Thread regarding SAS Institute layoffs

They could always take a page from MicroStrategy's play book and make an old business much more attractive overnight

This 35+ year SAS company “builder” (who retired on my own outside of any package) has ZERO expectations of getting stock or any form of post-employment windfall from SAS. Such might be “fair”, given that many of us were under-compensated for the level of productivity and value we delivered for SAS, yet WHO says life is FAIR?

The two remaining founders have never been willing to share the spoils beyond profit-sharing and a few solid bonus years. That’s how capitalism works.

Let’s celebrate the fact that we had a beautiful workplace, made some friends, had some laughs and got to do some truly innovative work, especially in the early years.

So I understand that the old timers built the company and I’ve been here almost 30 years myself so I am SORT OF an old timer but why would SAS or ANY company go back to people who have retired and give them more money? It was a (hopefully) amicable departure and you left for a price. Should we go back and give money to the other 3-4 original founders too? How far back do we go? I don’t think current employees are gonna get anything more than a 10-15% discount on stock, if ANYTHING happens! Just not sure why some would even ponder if retirees are going to get a windfall. But that’s just me.

"I want to buy me a piece of Viya", said no one ever.

Limited public offering - Sell shares as desired to pay the 'allowances' of pets and progeny. Hold the rest back for family control. Rinse and repeat.

That package will also be available to those of us already retired, right?

:-) :-) :-)

For current employees who are nearing the end of a long working career with the company, a retirement package would be a much appreciated alternative choice to stock offerings.

As a former employee, I want the company to do well. I would also like them to offer me stock, at a fat discount :-)

Johnson & Johnson recently did a "limited" IPO of part of their company. They want to exit their consumer products business because of its slow growth. They bundled Band-Aid, Tylenol, Listerine, and other products into a new company called Kenvue (KVUE).

Kenvue is valued at $41 Billion. Johnson and Johnson sold only 10% of the shares. They retain the other 90%, which they can sell at their leisure.

This sort of IPO might work for SAS. If market conditions are poor in '24, they could sell a "limited number of shares", then sell the rest when the market improves.

https://www.kenvue.com/brands
https://finance.yahoo.com/news/kenvues-ipo-extravaganza-historic-41-162450039.html

Employees are not going to benefit from any supposed IPO shares, 'limited release' or not. It's long past those days. How would the old timers feel after having spent decades at the company and are now retired? Young people who've invested nothing will now receive shares, but the people who've built the company won't? It would be a PR disaster.

Many of those old timers still sing tremendous praise for SAS, as seen in these threads. In my opinion, those old timers are still big SAS supporters and promoters. Releasing shares to current employees, but not them, would sour and degrade that support. SAS needs all the support it can get.

'Limited release' is just more PR-chain pulling intended to retain employees and string hope along. I got a 'limited release' for 'ya.

What does limited number of shares mean? Do IPOs typically "print" like 500 shares and then set a price or do they set a price and sell as many as they can? Limited makes me think more than ever regular employees will not benefit from this IPO. They will reserve stock for family, friends, VPs, stuff like that. Could they stop giving cash bonus and give stock instead?

This "limited number of shares" looks like a change in plan.

From SAS' viewpoint, a minority owner would infuse cash, reducing the pressure to cut costs, perhaps supporting new initiatives.

From a buyer's viewpoint... they'd purchase a minority share of a declining revenue stream, with no control over its future.

"A limited number of shares"....perhaps this means JG wants the family to retain a controlling interest for now, while releasing capital to give his children more choices with their inheritance.

Maybe also he thinks this will benefit employees by being able to offer a stock purchase scheme like other tech companies do, but can't see why employees would want to hold on to a stock with no growth prosepects.

The WRAL article says this..."a plan to offer a limited number of shares in a public offering next year." The key might be "limited number" What does that mean?

In my opinion, while JG is still alive, an IPO, private sale, or mass layoff will not happen. He'll go out on his own high note, having run a company his entire adult life.

What happens after his demise, however is anyone's guess. These lyrics come to mind:

"And the man in the back said, "Everyone attack"
And it turned into a ballroom blitz
And the girl in the corner said, "Boy I want to warn you"
It'll turn into a ballroom blitz
Ballroom blitz, ballroom blitz, ballroom blitz, ballroom blitz

Unfortunately, the only hope I see for any kind of future positive growth at SAS is if they pare their current workforce down to the absolute best employees, pay them righteously/give them a small piece of the action and hire a few world-class technical and business leadership to guide them in “doing the next thing”. In concert, with this must be a sunsetting of several more dead products and a narrowing in focus on what they build in the near term. Given SAS’ autocratic history, I have very little hope this will occur.

Becoming "IPO-ready" also prepares the company for a private sale. Neither an IPO nor a private sale have any requirements on growth or margin.

It certainly helps if at least one number is positive, and the margin is. So there's nothing to stop an IPO or private sale.

In either case, a buyer might think: I can increase this margin by laying off staff. Unfortunately, there's nothing to stop that either.

“This means we would be financially and operationally ready to enter the public markets."
What a load of BS!
I'm hearing from my contacts who are still in sales at SAS that "IPO-readiness" is more and more restrictions on how they can structure deals which is making it even harder to sell the products. This does nothing to make them more "IPO ready".

The only way to make SAS more attractive as an IPO is to start growing again or improve margin.

So produce some new products that the market is keen to buy and therefore start growing again. We all know that's never going to happen.

Or layoff 80% of the workforce to boost margin, which is much more realistic. But amazingly there's little sign they're going to do that either. None of it makes sense. Maybe JG is just being a stubbon old man and refusing to accept the reality that most of the employees need to go. Who knows, only time will tell.

Those announcements felt like they had shuffled the numbers in a multitude of ways so they could proclaim "Look how great we are!? We've been profitable for X years in a row!"

The language in those announcements felt suspect. "Revenue growth", "profitability", "double-digit growth", etc. The phrasing was not consistent from year-to-year, and there was no talk of the expense side of the ledger.

That is true. The language has changed over time. From "Record growth" and "Double digit growth" to "Profitable". How profitable? Only a select few know.

Using CPI, $3.1B in 2023 is roughly $2.4B in 2013 dollars.
https://www.bls.gov/data/inflation_calculator.htm

Perhaps it was much more profitable then than it is now.

I am a little surprised SAS is still profitable given that revenue isn't really increasing. Maybe they lost enough employees and cut enough programs and benefits (Family Picnic, etc.) to close the gap. I found a nice chart that showed revenue growth until 2013. I cant find one after that. https://www.businesswire.com/news/home/20140123005385/en/SAS-surpasses-3-billion-in-2013-revenue-growing-5.2-over-2012-results

Perhaps someone better at finance and econometrics than myself can factor for inflation to estimate the possible revenue decrease SAS experienced between 2013 and 2023. SAS may have shed a couple thousand employees, but the best remaining workers + everything else is costing a lot more.

January 2014 - SAS announces revenue surpasses 3B. 2023 - SAS announces revenue surpasses 3B...again.

CARY, N.C.--(BUSINESS WIRE)--Business analytics leader SAS in 2013 achieved its 38th straight year of record revenue – US$3.02 billion – as organizations embraced a range of SAS® solutions.Jan 23, 2014