I see $600M+ restructuring charges in Q3 statement. So does the management really not know how many head counts need to be reduced? How do they plan the budget then?
What was the basis of $600M restructuring charges?
Are they so clueless about budgeting for severance, separation packages needed for the employees to let go ? All this should be accounted for by finance in their budget forecast 2023, no ?
They are just lying that they don’t know the exact head count while they do know
Whenever I see something that I think is simple, but people aren’t behaving like it is, that tells me that I’m ignorant of something
Exactly the management has good estimate but they are saying they don’t know. They can share the estimate with the employees
They lie.
Simple math. Severence at an average of 50k per employee will fund 12000 layoffs with $600million.
This is assuming there are no execs like MR with exit packages going into hundred million+.
Management probably has a good estimate of the HC... the severance is also an estimate, you have a rough idea of average number of weeks of severance, average pay, etc., etc., What management doesn't know is the exact headcount. It's an aircraft carrier, not a canoe.
Here’s what 10Q filing says. $664M in restructuring charges to pay out severance, sabbaticals, benefits through H1 2023. The management knows exactly how much needs to be paid out in benefits, severance etc but has no estimate of the number of people ?
“In the third quarter of 2022, the 2022 Restructuring Program was approved to rebalance our workforce and operations to create efficiencies and improve our product execution in alignment with our IDM 2.0 strategy. Restructuring charges are recorded as Corporate charges in the "all other" category presented in Note 2: Operating Segments within Notes to Consolidated Condensed Financial Statements and are primarily comprised of employee severance and benefits arrangements. As of October 1, 2022 we recorded $537 million as a current liability within Accrued compensation and benefits on the Consolidated Condensed Balance Sheets. We expect these actions to be substantially completed by the end of the first half of 2023, but they are subject to change. Any changes to the estimates or timing of executing the 2022 Restructuring Program will be reflected in our future results of operations”
It doesn't work like that. ELT sets high level target to cut so much cost. At that point you estimate how much HC has to go. However, you don't know exactly how much the restructuring cost is because the number of weeks pay depends on country, how many years a person has worked there etc etc.