IT vendor layoffs: The axeman cometh

IBM, Intel, and Sun slice and dice

Intel seems to be facing reality a little more squarely than IBM, and is also facing a much harsher economic reality as the PC business implodes and server sales slacken. Intel reported alarming results for its fourth quarter last week, with sales down 23 per cent to $8.2bn and net earnings down 90 per cent to $234m, and this week decided to close five chip plants and layoff between 5,000 and 6,000 workers, which is between six and seven per cent of its 84,000 global workforce.

There is even talk that Intel might not be able to engineer breakeven, much less a profit, in its first quarter of 2009 - which is another way of saying a word that Intel hasn't heard since 1986, "loss" - but thus far Intel has kept to the party line that it is not providing guidance for Q1.

Sun Microsystems announced layoffs of between 1,500 and 2,000 back in May 2008 and then said it would cut another 5,000 to 6,000 back in mid-November 2008. That last cut would remove between 15 and 18 per cent of its 33,400 workforce, and the word on the street is that many of those cuts started to kick in last week and this week.

Back in early December, Sun shuttered its manufacturing operations in its Linlithgow, Scotland, giving the sack to 130 people. Sun says that it is consolidating its manufacturing of servers and storage in its Hillsboro, Oregon, facility, which is good news for at least between 83 per cent and 85 per cent of the employees who work there.

No word yet where Sun is making the latest round of cuts, but you can expect hardware and software development projects to take some hits and perhaps even some reshuffling of product lines. There is a lot of chatter about Sun killing off its high-end "Rock" UltraSparc-RK processors and their resulting systems, but this far, Sun will not comment on it other than to say - as John Fowler did back in November at the SC08 supercomputer show - that no changes had been made in the product roadmaps.

Of course, that was days after the layoffs were announced. This is now two months later, and the layoffs are happening.

This morning before the market opened, Microsoft announced that it would be cutting 5,000 jobs over the next year and a half; 1,400 employees were laid off this morning. Microsoft missed its Q2 revenue and profit projections. When Microsoft has to batten down the hatches, one of two things is happening, and maybe both: the economy is so bad that a Windows desktop monopoly and damned near a Windows monopoly on servers can't yield or somehow, more people are using Mac OS and Linux than any of us imagined. I think you know what is really happening, and I personally would prefer the latter rather than the former.

Just among these four IT players, that is a lot of people who are facing an empty box and 15 minutes on the clock to vacate the building. ®