no immediate layoffs. They have bought some time, partly through the (temporary?) pay/401 reductions, to see what happens regarding Coronaviruses’ impact on the company. I see that as a good thing since now, with unemployment this high, it’s a hell of a time to find another job.

"I bet by Jan of 2021 that we will see MH goal of one rep per campus come true."

I think they may already be there. Out of curiosity, during the call I spent some time on the C'gage rep finder to see who was covering the major universities in my state, which involves several different geographic areas - far-flung cities. Each uni had as single field rep covering everything. There were also three add'l reps covering specialty areas - Milady, small disciplines, something else. Those all seemed to be inside sales employees.

It is easy perhaps to see the collapse of some of these positions with, say, Milady being folded into another position, etc. but in terms of field reps it seemed very bare bones. The other field sales scenario that is possible is a widening of territories, where you chop heads and have the reps remaining cover larger geographies.

As for the call, it was upbeat and as hopeful as possible given all of the challenges. They gave no financial guidance for 2021, as no one knows what is going to happen in the near term. No mention of new restructuring, they said that the restructure had been completed. Big emphasis on service-side needs during the calendar 4Q, helping profs navigate the e-tools.

@1sre+15vmuvpp Very upbeat. Very much back to form. They gained market share and "beat" their guidance taking out the COVID impact, the industry downturn, and then and then and then...

I thought the most revealing insight was when an investor asked about competitors moving to a CU model. Michael said that a CU model "wasn't as easy as it looks" (not sure that I agree with that) but that competitors are responding by slashing prices. This is a bad scenario for the entire industry that will continue to snowball. If the content is just a commodity the market will only respond to changes in price. It's pretty much the worst market to be in.

Anyone listen to the call? What was the tone?

@1rfg+15vmuvpp. Correct. It is a race to the bottom and it has been since 2008. Twelve years of BS investor calls with empty promises, a bankruptcy, and thousands of staff reductions. There is nowhere to grow. Higher Education as an industry is undergoing a much-needed remake and the fallout will take years. I'm talking 20-30 years. COVID was pretty much the straw that broke the camel's back.

There will be massive layoffs in the fall. There is no other option. The merger was Cengage's only chance. I bet by Jan of 2021 that we will see MH goal of one rep per campus come true.

$917 minus $768 is still a $149M loss. Yes, the losses aren't nearly as bad as expected and the company seems to have shored up enough cash to weather the COVID storm, for now. However, the trends for both the industry and company are the same. If revenue is down but profitability is up, that can only come from cutting costs and shrinking the business. You can expect more of that to come. I also find it alarming that revenues continue to fall if market share is increasing....that means the company is buying market share at the cost of revenue and profitability. Again, the only way you can sustain that is through significantly reducing costs. At some point you can no longer cut your way to profitability.

Cengage is a zombie company in a zombie industry. There's no path to increasing revenues so the race to the bottom continues unabated. I expect the employees to continue to feel the most pain.

The goodwill stuff is smoke and mirrors. I love how they post the "excluding COVID results." Would they ever let any of us use that excuse? Cengage is death by 1,000 cuts. Every year, no matter what, we go backwards by $100MM or so. The other thing they completely ignore is that the COVID impact has not even been felt. Q1 is going to be a complete and absolute bloodbath.

That is not cash on hand, that is cash the business generated.

Ignore the slides at the front, You want the real numbers, the audited numbers at the back. The pretty slides can make anything look good. $3-4m in cash at YE. YIKES.

Not a good year by any stretch, but the focus on income statement loss – driven by goodwill impairment – and not on revenue, EBITDA, or cash flow results – is misleading. I'd venture to say intentionally misleading.

@1cic+15vmuvpp Careful now, whenever someone posts the truth it gets nothing but bad red arrows

https://cengage.widen.net/content/rdxihgdqzp/pdf/Q4-FY20-Investor-Financials-V-FINAL-20200617-1900.pdf?u=fn2gt2

Link for investors call slides

Is $917 million a lot?

Cengage is officially a t–d.

I'm a POC and I have a problem. Let's just say I'm in a western mountain state but my DM is not. I've taken her many times to decision makers over the years since that's my job. My problem is, now after a couple of years my decision makers have told me they do not ever want this DM in their office or presence again. It's gotten to the point where I take her to the same loud mouths over and over since only the least intelligent and least credible profs on campus are willing to speak to her. How do I continue to entertain her on campus, give her the impression shes valuable without destroying the relationships I've built with my most valuable Profs who refuse to meet with her? Confused in the Rockies

Who is going to hire you losers? You should have left years ago.

It means they had to lower the value of the company on the balance sheet which gets charged as a loss on the income statement.