Tech companies pushed to make
by Cynthia Fowler
According to Michelle Kessler of USA
Today, the tech recovery everyone expected to occur this year has
now been pushed out as late as 2004. This delay is forcing many
tech companies to dig deeper in desperate attempts to survive.
Applied Microsystems must sell its
chip-testing business, layoff 90% of its workers, and reopen as
a software startup business with just 25 employees.
Silicon Alley Reporter, a tech trade
journal, earned $12 million in revenue in 2000. Once advertising
plummeted after the dot-com fiasco, Venture Reporter took its place.
By cutting from 50 to 12 employees, relying on subscriptions and
charging for data instead of advertising, it has managed to break
Cisco Systems, Apple Computer, CMGI,
Hewlett Packard, and Autodesk had to resort to slashing or freezing
salaries and tightening their belts on discretionary spending. CorporateEducation.biz
executive director Ron Miskie decided to handle administrative tasks
himself and postponed purchasing equipment. Penguin Computer of
San Francisco decided to stay put instead of moving to a new location
to save the company $100,000.
Both Linux and French telecon gear-maker
Alcatel were forced to cut jobs in half in 2000. Lucent Technologies
is now on round Eight of cuts and has suffered more than 50,000
job losses in the last two years. JDS Uniphase, a network equipment
manufacturer, has already cut 20,000 jobs and plans to cut even
Companies that have chosen to cut jobs
may find that it is harder for them to recover when the economy
improves. Banc of America Securities analyst Chris Crespi was quoted
as saying "They've cut to the bone, and right now, they (might
be) cutting away part of their soul to survive."
Not cutting enough can also have a
negative effect. For example, shares of Electronic Data Systems
stock plunged last week after it announced an expansion of its sales
force at the same time that its earnings expectations were cut.
Tech and telecom employment cuts totaled
33,845 in 2000; 317,777 in 2001; and 198,601 through August of 2002
according to Challenger, Gray & Christmas.