>When companies have "bad quarters", are there
>alternatives to sticking it to lowest workers? Can stock-holders
>or hi/lo management eat some of loss too? When a company says,
>we must fire you because of "the stock-holders" ---- do
>companies have actual contractual agreements to keep
>profits at a certain level? With whom? If so, what are the
>additional consequences for a "bad quarter"?
Last night, Eastman Kodak announced to the world a disappointing quarter, and its stock was down 8 points on the open this morning. A bad quarter for EK was a profit of $344 million, which is about $30-40 million short of what Wall Street expected.
My first thought was, oh too bad, only $344 million! For you & me, that'd be a pretty good lifetime. Yeah, of course the stockholders could live with this on one level. But that's not the capitalist way. A firm must not only be profitable, it must earn at least the average rate of profit, or it will be under attack. There's no contractual relationship specifically, but either the share price will fall enough to attract a takeover, or the shareholders will organize to force management changes. They own the company.
Doug