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Wednesday, February 25, 2015

A Hewlett Packard Campfire Chiller Story..

Happy Wednesday to you all..

Today we're going to tell a story that is a little bit scary and 100% true..

We know Halloween is a good 9 months away but still this should send shivers down your spines more than tales of ghosts and ghouls and goblins..

So gather around the campfire (pretend your in a decent temperature to allow outdoor camping even if not), and bundle and snuggle up...
Once upon a time there was this corporation named Hewlett Packard (HP) and they were successful at selling computers, printers and other electronics equipment for businesses..

Now HP as it became more successful in the 1990s and 2000's grew and grew..  For instance, back in 2005, the company had expanded to 58,000 employees in the US, 9,000 of them in the SF Bay Area alone.

By 2014, the number expanded to 314,000 employees worldwide.

Then around mid October, 2014 shares of HP stock dropped to $32.24 after seeing a continual rise from $12.44 a share back on Nov 19, 2012 to $38 on August 31, 2014.
So like all corporations putting themselves first, they fired 44,000 people..

When people are let go in bad financial times, they're called "layoffs" and when the economic climate is good, the moves are called "restructuring"

Tomato.. To-mah-to..

So then what happened was after the firings, the stock continued to climb as investors were more than happy with the riddance of the 'dead weight' upon their profits
And as of yesterday Feb 24, 2015, HP stock is valued at $38.49

Yay!!

And the head honchos were so happy over the continual growth in their stock that they celebrated..

By announcing another 58,000 people would be laid off by year's end.

Ta Daaa!!
Of course anyone who truly understands the markets know the growth of all Fortune 500 companies have little to nothing to do with business growth or increased sales resulting in growing profits..

It has to do with Fed sponsored QE allowing for very inexpensive stock buybacks which inflate the price of the stocks to keep investors happy and those on the sideline thinking they're missing out on a good investment opportunity.

By axing 58 thousand workers, HP can cut enough costs on top and continue to fund its now exponential surge in stock buybacks, which in the just concluded quarter was a record $1.6 billion, an increase of 178% from a year ago..
This makes its shareholders even richer while its management team get massive equity-linked bonuses.

And those fired.. well they get to enjoy being on welfare for up to 99 weeks then if they haven't found new work or maybe picked up an odd job here or there but not 40hr work, they get to be officially not counted as unemployed anymore which helps keep the national unemployment rate artificially low..

Meanwhile the CEO Meg Whitman got to see her compensation package increased to $19.6 million --- $1.5 million salary, a stock award valued at $8.1 million, stock options worth $5.3 million, a $4.3 million incentive award and $295,400 in perks, including $251,000 for personal use of private aircraft.
And the moral of the story kids:

Never feel loyalty to the company or business you work for because it doesn't matter the economic situation or the fiscal strength of where you are employed..

You can and will be discarded for any or no reason to save them a few dollars.