Lessons for SMB Leaders
Layoffs are rarely driven by a single factor.
At companies like ASML, Amazon, AT&T, and Verizon, layoffs reflect a blend of uncertainty, cost constraints, and EBITDA or efficiency goals—but with very different weights in each case.
The better question isn’t whether layoffs are happening.
It’s what’s really driving them.
The Three Forces Behind Most Layoffs
When boards approve workforce reductions, the rationale usually falls into three buckets:
1. Uncertainty-Driven
Slowing demand, macro volatility, regulatory risk, or strategic pivots that push leaders to “de-risk” the P&L and preserve optionality.
2. Cost-Constraint-Driven
Debt levels, margin pressure, or capex intensity that force structural cost reduction to protect cash flow and covenants.
3. EBITDA / Efficiency-Driven
Simplifying organizations, removing layers, and increasing profit or revenue per employee.
In practice, most large companies combine all three—while telling different stories to employees, investors, and regulators.
ASML: Record Profits, Strategic Cuts
ASML posted record 2025 net profit of ~€9.6B on €32.7B in sales, fueled by AI-driven chip demand.
Yet it is cutting ~1,700 roles (about 4% of staff), primarily in technology, IT, and leadership layers, citing the need to streamline operations and sharpen engineering focus.
Interpretation:
This is not distress. It’s an EBITDA-quality and efficiency play—“doing surgery while healthy.”
Amazon: Bureaucracy, AI Capex, and Margin Defense
Amazon is eliminating roughly 30,000 corporate roles while ramping AI and data-center capex.
Capital expenditures jumped ~55% YoY to over $35B, revenue rose ~13%, yet operating income remained flat.
Leadership frames the cuts as removing layers and increasing ownership, not panic cost-cutting.
Interpretation:
A capital reallocation move—redirecting spend from corporate overhead to AI infrastructure while protecting medium-term margins.
Verizon: Cost Reduction as a Way of Life
Verizon plans to cut ~15,000 jobs amid intense competition and lagging subscriber growth.
Executives openly describe cost reductions as structural and ongoing, not temporary.
Interpretation:
Primarily cost-constraint and EBITDA-driven, with automation and AI enabling a permanently lower expense base.
AT&T: Long-Run EBITDA and Balance-Sheet Strategy
AT&T has already generated ~$6B in savings, targeting another $2B by 2026, alongside $145B+ invested in 5G and fiber.
Future savings are explicitly tied to AI, digitization, and automation.
Interpretation:
A long-horizon labor-productivity and leverage management strategy, not a reaction to short-term uncertainty.
The Common Threads Across These Layoffs
Across ASML, Amazon, AT&T, and Verizon, the same patterns emerge:
- Over-hiring during growth cycles
- Structural focus on EBITDA and efficiency
- Capital reallocation toward strategic bets
- Automation and AI reducing labor intensity
- Layoffs during strength, not just crisis
Uncertainty sets the backdrop—but EBITDA and cost structure write the script.
What SMB Leaders Should Actually Learn
You’re not Amazon—but the logic still applies.
1. Don’t Wait for a Crisis to Fix Costs
Run quarterly efficiency reviews: revenue per employee, overhead ratios, and role-level ROI—before cash tightens.
2. Separate EBITDA Protection from EBITDA Growth
Defensive cuts buy time. Strategic simplification increases long-term earning power. Model both explicitly.
3. Over-Hiring and Under-Designing Are Equally Dangerous
Before adding or cutting headcount, ask:
- Is this role fixing a broken process—or padding it?
- Could systems, automation, or redesign remove the need?
4. Use AI to Reshape Work, Not Just Reduce Headcount
Target repetitive, rules-based work (AP, AR, reporting). Measure cycle time, errors, and staff-per-transaction—not just payroll savings.
5. Tie Layoffs to a Clear Operating Thesis
If you can’t explain the decision in one sentence linking strategy → cost structure → EBITDA → sustainability, it’s not ready.
Bottom Line for SMBs
Uncertainty justifies the conversation.
EBITDA discipline determines the action.
The strongest organizations adjust cost structure before crisis—and do it in service of a clear operating strategy, not fear.
