Stephen Squeri had good news and bad news on Friday. Sales at American Express (AXP) rose 9% in the third quarter. The company raised its profit outlook for the year. The same day, it said it would cut about 3,500 jobs, 5% of its people worldwide. The good news didn't save the jobs.
Squeri's framing was a streamlining plan that frees money for the company's priorities. "We needed to become a more agile and efficient organization," he said. Customers keep spending more, he said. The company keeps adding new card members and holding on to the old ones. None of that was the point. The point was cost. The stock closed Friday at $313.22, down $11.95, and it's down 15.33% this year. We don't hold it.
The week was full of this. Barclays announced 5,000 cuts on Thursday, 5% of its staff. eBay (EBAY) said Wednesday it would let go roughly 1,000 people, 9% of its workers. That follows a February round that hit 6.5%. Challenger, Gray & Christmas counts 43,281 job cuts announced by U.S. employers in September. That's down 20% from a year earlier, so the pace isn't a panic. Andy Challenger of the outplacement firm lists what bosses see ahead. High energy costs. The war in Iran. A rate hike that could make hiring cost more. Healthcare costs that look set to surge. eBay is held at weight in 4 books; nothing added.
Volvo's harder version
Volvo Car's cuts come from the other direction. The Swedish carmaker is cutting 2,500 more jobs. That's about 6% of its staff, and about 2,000 of the jobs are in Sweden. Zhejiang Geely Holding Group of China owns most of the company. The goal is about $504.5 million in savings on top of earlier rounds. Last year it finished a $1.82 billion cost plan that cut 3,000 jobs. Earlier this year it ran a separate $504.5 million plan. The company says its long-term strategy is right and China is still weak. Investors heard something else. The shares fell 24% in one day.
Our read
This is a Career story, and it has two lessons. The first is that a healthy employer can cut you. American Express grew sales 9% and still trimmed 5% of its people. The second is what Volvo Car did to its own shareholders. One announcement took nearly a quarter of the company's value in a day. That's the case for owning a fund over a single stock, and for keeping any one name small. Neither lesson is about predicting the next memo. You can't. You can decide what the memo would cost you.
The one thing in your plan this touches is the emergency fund. The check for this week takes ten minutes. Divide the cash you could reach tomorrow by what you spend in a month. That's your cushion in months. If your health insurance comes with the job, add the price of a plan you'd buy yourself to the monthly number. The answer tells you whether a layoff is a bad month or a crisis. We'd rather fix that number in a calm week than in the week after the email. If it looks thin, bring it to your next review.