Hasbro laying off Wizards of the Coast staff is baffling
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Re: Hasbro laying off Wizards of the Coast staff is baffling
#2The market seems to disagree with the piece.
The stock was in free fall from early October and recovered a bit after the layoff announcement.
Anyone have an idea why?
Re: Hasbro laying off Wizards of the Coast staff is baffling
#3The market seems to disagree with the piece. The stock was in free fall from early October and recovered a bit after the layoff announcement. Anyone have an idea why?
Literally, and speaking generally, the stock price might go up due to short term gains? Layoffs are a form of cost-cutting and assuming it doesn’t affect the service or product, this leads to short term increased profits or offsets expected incurred losses? Not everyone playing the stock market is a value investor.
As the fine article notes:
> At time of writing, it’s unclear why Hasbro’s chosen to lay off employees at the single strongest company in its portfolio. This year, Wizards debuted a critically if not commercially successful major motion picture, earned a Game of the Year trophy at the 2023 Game Awards, and was consistently profitable, but Hasbro’s still sacking its employees. It’s the sort of math that only makes sense if you’ve got shareholders to placate.
Re: Hasbro laying off Wizards of the Coast staff is baffling
#4The market seems to disagree with the piece. The stock was in free fall from early October and recovered a bit after the layoff announcement. Anyone have an idea why?
Because layoffs provide profitability, rough as it is.
However! What Hasbro is doing to WOTC is tremendously short term thinking. You do not prune the organizations that are providing all of your liquidity in a time of crisis for fear of pruning the wrong branch and diminishing the growth by sending a message to key people that it’s time to go, which is always possible and arguably likely when you cut.
I believe that Hasbro shareholders should insist on making WOTC’s management team responsible for the whole company, as they have time and again been the backbone of profitability, progressive projects that actually ship and make actual money and have been doing a lot of good decision making in recent years.
Yes I’m aware of the CEO’s criticisms around short term decision making, but he’s always had to answer to the parent company and they are very corporate and MBA-logic oriented.
Now on to the answer to your question, here is the math they look at:
https://www.business.com/finance/big-tech-earnings-and-layof...
From the article:
Key Takeaways
Amazon had $2.8 million in earnings (before interest, taxes, depreciation, and amortization – or EBITDA) for every staff member they laid off in January.
Meta had $3.9 million in earnings for each of the 11,000 staff members they laid off in November. In response to Meta’s cost-cutting strategy, its stock price increased by 19 percent.
Tech giant Microsoft had an EBITDA of $98.8 billion in 2022. This means they earned $9.8 million for each person they laid off in January 2023.
Other companies’ layoffs weren’t as difficult to understand: WeWork ended 2022 with an EBITDA of -$824 million, and Spotify ended its fiscal year with an EBITDA of -$290 million.
Re: Hasbro laying off Wizards of the Coast staff is baffling
#5Penny Arcade comic on the situation, "Isolator":
Re: Hasbro laying off Wizards of the Coast staff is baffling
#6The market seems to disagree with the piece. The stock was in free fall from early October and recovered a bit after the layoff announcement. Anyone have an idea why?
Because layoffs provide profitability, rough as it is. However! What Hasbro is doing to WOTC is tremendously short term thinking. You do not prune the organizations that are providing all of your liquidity in a time of crisis for fear of pruning the wrong branch and diminishing the growth by sending a message to key people that it’s time to go, which is always possible and arguably likely when you cut. I believe that…
The current CEO, Chris Cocks, was the President of WOTC from 2016 to 2022.
Re: Hasbro laying off Wizards of the Coast staff is baffling
#7As a long term Wizards player / purchaser, I think their product quality has been dropping over the last few years. In D&D, take the Planescape box set - it was a really empty world lacking in the imagination that the original second ed Planescape had. All the D&D content just seems like filler to me.
In MTG, they are releasing so many sets that it would cost a fortune to keep up, and the cards are all like 'meh'. They are doing Dr Who and Lord of the Rings - so of course they are easy sells, but the quality is really average.
I guess the equation is - people keep buying, we have market dominance, so who cares about the quality?
Re: Hasbro laying off Wizards of the Coast staff is baffling
#8A layoff gives managers the opportunity to fire people who they've wanted to fire for a while. The firings within WotC were likely opportunistic and not about trying to change the direction or strength of the company. Doing it as part of larger layoffs gives an excuse for it and in theory mitigates drama.
Re: Hasbro laying off Wizards of the Coast staff is baffling
#9Penny Arcade comic on the situation, "Isolator": * https://www.penny-arcade.com/comic/2023/12/15/isolator
"D&D is, for lack of a better term than I have used previously, a culture. Serving that culture is such an honor. Does such a culture survive, truly survive, lodged within a pair of digital, aggressively monetized parentheses?" (Penny Arcade)
D&D is the ony common RPG available these days is most of Australia - it certainly has the largest market share. As cultures go, RPG can easily rebuild itself from a fan-base. I personally liked 5th Ed core rules, yet I could be very happy to see D&D topple itself and reintroduce gamers to a new world of freshly minted RPGs.
Re: Hasbro laying off Wizards of the Coast staff is baffling
#10As a long term Wizards player / purchaser, I think their product quality has been dropping over the last few years. In D&D, take the Planescape box set - it was a really empty world lacking in the imagination that the original second ed Planescape had. All the D&D content just seems like filler to me. In MTG, they are releasing so many sets that it would cost a fortune to keep up, and the cards are all like 'meh'. Th…
I think this hypothesis is a good example of an opinion I’m developing that any average executive team can follow the spreadsheet. But what makes a team truly exceptional is the ability and wisdom to identify and act on the subjective and immeasurable qualities of the business.
If quality falls but sales rise, did quality not matter? Will it not matter? Maybe we’re not measuring the right things. Maybe we have the wrong models. Maybe there is no model and you just have a general intuition that this is probably important regardless.