CDW Layoffs: 5 Things To Know

Tech Slowdown Beyond Q1 For Vendors …

Multiple tech giants – including Microsoft, Amazon and Google – made massive layoffs at the start of the year with reduced tech demand a factor.

AT&T reported signs of businesses moderating their spending on remote working tools since the height of the pandemic during its first fiscal quarter earnings call Thursday.

The news preceded a nearly 10 percent decline in its share price and appeared to affect wireless competitors, with a 3 percent decline in Verizon’s stock price and a 2 percent decline for T-Mobile.

And not only has a weakened demand for technology been a factor, but AT&T CEO John Stankey pointed to layoffs this year also giving enterprises less of a reason to buy.

“People are making their businesses more efficient – trimming,” Stankey said AT&T’s earnings call this week. “And the wireless business is, of course, correlated to headcount. And as some businesses have done some things to trim their employee ranks, you see that flowing through on handsets and data cards and things like that.”

Stankey continued: “It’s, again, nothing that’s out of the pattern of what we expected in terms of overall growth in the industry. We still have very healthy business services growth. We feel very comfortable about our share. … We’re penetrating in segments like in the public safety area better than the market in total. All considered, that’s pretty consistent with what we expected this year.”

Lenovo has reportedly begun laying off employees as part of a roughly $115 million cost-cutting plan in response to a major downturn in its PC business.

Lenovo’s layoffs are happening after the company, which has dual headquarters in Beijing and Morrisville, N.C., said a “severe downturn” in the PC and smartphone markets caused its revenue to decline 24 percent year-over-year to $15.3 billion in its third quarter, which ended in December.

In its third-quarter earnings call, Wong Wai Ming, Lenovo’s CFO, blamed the downturn on a “confluence of global economic challenges and dynamic shifts in market demand.” This, combined with the IT giant’s hope of doubling its net margin in the next few years, has prompted the company to invest in “high-margin growth engines” and “reduce runway operational expenses” by roughly $115 million.

However, Yang said on the same call that Lenovo believes the PC market could “stabilize sooner than many expect,” with the possibility that PC sales could end up growing at a faster rate compared to 2019, before the COVID-19 pandemic prompted an unprecedented IT spending spree.

“While the PC market still needs some time to digest the inventory to a healthier level, we believe total shipments are likely to stabilize at a higher than pre-pandemic level as early as the second half of this year,” Yang said back in February.

Research firm IDC reported in its latest PC market report earlier this month that Apple shipped 4.1 million Macs in the first quarter, 40.5 percent fewer than it did the same period last year. This resulted in Apple seeing the largest year-over-year decline in PC shipments in the first three months of 2023 compared to its four largest competitors: Lenovo, HP Inc., Dell Technologies and Asus.

Palo Alto, Calif.-based HP, by contrast, took the smallest hit to PC shipments in the first quarter with a 24.2 percent year-over-year decline, resulting in 12 million units for the period.

TD Synnex’s first fiscal quarter 2023, which ended Feb. 28, was a mixed bag for the world’s largest IT distributor. The company, with dual headquarters in Fremont, Calif., and Clearwater, Fla., reported revenue of $15.1 billion, up 1 percent in constant currency.

At the same time, TD Synnex, formed in September 2021 from the merger of Tech Data and Synnex, provided second fiscal quarter 2023 revenue guidance of between $14.0 billion and $15.0 billion, which is down from the actual second fiscal quarter 2022 revenue of $15.5 billion.

Dell Technologies Thursday cautioned in March that it sees macroeconomic headwinds impacting its business in its upcoming fiscal year.

“Underlying demand in PCs and servers remains weak, and we are seeing signs of changing customer behavior in storage,” Chuck Whitten, Dell’s co-chief operating officer, told analysts on the company’s conference call at the time. “Though Q4 was a very good storage demand quarter, we saw lengthening sales cycles and more cautious storage spending with strength in very large customers offset by declines in medium and small business. Given that backdrop, we expect at least the early part of FY24 to remain challenging.”