July 12, 2007
View From Silicon Valley- Drip, drip, drip
(c) copyright View From
Silicon Valley, 2007. All rights reserved.
So far in 2007, the SOXX is up 10.5%. The median Santa
Clara County resale home price (if you trust the median) is up 12.3%. Life must be sweet in Silicon Valley, right?
Well,
maybe. On the other hand, what we see as a recurring theme in 2007 announcements seems to be getting over-looked.
This
is by no means a comprehensive list, but we believe there is nonetheless a message:
Kimberly-Clark laid off 56 employees,
effective in August, from its Lakeview (CA) diaper mill and distribution center in Neenah.
--That's not even in Silicon
Valley! Who are you trying to kid here?
The San Jose Mercury news laid of 31 people last week. Another
15 Merc employees resigned in protest.
--Now we're talking Silicon Valley but those weren't tech jobs, so who cares, right?
Right??
Symantec announced a goal in January, 2007 to reduce costs by $200 million. They coyly refused to cite
a number but then let a 5% figure slip. Fortunately, somebody in the financial press (besides us) actually did some
homework and figured out this is 875 outs out of 17,500 employees.
--Now we're getting closer. Symantec is a significant
employer here in the valley and they're not claiming jobs here will be safe.
Then May arrived. Some headlines
described it as "spring cleaning":
IBM announced 1,300 job cuts May 9 then, apparently realizing what a small finger
in their profit-leaking dyke this represents, announced another 1,600 on May 30.
--Given the rumor IBM would cut 150,000
(not a mis-print), the second 1,600 had to be almost a relief. Again, these are tech jobs but only a tiny fraction of
the 355K+ global employees and likely very few will be local, anyway.
AMD announced 430 cuts (2.6% of its total) also
on May 9.
--Only 40 of those layoffs were in Sunnyvale or Santa Clara, which is not zero but is really no big deal in a
universe of ~900,000 total county jobs. (Before anyone proclaims this proves Intel is winning again, keep in mind Intel
laid off 10,000 late-2006.)
Motorola advised it was still on track with it's 3,500 employee cuts announced in January
and added a fresh 4,000 cuts for a cool $1B in cost cuts.
--No word on the Silicon Valley content but a former icon of
the technology business is clearly hurting.
Avago cut 230 of it's 1,000 engineers.
--The article says all the cuts,
and all the 1,000 engineers, were in Singapore. The implication being Avago already has zero Silicon Valley-based engineers.
Nokia
Siemens cut 9,000 jobs.
Transmeta cut 20% of it's 65-person staff. (Presumably 13 people.)
Freescale announced
across-the-board job cuts but didn't say how many or where.
--About the same time, we heard Freescale cut their local direct
sales force in favor of a contract sales rep.
--We also heard the cuts were 10% and commentary in the Austin papers
suggest this was likely to be just the first round.
Thankfully, May ended but the layoff announcements did not:
A
quick look at June finds:
CMP Technology (the guys who publish some of the leading technology industry technical magazines),
announced "broad-reaching changes to its product portfolio and organizational structure, the latest steps in its ongoing strategic
transformation into a next-generation media company."
--In other words, they're cutting heads but using by far the most
flowery language among the technology companies. (At least so far.)
Micron announced an "unspecified number"
of it's 22,000 workers would be cut. Reports speculated reductions were focused in Idaho since 70% of Micron buyers
are based in Asia.
--OK, that's a tech company but they're not announcing cuts in Silicon Valley. (Although there are likely
to be some cuts here.)
Now in July:
National Semi announced 500 cuts last week "due to the continuing slump in the
semiconductor business."
--Wait a minute! Who ever said the semi business was in a slump? Let alone a "continuing"
slump??
The rumor mill speculates semi companies such as Broadcom and Marvell are on hiring freeze and/or losing head
count via attrition. We know of more, but agreed not to publish until after they're publicly announced.
Conclusion:
Do these announcements constitute a Silicon Valley crisis? No.
Do they indicate a contradiction to the golden prosperity forecast by the SOXX and house prices?
--Probably.
Are these the only announcements? Not likely
We will add more announcements here as they emerge.
