One recourse for Sun shareholders who disagree with Management's decision to retain so many employees is to sell their shares. But it is not the only, or, I would imagine, the preferred recourse for many Sun shareholders.
Because for many Sun shareholders to sell now would mean incurring a financial loss that they may be reluctant or unwilling to bear. If one is unwilling to sell one's shares, despite one's disagreeing with Management's decisions, the other alternative is to make your opposing views known to Management.
By remaining a shareholder, one can use one's ownership stake in Sun as a basis to voice one's opinion that Management is not serving shareholders' interests best, by maintaining, let's say, a bloated staff of underemployed, overpaid individuals whose jobs almost have little economic justification for the company.
It would not be hard for shareholders so inclined to make the argument that Sun is over-staffed. One only has to look at Sun's head count the last time the company was at this revenue level. At that time head count, and expenses were significantly lower, and profits measurably and satisfactorily higher.
So now that the company has returned to this revenue level, what are all the additional, and frankly, extra employees doing to contribute to the bottom line? Why weren't they working at Sun the last time around? In all likelihood the current employees are engaged in a great many more projects than Sun had when the company had the smaller head count a few years ago.
But are all these new projects economically justified? Do they all have clear, believable plans to contribute to earnings? Do they now, or are they about to in the foreseeable future, pay their own way and contribute to Sun's bottom line?
Until Sun's management answers those questions, shareholders have a right to question the company's head count.
And question they should. It is hard to believe that all these employees' jobs can be justified in terms of their potential revenue contribution -- especially in light of Sun's particular, and high tech's general, tendency to fund "research" that while interesting in an academic or scholarly way, seldom if ever results in profits to the company paying the bills.
So if Sun really does have an appreciable number of unnecessary jobs filled, what would be the motivation for Management to retain these employees? If a shareholder doesn't believe that the jobs are economically justified, and doesn't believe that Management really believes it either, what could the real reason be that Management maintains a high head count?
Surely, a libertarian CEO, who believes that individuals should find their own place in society without government aid, would not allow himself to end up running a company that pays people to do nothing or very little, in almost exactly the same way that the government's welfare system, that he opposed, did. The irony of that situation would be a little too rich.
Perhaps the real reason is that the CEO has an over-sized ego, and his ego trumps his business sense, and as a consequence also trumps the interests of his company's shareholders; the CEO may not want to make the job cuts, because doing so would seem to lessen Sun's importance in the high tech world; job cuts would tacitly admit that Sun is not pursuing as many great ideas as its head count might indicate; and lastly layoffs would call into question the business judgment of the man who hired all these people, so quickly, and with so little for them to actually do, in the first place. |
