Activision Admits Recent Layoffs "Could Negatively Impact Business"

wow. talk about karma

Oh really? I'm sure all the leftover employees must have the highest morale possible after learning 8% of the workforce was dropped despite bringing in record revenue. What a surprise that they would feel antsy that maybe their jobs aren't secured even when they DO succeed.

/s

Should've put their games on the Switch sooner and maybe would've saved some jobs.....😛😉

That statement is like something a politician would say to avoid answering a question think of all those people who have put effort into development only to be laid off and the company makes record profit sad situation

Activision has finally learned the one of many Triple A gaming consequences of short term benefits, long term pain.

I'll apologize in advance if this comes off rude, because I rarely (if ever) negatively criticize authors publicly, but this is absolute nonsense. And I don't place the majority of the blame on @Damo, but the original report.

First, this line can be applied to any business decision. There are many unknowns. There are pros and cons to every business decision. Yes, there were will be some negative repercussions to laying off 800 people. However, the company clearly believes that there will be a net benefit to doing so. This statement is simply laying out the fact that there will be some negative impacts as well, and the future isn't certain - which may change the timeline of their plan or require additional structure changes. None of this should be surprising.

I'm not defending Blizzard's actions (Or criticizing them, for that matter) but if we're going to take a statement like that and boil it down to a single line, that single line needs to accurately depict the situation. Blizzard clearly states they believe this is the best thing for the business long-term, despite short term repercussions. Dishing out an average of $187,000 per employee terminated will obviously negatively impact your short-term bottom line.

So what was it for, then? Surely it wasn't just so the guy at the top could get a whole lot more money. That would be really stupid, right Bobby Kotick?

Kind of sounds like they are admitting this is bad for the company and makes them look bad, but that they don't care because now they can keep more money for themselves

Who would've thunk it? Honestly, that probobly should been a no-brainer BEFORE you laid off a bunch of people.

I hope they cut only people who wasn't working right, and they will reintegrate with talented people with ideas enthusiasm to work. This may keep mid-long term benefits. Anyway the videogame business is becoming way too expensive to sustain itself imho.

FIRE BOBBY KOTICK.

Remember when Activison was founded by game designers who just wanted a decent pay and recognition after Atari treated them and their other employees as expendables?

@roadrunner343 Your not wrong in saying this could apply to any business decision, and isolated this reasoning makes sense. Who know's how tight ActiBlizzard's wallets are?

Apparently enough to payout $15m in salaries/stock/benefits for a single top-end employee but not enough for 800 employees. I'm pretty that enormous disparity for a video game company is the primary dissonance for a lot of the fans & media outlets. It has felt more like the goal is turning into "make as much money as possible" rather than "sustainable long-term business".

The lesson is, if you work for a large corporation like that, put in your normal hours, don't do overtime unless you are being paid because they don't give a double mattress about you in the end.

None of the information in this article surprises me to be honest. These same rules apply to most businesses, you can't expect an instant turn around because what their plan may be, it will take time to get there. I hate that they laid off over 800 people, so I hope whatever they are going for actually works out for them, otherwise this will all be for nothing.

@Lnsx They are paying out to those 800 employees. Assuming the figure of $150m is accurate, that comes out to about $187k per employee separated. I'll gladly walk away from my position if offered that.

Regarding your last point, if this was not for long-term profit & growth, then what was it for? Surely no executive wants to take the fall for spending $150m in severance, negatively impacting the business short-term, and negatively impacting company morale. I assure you, if you are in any position of management/leadership in a publicly owned company, those are not the ways you go about getting yourself a nice bonus. The only motivation for this type of restructure - and publicly disclosing the potential drawbacks - is if you think there will be a net benefit when all is said and done.

Now, did Blizzard make the right decision? I don't know. That's up for debate, but I'm sure we'll be able to tell from their annual reports in a couple years.

EDIT: And to be clear, I don't care if people criticize Blizzard for this. There's some fair arguments to be made. Unfortunately, most of the arguments I see people perpetuating are terrible, which I why I felt the need to write my first post. People act as if "The Man" at the top makes all the decisions, and we need to hate him for personally firing 800 people to stuff his own wallet, when the reality is the executives answer to a board of directors and their investors. Corruption exists, certainly, but there's no reason to believe this was a corrupt business decision, at least not with the information we currently have.

@roadrunner343 I agree this is a very very typical caveat to any business decision so that if it pans out badly, the author can go, well we always said there were risks.

800 people may have lost their jobs and had their livelihoods overturned...

But won't someone think of the filthy rich CEO and his many yachts?!?

The problem with Activision is that they are no longer innovators. Everything they have done has been a success which they then has failed after they have stayed at the party for too long.

There’s uncertainty in the industry that isn’t sure if the future is in mobile, streaming, or next gen consoles. Plastic guitars wasted money, so did toys to life, and so did VR. Regulation and Customer dissatisfaction has damaged the cash cow of live services with loot boxes. So it makes more sense just to put the money in a big mattress and wait to see where to invest it.

Such uncertainty is not good for huge companies, and even worse for their employees.

Your blowing this up way out of proportion. They have to disclose every single risk to avoid lawsuits by shareholders, especially those shares held by hedge funds. This disclosure seems pretty begnine to me. Anyone who invests and take the time to read will discover these scary sounding disclosures are part & parcel of every K-10, in every industry.

Activision: Hmm maybe it wasn’t a good idea to fire hundreds of employees

People: hMm mAYbE iT wAsN’T a GoOd IdeA tO fIRe hUndREds oF emPloYEs

How much of this is just what companies do? They present all possible outcomes so they can’t be sued by investors, etc, if it does not work out as predicted?

The worst people on the planet are the corporate apologists that feel the need to defend corporate greed because they buy into the capitalist nonsense that the needs of the shareholders are sacrosanct.

Also these same people try to talk as if they KNOW about business, but they don't. I'm not going to call anyone out anyone by name, but there is a certain someone on this board who can't puzzle out why Activision would toss 8% of their workforce if it might effect their long term outlook. Further, this person lives in complete ignorance of the fact that modern day capitalism is all about short term profits and that (not long term growth) is what leads to larger bonuses for people like Bobby Kotick. If this person had been watching the stock market, he would have seen that Activision stock went up on the day they announced the firings because the greed heads enjoy putting people out in the cold and fewer mouths to feed mean more "short term" money in their pocket. The fact that he doesn't get this shows he is completely ignorant how business works in the later days of vulture capitalism.

Look at Toys R Us for example. Every decision made from the moment that Mitt Romney and Bain capital stepped in was to extract as much money from the company in the short term and, when they stole all they could, they left the desiccated husk to rot in the sun until the company finally went bankrupt. It's just another example of how the greed heads are only concerned with the money in their pockets and sometimes the money in the pockets of the "investors."

"While we believe this restructuring plan will enable us to provide better opportunities for talent, and greater expertise and scale on behalf of our business units, our ability to achieve the desired and anticipated benefits from the restructuring plan within our desired and expected timeframe is subject to many estimates and assumptions, and the actual savings and timing for those savings may vary materially based on factors such as local labour regulations, negotiations with third parties, and operational requirements."

Omg, that was one sentence! My head hurts...

I guess there COD cash cow has finally dried up.

@Yogsoggoth If you truly have an issue with an "Apologist" on this very board, call them out by name, rather than cowardly attacking an anonymous figure that may or may not exist. I can only imagine you were addressing me, despite the fact that reading my posts should very clearly indicate that I am no corporate apologist. If you want to attempt to have an actual discussion on the topic, lets go - if you prefer to continue throwing unsubstantiated attacks at an anonymous figure, feel free to disregard the rest of this post and continue doing so.

As for business acumen, sure - I'm not the cream of the crop. I've got about 5 years of mid-level management from many years ago before deciding I wanted to remain in a technical role. I completed my MBA from PSU in December 2016, so I'm not too far removed from that. I make no claims of being a business mastermind. I do however know enough to have an intelligent conversation with folks on the topic without making up utter nonsense as you appear to do in your second paragraph.

Modern day capitalism is certainly not "all about short term profits" and never has been. That certainly plays a factor in business decisions, but is rarely the leading factor when making business decisions. Of course it happens, and of course there are corrupt executives. The nature of the media is that you hear every time there is a corrupt executive or business decision - you don't hear about the millions of sound business decisions made on a daily basis. This should again be common sense.

The fact that executives are explicitly warning investors that this may have an immediate, negative impact on the business, completely negates any argument you've tried to make in favor of short term gains. Further, you quote their stock price - which was already in the process of recovering before the announcement was made, and has since dipped back down to pre-announcement levels and is down compared to the same time last month. More irrelevant still - you try to claim that this shows corporate greed - which is completely nuts. It's a publicly traded company. If anything, this shows that the general public investors initially felt the layoff will have a net benefit. And that's completely disregarding the fact that such small changes over the course of a few days is pretty much irrelevant in the grand scheme of things.

Again, if you want to criticize Activision Blizzard for the layoffs, feel free. I've admitted there's some pretty good arguments for it. You're just choosing to make terrible ones. Toys R' Us is probably a better example of negligence, but that doesn't have any bearing on what is currently occurring at Activision Blizzard. There's been nothing out of the ordinary with this restructuring so far. It sucks many people lost their jobs, but there's absolutely nothing that has been revealed yet that indicates any sort of mass corruption.

Not to mention gamers now have an even lower opinion of Activision than they already did which was already low.

Look at how we recently learned the average length of service for Nintendo employees is over 13 years. That’s because they appreciate and look after their staff. They don’t just lay them off after a record year!

This treating humans as “disposables” really needs to stop in western culture. You’re playing with people’s livelihoods and it’s people that make a company, nothing else.

Seems pretty straightforward to me. They just made a huge risky business decision and here they're reminding people that there's no guarantee it will work as planned.

@roadrunner343

Fine, I'll call you out directly if it makes you feel better. You have no idea what you are talking about.

This is what happens when workers have no say or security at the workplace. It’s a sad fact of the system that we currently operate within. People talk a lot about democracy and freedom of choice in the political process, but don’t think to extend it to the place where they spend most of their waking hours. At this point it’s silly to say what is happening is due to a couple of bad apples. The barrel has been spoiled long before Bobby Kotick came into the picture.

We can and should do better than this.

@Yogsoggoth You make a good point. After careful consideration of all of the facts you have laid out, I now cede that you are actually are correct. Thank you for your thoughtful discussion and truly excellent counterpoints you have made.

Seriously... are you not capable of addressing a single aspect that you disagree with and actually explaining why, rather than throwing nonsense attacks about? Never mind the stock price "facts" that you throw around that are blatantly false, if you bother to actually go look at the stock price history. Though, I guess it is much easier to claim other people have no business experience when you refuse to engage or discuss the topic. So far, your position essentially boils down to all rich people (And organizations, apparently) are evil and layoffs make you feel bad. Having empathy for those that lost their jobs is great. Assuming every layoff is due to evil, corporate greed and part of a mass corruption scheme is not.

@TheFongz

True. No different than a sports team making some big trades and saying "we hope this improves our championship chances, but nothing is guaranteed"

@Yogsoggoth Activision isn't the only one with large layoffs, and layoffs aren't always about short term profit. Some are about removing bloat and trying to adapt to shifting market shares and product delivery.
Just for 2018:
Sears - Staff for 103 stores
Verizon - 3,000 Staff
Pepsi - 1,000
JC Penny - 360 (after 5,000+ in 2017)
Ford - 2,000
Macy's - 5,000
AT&T - 4,000
Walmart - 500
Sam's - 10,000
Kimberly Clark (Kleenex & Huggies brand) - 5,000-5,500

That's well over 30,000 jobs, yet no one is as angry as some folk are at Activision. And that's simply because, well, vidya gaems. Not all of these layoff decisions came from the idea that "Hey, if we fire X amount of people, our stock will go up."

Still better that EA

It's basically a risk factor. Not an admission or anything like that. A reasonable risk factor. They are trying to be more profitable and that's good for them, but it has risks. There is nothing immoral in trying to become more profitable, that's the way it is supposed to be.

you used a image from Skylanders Academy, i LOVE that Netflix series, in fact i love the intire Skylanders franchise, so i hope Activision will at least make a collection of the first 5 games for the Switch

@roadrunner343 "Now, did Blizzard make the right decision? I don't know. That's up for debate"

Welcome to the comments section...where we are literally able to debate what you say is up for debate.

This story is all to do with context. Yes, this could be said by any company, but in this case, it's being said by Activision. That fact adds some context to just why people feel justified in debating a topic you said yourself is "up for debate". Not really sure why you posted such a long comment telling people it was up for debate then getting cross at people debating and discussing it, to be honest, but there we go.

@MarkieMAN64 You completely ignored the majority of the post. The point was, we don't yet know the business impact of the decision. That's the part up for debate, and only time will tell the full impact, be it positive or negative. It's odd that you mention this story is all to do with context, but then choose to take a small snippet of my post out of context.

As I said previously, I'm all for debating and discussing any topic. I specifically said I was not defending or criticizing Blizzard's actions. I don't know enough about their business to say one way or the other. I simply don't see anything that indicates mass corruption or wrongdoing here.

@roadrunner343 As I said, context. If this was from a company which has a great reputation, it may not be as big news. You're willing to give the company the benefit of the doubt? That's fine. But you seem to be criticising people who have formed an opinion. Their opinion can change and adapt from there.

I'm just not really understanding why, because you've chosen to reserve your opinion one way or the other, everyone else should too.

@MarkieMAN64 I don't believe I criticized anyone's opinion. What I am criticizing is blatantly false accusation and ignoring half of the story. Again, that's the part I said is up for debate - if you personally feel Activision is greedy, I have no issues with that. They've certainly done some shady things in the past. The problem is several unsubstantiated claims were made with no sort of evidence or reasoning to back them up. He also made false claims about stock price that are easily disproved and strongly contradicted himself by saying this move was all about short term profits, when Activision is paying out $150m in severance, stock is down compared to this time last month, and they are warning investors there may be more negative impact. That's the exact opposite of a short-term cash grab.

Perhaps Bobby Kotick should take a pay cut? Considering this idiot is one of the highest paid CEOs in America today...

Maybe some disgruntled employee will walk into the board meeting and do something and maybe then something will change. But I suppose not.

@Yorumi

They had their best financial year ever in 2018. If you believe their full release they are cutting non-developer positions with a plan to increase developer positions so they can increase their software releases. They say explicitly than they plan to increase developer positions by 20% in 2019.

I don't know their management structure so they may be top heavy, but I think this is every workers fear. You go and work hard and your company is doing great and they still let you go because they didn't make enough. It also doesn't make a lot of sense in a vacuum as I'm guessing the non-developer positions support the developer positions. So it seems if one group was increasing the other would as well or at least wouldn't shrink.

Not a big fan of Activision's games anymore. Not much has grabbed my attention lately.

YA THINK?!

Like wow, I don't know if this person is just being brutally honest or is the dumbest person in the world to just straight up say "this decision we just made that didn't actually need to be made at all might've been a complete mistake"

"Here's our plan to save money... Though it might not save money and actually it will DEFINITELY harm the economy and ruin many people's livelihoods and family lives... let's do it.".
I also like the fact they mention labour requirements, I'm sure they would make them more slack if they could. Honestly, not sure about paying anything to these guys, but I suppose that will harm those employees still left. Hope they all find somewhere better to work.

@Yorumi

I work in business and generally defend businesses from comments like to your point and that wasn't what I was saying at all.

It's a real bad look for a business to have record profits and then turn around and lay people off. Will it improve financial performance? Probably because almost every business has fat. Was their management structure too rich? Probably. At the end of the day successful companies should care about their employees and making there life better too. It drives motivation, it helps your recruiting, retention, and productivity. I don't know the details, but they said some teams got too fat. A typical management mistake is throwing bodies at problems. If that happened they should have brought in temp employees instead of a massive layoff when things got moving in the right direction. If they had teams not performing they should fire them for that. Yeah, I'll never know all the details, but I just think it's hard to defend a company after they just posted their best financial performance ever and then layoff people especially when they say they are committed to growth. A comparable would be if Nintendo (who is performing great financially) said tomorrow they are laying off 10% of their staffing. That would make me feel sick to my stomach. I'm not going to give them the benefit of the doubt unless they give a better explanation than the one they provided. Honestly, it sounds like to me they realized that 2019 would be worse than 2018 financially and wanted a built in excuse.

Almost 800 people laid off, and the CFO still got a $15 million bonus (about £11,386,650 for this American's fellow Nintendo fans across the pond).

If each employee received a relatively equal amount of that money divided up amongst each other, each employee could have gotten around $1558.44, if the number of employees was 9625; if the number of employees was 9900, they would have gotten $1515.15.

Essentially, at least a $1500 (or 1138.66 quid) bonus to each employee, but the CFO got $15 million and almost 800 people were laid off.

Really makes me want to work for Nintendo. Their executives will slash their own salaries so nobody loses their jobs. I wish the executives for the grocery chain that I work for would do that; they're cutting our hours like crazy because they want larger profits from us.

I'm probably reading this wrong or something, but it seems to me like they where saying that they layed off people in order to hire new people and get new ideas. Again I'm probably wrong but by chance I'm not it's something to consider. The legal talk is very confusing.

Instant karma.

Ahh well, next time maybe don't work for activision to begin with

@astrofan1993
"Almost 800 people laid off, and the CFO still got a $15 million bonus (about £11,386,650 for this American's fellow Nintendo fans across the pond)."

Of course he did, because that was for last year. If they shot themselves in the foot, because the lay offs will actually have a negative business impact, he won't be getting a bonus next year.

Also as you can read in the article they put aside 150 million $ for severance pay for those 800 people. Of course it is bad to lose your job, but they didn't actually just kick them out on the street.

It's standard reporting as a publicly listed company.

You have to list out your major risk factors when making forward looking statements.

In this case the risk is:

"Our planned efficiency improvements may not actually materialise in the way we have envisaged them"