Tech Companies Slash Jobs, Tighten Belts In Tough Economy2:37 PM EST Thu. Oct. 30, 2008
Economic uncertainty is hitting high-tech hard. Technology companies are announcing layoffs and other strategic initiatives to streamline their budgets and save some cash. Whether it's putting thousands of employees on the chopping block, chipping away at travel spending or even cutting ever-important user conferences, a host of companies are tightening their belts.
Here, ChannelWeb rounded up 12 companies that have recently made big moves to save a few bucks.
Motorola is expected to cut thousands more jobs, on top of the 10,000 job cuts it's announced since early last year, the Wall Street Journal reported Tuesday, citing unnamed sources.
The cuts come as Motorola's new co-CEO Sanjay Jha (pictured) tries to bring profitability back to Motorola's mobile device division, which has been steadily losing money. Jha is said to be changing Schaumburg, Ill.-based Motorola's device strategy by scraping a good number of designs and focusing mostly on mid-tier devices. Motorola also plans to ramp up its attention to the open source Google Android mobile operating system in a bid to capture some of that growing market.
Qwest Communications International said this week it will slash about 1,000 jobs to compensate for a massive earnings slip in the third quarter.
According to a Qwest press release, it expects to cut 3 percent of its work force "through a series of actions." The layoffs are expected in the fourth quarter.
Qwest's earnings plummeted from $2.1 billion in last year's third quarter to $151 million in this year's and revenues dropped two percent to $3.2 billion from last year.
In its bid to realign its business and boost competitiveness, Dell has cut nearly 9,000 jobs. While Dell CEO Michael Dell (pictured) said earlier this month that the job cuts have essentially ended, the world's second-largest computer maker said it was still unclear whether the global PC market will improve.
The slashing of 10 percent of Dell's global workforce came after HP took over the number one spot in the PC market. Dell has said some of the cash saved from the job cuts will be used to make acquisitions in an attempt to get Dell back into the top slot.
Budget cuts don't always result in layoffs, however, as evidenced by NetApp. The storage vendor this week announced that it is cancelling its first annual user conference, NetApp Accelerate, in 2009. According to NetApp, the conference was deep-sixed in response to customer feedback about their increased restrictions on corporate travel.
The conference was originally slated for February in San Francisco. The company said registered attendees will receive full refunds of any deposits and/or conference fees they have already paid.
"We had more customer interest in NetApp Accelerate than we anticipated," said Elisa Steele, senior vice president, Corporate Marketing, at NetApp in a statement. "But those same customers told us their travel budgets were being cut and it was difficult to commit to attending in today's climate of economic uncertainty. For those reasons, we decided to cancel this year's program."
Pictured here is NetApp chairman and CEO Dan Warmenhoven.
IBM late last week revealed that it will deauthorize distributor Synnex from selling System x products starting early next year, telling Synnex co-CEO Kevin Murai that IBM needed to regain share and relevance in the market.
While IBM hasn't come straight out and said it to either Synnex or ChannelWeb, pulling System x gear out of Synnex could be seen as a sign to tighten the reins in an uncertain economy. IBM did not, however, end its System x relationships with other distributors like Arrow Electronics, Avnet, Ingram Micro or Tech Data.
"They really didn't have a lot of answers. What they said was they are losing share in the market, losing relevance in the channel, and as a result, they felt a need to take capacity out of the channel," Murai told ChannelWeb this week.
Software giant SAP said this week that it will cut research and development spending and will likely implement a hiring freeze and restrict travel expenses in an attempt to come out of the credit crisis on a high note. In the third quarter, SAP reported slumping software and related service revenue, which hit less-than-expected numbers. At the time, SAP called the belt-tightening a response to a "very sudden and unexpected drop in business activity."
The company may not be shouting its own name in glee this year. Yahoo earlier this month posted lower quarterly profits and announced plans to cut at least 10 percent of its global workforce to save some dough. According to Yahoo, it plans to cut at least 1,500 of its 15,000 employees and reduce its expense-run rate by around $400 million by year's end. The recent round of slashing expands on the roughly 1,000 jobs Yahoo put on the chopping block back in February.
CFO Blake Jorgensen (pictured) has said more cuts could come next year if the economy continues its downward spiral.
Sun Microsystems has been in a perpetual restructuring mode for the last several years and this year has laid off hundreds of employees. While Sun's financial results are expected to come Oct. 30, it issued preliminary numbers on Oct. 20 and expects to report a net loss of 25 cents to 35 cents a share for the quarter ended Sept. 30 on sales between $2.95 billion and $3.05 billion -- down from $3.22 billion in the same period one year ago.
Symantec saying it might not fill its global channel chief position after Julie Parrish leaves at the end of the month could be seen as a sign of tightening the financial belt. While Symantec hasn't said specifically that it's curbing spending or implementing a hiring freeze, COO Enrique Salem (pictured) said he and other top executives are evaluating whether hiring another global channel chief is the most efficient course of action.
"What I always look at when there is change, I ask, 'Is there a more efficient way to run the organization?'" Salem told ChannelWeb. "So my sense is, stay tuned, we'll try to come up with the most efficient way to run it and right now probably put more responsibility into the three leaders that we have around the world."
Avid Technology said this week that it plans to cut 410 jobs -- 15 percent of its workforce -- along with selling off its Softimage 3D game animation business to Autodesk for $35 million -- which takes another 90 employees off the payroll -- to raise capital in the credit crunch. Gary Greenfield, CEO of the audio and video editing software company, however, said he has seen no specific evidence that the economic downturn has hit the struggling Avid.
After posting less-than-expected third quarter profits, Xerox this month said it plans to cut 3,000 jobs, or 5 percent of its work force, to make up for a slowdown in orders from large U.S. companies. The company said the restructuring will touch all departments except sales.
Even before the country hit economic hard times, Xerox had been cutting costs and positions, eliminating 8,800 employees since 2005, 1,500 of which were slashed this year alone.
Pictured here is Xerox chairman and CEO Anne Mulcahy
Systems integrator Agilysys last week eliminated three top executive positions to save on corporate overhead and streamline budgets. According to Agilysys, the positions of executive vice presidents Robert J. Bailey and Peter J. Coleman and senior vice president of IT and operations Jeff Levine have been axed. The trio reported to Arthur Rhein, who retired last week as president and CEO and stepped down as chairman. Agilysys has said it will not fill the now-vacant positions.
"As a result of our emphasis on reshaping and streamlining this company, it has become clear that we no longer can afford the corporate overhead that was anticipated to support our previous growth target," said Agilysys president and CEO Martin Ellis. "As a result, we are restructuring corporate SG&A to improve operating performance, deliver sustainable earnings growth and position the company for the future."
Agilysys said it has set a strategic objective of realigning overhead infrastructure with current market realities. In addition to $17 million of expenses eliminated as a result of cost-reduction initiatives earlier this year, the company has identified further opportunities, including a management realignment and headquarters consolidation.