Wednesday, July 08, 2009

Corporations and Their Employees

Earlier this year, EMC, for which I used to work, "temporarily suspended" its 401(k) match, which was an annual match of up to $3,000. EMC has around 27,000 employees, so we're not looking at a small amount of money here. (It is true that EMC is apparently granting stock to employees in lieu of the match, so there is potential upside, with the emphasis on potential.)

Today, EMC agreed to shell out $2.4 billion to acquire Data Domain, winning a bidding war with Network Appliances. That $2.4 billion is a multiple of what a year of 401(k) match would cost the company. EMC is also a conservatively managed company, and when I left, I think they had something like $6 billion in cash reserves. Maybe that has gone down. Maybe, in the face of decreasing profits, they just had to cut the 401(k) match. But, apparently, they also needed to spend $2.4 billion to buy yet another company.

Update: I have corrected the name of the company EMC is acquiring to Data Domain.


Paul H. Muller said...

Time was a company would cut benefits and jobs as a last resort and only when they were losing money.

What has changed in the last, say, 30 years, is that companies cut benefits and jobs when still profitable but do so because they are not earning enough profits to suit the shareholders.

And there has been no penalty for this. My friends call me a socialist/communist/revolutionary and worse, but I say the only way this is gonna change is when management and shareholders pay a real price for shedding jobs...

Lisa Hirsch said...

I join you in communism.

Anonymous said...

To avoid any confusion by other readers, the company that EMC acquired is DATA (not Digital) DOMAIN. ~ Molly

Lisa Hirsch said...

Aaack, thanks, I will fix that.

Henry Holland said...

My friends call me a socialist/communist/revolutionary and worse

Well, I *am* a card-carrying Socialist of 30 years standing, but I'll never cease to be amazed at the mindset of so many Americans: it's so ingrained in our culture and mythos that we're all rugged individualists who succeed or fail based solely on our virtues --I call it The John Wayne Myth-- that it boggles my mind how easily people instinctively leap to the defense of corporations because thinking about someone other than yourself is "commie talk", that if we do so it obviously leads to the gulags.

What a bizarre people we are sometimes.