What balance sheets don’t show is potential. In all companies, except very sick ones, there’s the potential for growth. Usually this resides in the brains of a few key employees.
NXP’s Q2 accounts it says it has spent $715 million on sacking people since September 2008.
Of course it doesn’t call it sacking people – NXP calls it a ‘re-design programme’.
So what has sacking some 4,500 people achieved?
Well the quarter the sackings started – Q3 2008 – the company made $147 million EBITDA profit on sales of $1.3 billion.
Last quarter the company made a net profit of $84 million on sales of $1.2 billion.
In other words it paid out $715 million for nothing, while a lot of people and their families were negatively impacted.
And judging by NXP’s lack of growth over the period, the people who had the brains to deliver growth were the ones who got sacked.