There’s an old saying that, “In tough financial times, buy Procter & Gamble stock,” because people will always need toilet paper and laundry detergent. In recent years this adage seemed to be true with tech companies, because in our new technology-dependent economy, companies will always need computer hardware and software.
But although the global recession took a while to reach Silicon Valley, it’s clear that tough times are in store for the tech industry as well. This shouldn’t be a surprise, however. Companies are shedding millions of jobs across the country. New jobless claims hit 589,000 on January 17, matching a 26-year high reached four weeks ago. As companies in other industries lose jobs, they find themselves with a glut of extra computers, so hardware spending slows to a crawl. And as money becomes tight, companies will surely delay upgrades to Windows Vista even longer, many skipping Vista altogether while they wait for Windows 7.
In 2008, Silicon Valley seemed immune to the global financial crisis, losing only 11,700 jobs compared to the whopping 200,000 jobs lost after the dotcom implosion in 2000. But the layoffs are just starting. Microsoft is laying off 5,000 people, it’s first mass layoffs in the company’s 34-year history. California’s jobless rate hit a 14-year high of 9.3 percent in December, significantly above the national average of 7.2 percent. According to TechCrunch’s Layoff Tracker and other sources, here are some of the bigger layoffs in the tech industry:
|Company||Layoffs||% of Workforce|
The pain is not just with jobs. Venture capital funding fell 71 percent in the fourth quarter 2008 compared to a year ago. Expect to see small start-up companies drop like flies if they are not already profitable, as investors appear unwilling to fund them any longer.
And analysts say this is just the beginning. Expect tens of thousands more people to lose their jobs this year as the recession forces companies to slash marketing and capital spending.
So a word to my programmer readers: If you have a job, be sure to work harder and smarter in order to keep your job. And if you’ve lost your job, prepare for a long, cold winter in the unemployment line.
Article published on January 26, 2009
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