Here is the full memo from Microsoft CEO Steve Ballmer about the 5,000 layoffs and other cost cuts just announced, due to economic slowdown, which also resulted in weak financial results for the second quarter.
It’s not a happy missive, obviously, but tough times have also hit Microsoft hard.
BoomTown was a squeaky enough wheel to get Yahoo CEO Jerry Yang to grant a long interview by phone yesterday–just a day after he had announced weak third-quarter earnings results for the Internet giant, caught as others are in the econalypse, as well as layoffs of at least 10 percent of its global workforce.
But instead of being glum, as you might expect, especially after a year of corporate turmoil that would have finally gotten to even Job, Yang sounded surprisingly confident that Yahoo would emerge a winner after all the wrenching change is wrought at the company he co-founded.
Here is the second of two parts.
BoomTown was a squeaky enough wheel to get Yahoo CEO Jerry Yang to grant a long interview by phone yesterday–just a day after he had announced weak third-quarter earnings results for the Internet giant, caught as others are in the econalypse, as well as layoffs of at least 10 percent of its global work force.
But instead of being glum, as you might expect, especially after a year of corporate turmoil that would have finally gotten to even Job, Yang sounded surprisingly confident that Yahoo would emerge a winner after all the wrenching change is wrought at the company he co-founded.
Here is the first of two parts.
Weaker results? Check.
Guidance going forward weaker still? Check.
Layoffs? Check.
Economy sucks? Double check!
Nonetheless, Yahoo CEO Jerry Yang said he “remained optimistic” about Yahoo and was going to “get fit” and power through its obvious troubles.
Get this guy over to the McCain campaign, pronto!
Here’s a bright spot in Yahoo’s third-quarter earnings announcement later today: Sources told BoomTown that the company will not announce a specific number of layoffs tomorrow, although it will give an overall percentage of employees and costs to be cut.
In other words, you get to practice your long division and multiplication skills! Fun!
Other than that, of course, when Yahoo CEO Jerry Yang gets on the horn at at 2 p.m. Pacific time, the outlook is likely to be a wall-to-wall glumfest.
Today, Google, the Internet’s juggernaut in both power and profits, will release its third-quarter earnings after the markets close.
Investors and Silicon Valley will be closely watching Google’s performance and also be listening carefully to the guidance its executives will be giving, hoping the Web’s most stellar performer of late does not stumble.
If it does, some think it is look-out-below time. And, if it does not, it will presumably be all sunshine and daisies for the sector.
Neither is exactly true.
As the economy continues its very drastic downward slide–part of a binge and purge cycle that is almost classic in its psychology–it is, of course, no surprise to see Web 2.0 finally wise up.
While the quarter-dropping-in-the-slot was a bit slow, I think no one now doubts the impact of the tech and Internet business, going forward.
Of course, this change in tone is a good thing and much needed, given how frothy things had become in Silicon Valley over the last two years.
In other words, the recent excess is not the culprit, although its departure is a very good thing.
Yahoo shares dropped yet again yesterday, closing at $12.65, in a vicious day across Wall Street.
That’s a decline of 8.07 percent or $1.11, a worse performance that the 7.3 percent decline in the overall market.
This means that Yahoo’s market cap is now at $17.53 billion, which has to make one wonder if perhaps a foreign company, a private equity firm or some outfit with some cash will swoop in and grab it.
Is it just me or does the sudden prospect of venture capitalists–the very investors who fueled the Web 2.0 valuation insanity with their typically egregious overfunding of start-ups–lecturing about the bleak economy and the need to tighten belts seem just a tad ironic?
It’s kind of like Washington politicians who handed out-of-control bankers one deregulation after another in exchange for campaign donations now mounting their high horses and decrying Wall Street greed in the current economic meltdown.
To be fair, the whole market was dragged down today due to worries about a deepening recession. But Yahoo’s ever-decreasing share price has got to have the company and its investors mighty worried.
Hitting lows not seen since the dot-com doldrums of 2001 and 2002, Yahoo closed at $15.58, down $1.38 or 8.14 percent, giving the troubled Internet giant a market cap of just $22.08 billion.
About 10 days ago, Google CEO Eric Schmidt opined in a press conference about the growing financial crisis: “My guess is that the drama is in New York and not here.”
Bad guess, as it turned out. Really bad guess, actually.
Yesterday, Google–one of many tech companies hammered after the House rejected the bailout plan–got slammed badly, along with Yahoo, Microsoft, Apple and many others.
Today, most of those stocks made back a lot of what they gave up.
But the experience should have given Silicon Valley a bracing wake-up call that it is in no way immune to the situation and that its businesses will likely suffer along with media and all sorts of other consumer companies if the credit crunch is not assuaged relatively soon.
Before the recent crash-and-burn of the overall U.S. economy, BoomTown went all Cassandra and started talking about the worrisome weak tech stocks at the beginning of September.
Then in mid-September, after listening to the frothy statements at two demo conferences from a series of start-ups, I got even grumpier in a post called “Dear Web 2.0: It’s Still the Economy, Stupid!”
In Greek mythology, Cassandra was given the gift of prophecy, except–due to her rejection of Apollo’s affections–nobody would ever believe her warnings.
Well, this time you might want to believe it–for Silicon Valley, it really is the economy now.
With the economic situation obviously worsening–don’t say you weren’t warned–BoomTown has no doubt now that Internet companies are in the midst of reevaluating their troop numbers to streamline themselves for the coming few months of financial winter.
That’s why, according to several sources at Yahoo, for example, top execs are telling some employees that the company is considering options to get itself sized right for an expected slowdown in the advertising market.
Why now? Well, it is critically important that Yahoo give Wall Street a solid performance when it reports third-quarter earnings on Oct. 21, for the period ending Sept. 30.
Last week, one of the things that struck me about the coverage of the two main tech conferences devoted to start-ups, DEMOfall and TechCrunch50, was the almost complete lack of discussion–or, more appropriately, worry–about the troubled economy.
This, even though the subprime mortgage crisis remains in full swing, along with the continuing turmoil around the stability of Wall Street financial firms, as well as Fannie Mae and Freddie Mac. Also, let’s not forget those sky-high gas prices.
The situation has worsened this past weekend with more dangerous developments in the financial sector, which eventually means that the popular Web 2.0 maxim of “growth before profits” is also in for a very bumpy ride.
We’re posting all the interviews from the sixth D: All Things Digital conference that took place in late May.
Here’s Part 3 of 3 of an interview I did with Thomson Reuters CEO Tom Glocer.
In this video, Glocer talks about how to avoid the fate of the music industry, the troubled economy, his favorite gadgets, new ways to deliver information on a variety of devices, and also takes questions from the audience about machine-trading and possible new acquisitions.
Kara Swisher started covering digital issues for The Wall Street Journal's San Francisco bureau in 1997 and also wrote the BoomTown column about the sector. With Walt Mossberg, she co-produces and co-hosts D: All Things Digital, a major high-tech and media conference. Read more »
Here is a statement of my ethics and coverage policies. It is more than most of you want to know, but, in the age of suspicion of the media, I am laying it all out.
D is unlike any other executive conference. Since its debut in 2003, D has brought to life the energy and excitement of the digital revolution in an unscripted, upfront and unparalleled way. Read more »
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