In an economy such as today’s, many tech companies are hurting and looking for ways to cut costs to maintain profits. Microsoft, Intel, and EBay all announced sad news today. You can find a quick summary below with links to the full stories.
Microsoft announced today that they will be cutting 5,000 jobs over the next 18 months. This cut accounts for more than 5% of their workforce. Microsoft has been in business for over 30 years now and has never had a layoff during that time.
Microsoft’s shares also fell 8% today as they announced that their second-quarter profits dropped by 11%. Among this news, Microsoft also stated they will no longer be able to provide revenue and EPS forecasts:
Due to the volatility of market conditions going forward, Microsoft is no longer able to offer quantitative revenue and EPS guidance for the balance of this fiscal year.
Intel announced today they will be cutting up to 6,000 jobs throughout their factories as demand for personal computers has slowed due to recession. The factories that will be most affected are ones producing older-style wafers and their “assembly-test” facilities. These cuts are blamed on the 90% loss in fourth quarter profits that Intel announced last week.
The “assembly test” plants are where chip makers send their finished wafers to be sliced into separate chips, put into individual packages, and tested to make sure they work.
The wafers made at the Oregon and California plants targeted by Intel are smaller than the wafers on which the most cutting-edge chips are built. The smaller size means Intel can’t squeeze as many new chips onto them.
You would think that in economic down-time such as today, EBay would flourish as shoppers would turn to their auction site as a way to save a buck or two when making purchases, but that has not been the case. EBay is feeling the pressure of recession as well, announcing a 31% drop in fourth-quarter earnings sending EBay shares down 6% over night.
In an interview, Chief Executive John Donahoe said the company knew it would be a difficult fourth quarter, as consumers held on to their money. “They wanted to make sure every dollar counted,” he said.
Among other issues, there was also no gotta-have-it gift item during this holiday season, unlike previous years. Donahoe said EBay often benefits from the scarcity of such products by becoming one of the few places shoppers can still buy them.
The good news for EBay, PayPal revenue is up 11%.
With news such as this coming from industry giants, you have to stop and think how far the economy is going to fall and how badly the stimilus package might really be needed.