Downsize at will
30 January 2015 | 0
On this week’s TechRadio podcast Dusty and me talked about results season. It’s a formality that whenever the quarter ends the wonks get ready with their score cards, the markets get jittery and hacks get a crash course in accounting (money in = good, and such). So far, it’s been good news for Apple and Facebook who recorded strong financials; good times for Amazon who got back in the black after a strong holiday season; middling news for Microsoft off the back of poor hardware sales and Windows 8 indifference; and hard times for Samsung as its mobile strategy bites the dust.
Such is the consumer space. This week, however, revealed a darker side to results season and something I haven’t noticed before: a hardnosed willingness to announce job cuts at as part of earnings reports. Three stories broke this week relating to IBM, Citrix and EMC that either reveal a worrying trend or an overactive imagination.
Let’s get the IBM story out of the way first as it has already been refuted by the company. The short version is journalist and vocal IBM critic Robert M. Cringely blogged on Forbes about a top-secret restructuring plan. If implemented, Project Chrome would see job losses in the region of 110,000, almost a quarter of the global workforce, of which 25% of the cuts would be to management.
The story was barely 12 hours old before IBM responded with a trenchant statement admitting that while it had let “several thousand people go” it was planning to hire an additional 15,000 in areas where new skills are required and had taken on 45,000 employees in 2014. IBM labelled the story “baseless” but if true, how damaging would it be to its share price at this time of year?
One story you can cast off as mischief, an attempt to discredit a reporter who should know better than to work without a corroborating source. Then stories about Citrix and EMC arrive announcing restructuring at the same time as their financials. It’s a cute way to say “we had a mixed bag so we’re going to let a bunch of people go”. Brutal stuff. Based on reports Citrix will be ditching 700 fulltime and 200 contractors with a view to saving up to $100 million a year. In what areas, it did not specify.
EMC’s restructuring plan is less clear. Despite a strong Q4, a weakened outlook for 2015 – based partly on currency fluctuations – will see an unspecified number of employees let go although it still plans to end the year with more people than it started with. If your skills are up to date, you probably have nothing to worry about.
Is this the new face of reporting? Statement released with gross and net figures followed by a statement on how many jobs are to be axed because of them. If that’s to be the case, why not go the whole hog and say X loss will lead to Y layoffs in HR, accountancy, admin and middle management; or X weakness in this market will see Y sysadmins and salespeople go.
Two areas you can be sure wouldn’t be touched in such cases would be R&D (because who wants to admit they have nothing new to offer) and the C-suite (because shareholders love stability and people with the gumption to make ‘hard choices’).
Results season for Q1 2015 will show whether this is a blip or a trend.