Tech Layoffs Are Picking Up Speed

By  |  Friday, January 16, 2009 at 9:12 pm

Folks, I have to say the rate at which these layoffs are coming lately is beginning to seriously worry me a little. While we focus here on technology, forgive me a moment while I stray a bit. Across the economy layoffs — as pointed out by this CNBC article — have increased dramatically after the New Year.

The reasoning? After a holiday season that was more about denial of our economic situation rather than facing reality, companies are looking at their balance sheets and realizing what bad shape the US economy is in.  So the first reaction is to cut costs, and that nearly always means layoffs.

You have probably already read David’s reporting on AMD’s latest round of cuts, and Harry’s take on the end of Circuit City. But it goes beyond this.

Motorola? They’ll be cutting another 4,000 jobs due to weak handset sales. Autodesk’s balance sheet is deteriorating, so it has decided to cut its workforce by 10 percent, which leaves about 750 without a job.

Seagate is set to lay off 2,950, which would be 6 percent of its workforce. Worse yet, some employees will see their salaries cut by as much as a quarter. Oracle and Lexmark are both cutting 250 apiece, and I’m sure we’ve only just begun. Sad to think we’re only 15 days into 2009, and its already this bad.

What’s more worrisome is that when stuff like this happens, spending on advertising also drops. Take for example Federated Media, Technologizer’s ad partner. The company announced that it’s laying off staffers who were focused on traditional display advertising in order to focus on more “conversational” social-media marketing initiatives. The weak market for display ads inevitably means less ads on at least some of the tech sites that are dependent on them for revenue.

What does that mean for those publications? Obviously, they’ll start letting go of writers. It’s just like dominoes.

This recession is by no means over: we aren’t even to the worst part yet. President-elect Obama is going to inherit one hell of a mess, that’s for sure.

 
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6 Comments For This Post

  1. Evolution in action Says:
    January 17th, 2009 at 1:30 pm

    Faced with a likely drop in business of 90-95% what are Some Tech companies to do?

    Generally it is impossible, yes impossible, for a company to survive when sales drop to 1/10 of normal levels. Overhead costs mean absolutely massive losses, even laying off 90% of the employees still results in huge losses due to plant costs, severance, finance charges etc. The only way out is to abandon ship, downsize completely, walk away from buildings, throw away most equipment, cancel everything that can be canceled and move into a “garage”. This is pretty much like a giving the house keys back to the bank.

  2. Almost a layoff victim Says:
    January 17th, 2009 at 4:43 pm

    Some of the companies who have laid people off — including mine listed above — have strong business prospects, cash in the bank and should have a good future. Many of these RIFs are certainly done to cut costs, but after such strong sales and stock performance the past few years these cuts are also to demonstrate to market that you are doing *something* to address your failure to meet the revenue you stated at the beginning of last year (when, lets face it, who would have imagined we’d be where we are today). I’m not arguing that these layoffs aren’t beneficial or necessary in many cases — or that that these actions aren’t indications of the terrible state of the economy — but don’t forget layoffs are also good PR and accounting tools

  3. Jared Newman Says:
    January 18th, 2009 at 8:43 am

    I’m not worried as much about tech publications letting go of writers as I am about them paying less or offering less work.

    To explain, let’s look at the video game industry: When EA and Midway lay off employees and close studios, the affected games are the mediocre titles that had the least sales potential. It’s in the company’s best interest to axe these titles when people aren’t buying as much.

    A journalistic publication, on the other hand, can’t make those kinds of decisions. Yes, you could say one beat is less crucial than the other, and lay off accordingly, but it’s more likely the publisher will look for other ways to reduce costs. One gig of mine just put a cap on the number of articles we can run this month.

    When a publication instead chooses to layoff employees, it hurts the brand. That’s why newspapers, in an effort to cut costs, speed up the rate at which their own graves are dug.

  4. Soiy Says:
    January 18th, 2009 at 4:57 pm

    Check out http://www.crootpad.com they got a good game for surviving layoff.

  5. IT and Network Support Services Says:
    January 19th, 2009 at 6:48 am

    I’m not sure these figures take into account regional and geographical considerations.

    For example, in the Washington DC area, most of my business contacts tell me that their respective businesses are still continuing to experience growth.

  6. Today's Top Products Says:
    October 10th, 2010 at 7:15 am

    Really enjoyed the article and found it very informative. Thanks and keep up the great writing!

2 Trackbacks For This Post

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