I think that "we can run this unprofitable business with half its current headcount, thus turning it into a profitable business" is hardly an indication of failure.
You're assuming the unprofitable business will become profitable.
Businesses are never unprofitable because they have too many employees.
Businesses are unprofitable when management lacks the skills, the foresight, or the vision to make those employees profitable.
Edit: If this isn't obvious consider what a world-class entrepreneur could do with 12,000 experienced employees, a couple of billion in severance savings, and a kick-ass idea.
What can you do with 12,000 employees with minimal experience and skills who have been working on a long-standing but now obsolete product line that was manpower intensive, when your business is being completely realigned around other product lines that still make a profit but rely on small numbers of highly experienced staff?
This is not a random question; this company exists.
