Job cuts have benefited Boeing stock price in past

Despite news this week that Boeing plans to cut about 4,000 jobs by mid-year, the company’s stock price could be going up, if the past is any indicator.

First, a caveat: Correlation is not causation. Just because two variables trended together in the past does not mean that a change in one effects a change in the other.

That said, Deutsche Bank analyst Myles Walton said in a research note Thursday that Boeing’s stock price has outperformed the market in eight of the nine years it has cut jobs during the past 18 years. In the nine years, Boeing hired workers, its stock price lagged the market.

Another caveat, a stock’s performance does not necessarily indicate whether management made a good or bad decision in expanding or contracting its workforce.

Boeing CEO Dennis Muilenburg cut costs to boost Boeing defense division’s profits at a time when military spending was down.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.

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