Stock drop and layoffs: Is there a connection?

Posted at 6:27 AM, Jan 21, 2016
and last updated 2016-01-21 09:27:59-05

The stock market turmoil is something to think about even if you don’t invest in your company’s 401K or don’t play the stock market.  

Here in San Diego, all eyes were on the market as it went for a roller coaster ride Wednesday.  

“It used to be so fun checking it every morning. That's the first thing I do when I wake up. Not now,” said small business owner, Dena Falcon.

"Each day my annuity is going down lower and lower,” said downtown San Diego resident, Gilda Johnson Benton.

10News looked into whether or not there’s a connection between how much a stock drops and a company’s decision to lay off workers. We thought of Qualcomm as an example. The company laid off 1,314 workers last September. In November, it reported its stock was down 30 percent for the year.

"In my mind, that's not necessarily an appropriate connection to make,” said San Diego State Finance Professor Emeritus, Dr. Tony Cherin.

Dr. Cherin says companies continue to have strong earnings but its stock value can drop simply due to investors panicking and selling. 

"Just about everything you can look at is going down,” said Cherin.

He believes part of the reason for Qualcomm's layoffs were the result of earnings going down due to stiff competition from Samsung, not necessarily due to its stock dropping. He says workers concerned about layoffs at their companies should focus on other factors besides stock value including the overall financial health of their companies and the demand for its products.

"Don't worry about 'I'm going to lose my job tomorrow,'” said Cherin. 

Gilda Johnson Benton is worried what would happen if the stock market continues to go down.

"I'm sure I will have to return to work,” said Benton.

Dena Falcon sees the bright side of the market turmoil.

"America's on sale. That's how I look at it right? Some stocks are just too expensive to buy,” said Falcon.

Shes believes it’s the perfect time to buy low, then sell high later.