Arm’s Job Cuts Could Be a Sign of Things to Come

Amid the crush of bad news lately, one thing we haven’t seen too much of is job cuts. In fact, the story has been more about the tightness of the labor market, as tech companies struggle to hire enough people. But a Bloomberg report today about chip designer Arm planning to cut up to 1,000 jobs to improve its profitability ahead of an IPO may be a harbinger of things to come. 

Arm’s cuts follow last week’s news that buy now, pay later firm Sezzle was laying off 20% of its North American workforce in an effort to save around $10 million and help it move closer to profitability. Both of these episodes point up a reality that investors nowadays are paying more for profitable companies than for fast-growing but loss-making firms. A few other firms out there are spilling red ink by the tanker load, so Sezzle and Arm are unlikely to be the last to cut back.