Layoffs Hit Silicon Valley: HP Today, Who Tomorrow?
by Kara Swisher
Posted on September 16, 2008 at 7:15 AM PT
Of course, the layoffs at Hewlett-Packard (HPQ) were expected, part of its cost-cutting integration after the $13.25 billion acquisition of Electronic Data Systems.
HP said yesterday that the 24,600 jobs the tech giant axed, or 7.5 percent of the total work force, were made to “streamline the combined company’s services” businesses.
But BoomTown has to wonder if other big tech and Internet companies might not be looking at HP’s move and the current economic mess and wonder if it might be a good time to pare down a bit, after a spate of overhiring.
In fact, the ill winds that will surely be blowing west from Wall Street remind me of the classic lines of noir crime novelist Raymond Chandler:
There was a desert wind blowing that night. It was one of those hot dry Santa Anas that come down through the mountain passes and curl your hair and make your nerves jump and your skin itch. On nights like that every booze party ends in a fight. Meek little wives feel the edge of the carving knife and study their husbands’ necks. Anything can happen.”
Indeed, bad times, as one smart exec told me yesterday over lunch, are very good times to clean house.
And, as I wrote yesterday in post called “Dear Web 2.0: It’s Still the Economy, Stupid,” the frightening gyrations of the financial markets will surely impact Silicon Valley, as much as the culture here tries to pretend it will never be affected.
And that’s why I am guessing the sector is going to be seeing some judicious job cuts from managers in the next few months.
Yesterday, for example, our most excellent blogger contributor, Eric Savitz of Barron’s, cited a report by Wedge Parters on the online auction giant eBay. Paraphrasing the Wedge report, he noted “the company’s business is ‘deteriorating’ and that the company is readying layoffs that could affect 10 percent of the company’s 15,000 employees.”
Many think companies like Yahoo (YHOO), Microsoft (MSFT) and even Google (GOOG) must start to smartly make cuts–even if they add in other areas–to make sure that they are lean and mean in a less frothy market.
And I am also guessing start-ups, even those flush with investment cash, have to be thinking hard about spending as freely.
While you certainly can’t cut your way into growth, a little prudence is one quality Web 2.0 is probably about to learn.
Comments
You are correct in that you can’t cut your way to greatness, but being overweight to obese will not keep you on the path to greatness, either. Many western businesses have not only too many staff but staff with the wrong skills to compete in the global market. It’s better to lose some weight to save the patient than slowly die as a bed-ridden behemeth (e.g., Detroit automakers, integrated steel in the 1970’s-1980’s, etc.)
Posted by Stan Lepeak at September 16th, 2008 at 8:40 amI just don’t see why HP would be laying off people, being that their company does exceptionally well. Besides, after Jay-Z did the “Puters Putin” laptop commercial, I thought their sales would skyrocket through the roof…
http://www.ShawnDrewry.com
Posted by Shawn Drewry at September 16th, 2008 at 9:48 amThe irony is that one type of digital revenue will stay, or appear to stay, robust in the coming months and that is digital revenue within traditional media companies. Mainstream companies know which way the wind is blowing and will not want their emerging digital businesses to come out damaged by this recession. So while they might cut back on their traditional marketing spend, they will not cut back their digital marketing spend nearly as harshly.
Posted by John Welsh at September 17th, 2008 at 1:15 pm