IBM’s CEO Virginia Rometty has taken to her web cam to blast her be-suited staff who are “too slow.” Rometty sent off a five-minute internal video message which was so grumpy they did her the favour of sending it to the Wall Street Journal. She moaned at the company’s sales staff for failing to get ink on the page for a number of potential deals.
“As the quarter ended, hundreds of millions of dollars of software and mainframe opportunities, they didn’t close and that was because we didn’t move fast enough,” she snarled.
Rometty said that in at least one case IBM was too slow to understand the value and then engage on the approval and the sign-off process and it didn’t get done. If a client were to have any requests or questions in the future, IBM had better have a response ready within a day.
“And if anything slows you down, call it out. Engage management, engage leadership and let’s deal with it,” she growled. She has already given her “under-performing” storage crew a dressing down and said she will be taking “substantial actions” to sort out that area of its business and Rometty has also switched the head of corporate strategy with the head of systems and technology in a bid to shake things up.
But on the plus side, she confessed that her strategy was “the right one” and “fundamentals are strong”. So in other words she is right and those lazy suits are wrong. Big Blue missed its first quarter targets after expected income from mainframe systems and related software deals, along with patent licences, had to be rolled over into the second quarter.
IBM, a bellwether for the IT industry, is in the midst of a drive to boost profits by 2015 against an uncertain global economic backdrop.
Local management has yet to officially outline whether there will be a formal job-cuts plan approved by U.S. headquarters, the union representatives said, but said the numbers had already been communicated.
“Management is set to present a plan to cut between 1,200 and 1,400 staff over the next two years,” said Pierry Poquet, secretary general of the UNSA union, who said a meeting was planned for April 25.
“For now it is only a target…we’ve heard such announcements before but they don’t always come to pass.”
The CFE-CGC union’s representative, Evelyne Heurtaux, confirmed the figures. “We’ve been told a figure of around 1,300 jobs cut over two years,” she said.
IBM currently employs around 8,000 people in France, Heurtaux said.
An IBM spokeswoman could not be reached for comment.
AMD is about to face a cash crunch just as the outfit needs the dosh to push into new markets.
According to Bloomberg AMD is facing yet another crisis. Not only is Chief Executive Officer Rory Read firing workers to cut expenses as the chipmaker’s sales slide, he can’t cut costs fast enough and is seeing his cash reserves shrink faster than an Arctic swimmer’s scrotum. AMD’s cash supply has fell to $1.5 billion in the third quarter, shedding $279 million from the previous period. If this goes on the company might only have $600 million in the bank by this time next year. AMD has $2.04 billion of debt.
No one has ever worried about AMD’s cash flow before, but now there are some serious concerns. Particularly as the PC market, which provides 85 percent of AMD’s sales, has been drying up because of the economic melt down.
Fears are that AMD might run out of money before any transformation to the new technology landscape can happen.
PC chip maker Advanced Micro Devices announced that it will cut its workforce by 15 percent in a bid to reduce operating expenses, its second round of layoffs in less than a year as it struggles with a weak global economy and a consumer shift toward tablets.
The chip maker, with a staff of nearly 12,000, said in a statement it expects its restructuring actions, which will also include site consolidations, to result in operational savings of $190 million next year. It expects to record a restructuring expense in the fourth quarter of about $80 million.
“It’ll bring earnings up, I guess, but you still have to ask how disruptive this will be and what roles are they cutting,” said Stacy Rasgon, an analyst at Bernstein Research. “The market is not going their way and they’re not in a strong position.”
Last week, AMD warned that its third-quarter revenue fell more than previously expected and that gross margins suffered from a $100 million writedown due to lower future growth of some products.
New Chief Executive Rory Read took over at AMD last year promising to fix long-standing execution problems that have plagued the chip maker. But since he took over, AMD has continued to lose money as well as market share to Intel and graphic chip rival Nvidia.
Tablets and smartphones, once considered a niche market by Intel and others, are fast gaining favor with consumers and eating into sales of laptops and desktop computers, while a slowing global economy is dampening spending in general.
Struggling mobile phone giant Nokia will sell some 500 wireless patents to U.S. firm Vringo and divest its Qt software business to Finnish IT services firm Digia Oyj to prop up its dwindling cash reserves.
Nokia is fighting for survival after losing the smartphone war in which Apple and Samsung have gained dominance. The world’s second-largest cellphone maker has linked up with Microsoft to sell phones using Windows software but has so far had only limited success.
To halt losses Nokia unveiled a massive restructuring program in June, including cutting 10,000 jobs and said it plans to divest non-core assets.
The patent deal nets Nokia $22 million, while still leaving it with one of the strongest portfolios in the wireless industry.
Vringo said it will pay cash for the patents, which cover a broad range of technologies relating to cellular infrastructure. Should the patents yield more than $22 million in revenues, Nokia will collect a further payment of 35 percent of income.
The value of the deal in which Nokia will divest Qt software to Digia was not disclosed, but analysts estimated it was a fraction of the $150 million Nokia paid for Qt’s then-owner Norway’s Trolltech in 2008.
Qt software was a central part of Nokia’s strategy until 2011 when it decided to swap its own smartphone software for Microsoft’s Windows Phone.
The software is used by more than 450,000 developers for making applications for some 70 industries, including automotive, medical, industrial automation and defense.
Valve ‘boss’ Gabe Newell caused quite a stir this week when he remarked during a talk at Casual Connect in Seattle that Microsoft’s Windows 8 is “kind of a catastrophe for everybody in the PC space.” Some are saying that Windows 8 is the next “Vista” and that it’s not too friendly for consumers or developers. Recently, Rob Pardo, executive vice president of game design at Blizzard, took to Twitter to endorse Newell’s comment.
Pardo commented on the “nice” interview that former Xbox executive Ed Fries did with Newell, and he then proceeded to note that Windows 8 is “not awesome for Blizzard either.”
The big concern from Newell and others is that Microsoft will make Windows 8 a closed system. It’s been suggested that Microsoft will seek more control over various applications and purchases made through Windows 8, but the company has yet to announce full details.
Apparently HP CEO Meg Whitman has had the challenging task of going on a charm offensive. She has told Autonomy staff they have a bright future with HP.
The company bought Autonomy for more than $11 billion as part of a daft move by the then CEO Leo Apothiker to turn HP into SAP. However Autonomy did rather badly last quarter and was to blame for a disappointing performance of HP’s software division.
Whitman said in an email that it was “always hard when a charismatic founder, who has built a great company leaves.” But she added that Autonomy staff had a “very bright future” aft HP. She stressed that Lynch’s departure was down to the division’s poor performance rather than the notion that Autonomy had no place in HP’s corporate culture.
Already one in five Automony people think that the the writing is on the wall and have cleaned out their desk and moved on to greener pastures. Lynch will be replaced by HP’s chief strategy officer Bill Veghte.
World on the street is that perhaps things had not gone so well at integrating Automony and Lynch took the fall for it. HP had not done well with its software, not just around Autonomy but in other sides of its software suite as well.
The problem is that HP does things one way while Autonomy did them another. Interestingly enoguh, Autonomy never fell short on its sales targets until it was bought by HP.
Hewlett-Packard Co is considering slashing its workforce by 8 to 10 percent, or a minimum of 25,000 jobs, sources familiar with the matter told Reuters, as newly installed CEO Meg Whitman strives to steer the storied Silicon Valley giant back to the path of growth.
The job cuts, which could include retirements, are under discussion but have not yet been finalized, several people familiar with the situation told Reuters. The sources did not elaborate on a time frame or other details.
HP, which employs more than 300,000 people across the globe, could announce the layoffs as soon as next week when it unveils quarterly results, said the sources, who asked to remain anonymous because the plan has not been made public.
Analysts have been expecting job cuts in the wake of Whitman’s plan to merge the company’s personal computer and printer divisions.
Word on the street is that IBM is planning to reduce its US employee head count by 78 percent over the next three years and replace them with foreign based workers.
According to Cringely getting rid of that many employees in three years will be difficult. What the move will do is leave behind top management and the Big Blue sales organization. It would also mean that all those workers on US government contracts will have to stay. Otherwise IBM offices will be populated by tumbleweed and a lone harmonica player.
Cringley quoted a long forgotten interview he did with Steve Jobs who said that the downfall of IBM was that it has best process people in the world. They just forgot about the content. In other words IBM thinks that it can export their entire business model to places were the labour is cheaper. The question is whether IBM’s US customers will put up with that. Americans, who are largely ignorant of other people’s accents, really hate call centres answered by Indian staff. If you want to know how hard they find this, remember that we are talking about a nation which could not accept Morecambe and Wise, because Eric’s accent was too hard to understand. [237 years and you still can't get over the revolution. Ed.]
Biggish Blue has fixed the problem of troubleshooting, using conference calls to instant messaging because the Yank’s can’t understand them. IBM’s biggest money maker is its Global Services business, which also employs the most people. But that section of the company is not doing as well as it did a decade ago and this is the area where IBM jobs are being shipped offshore. Walt Disney Company got upset and left because of this.
Cringley said that what is odd is that IBM still has the same legendary layers of management it had in 2007. So it seems that IBM thinks that it can keep its managers and then move to a huge chunk of overseas workers and do the same thing. Fortunately for IBM, its grand plans tend to die a death in its bureaucracy. In 2007 it planned remove most of its management layers and become slimmer and meaner. That plan did not go anywhere because the managers who were responsible for the cuts were the same people who would have to go.
In this situation, firing all your US staff means that managers will have to deal with call centres and techies who they do not understand just like their customers. Just like their customers they will change their minds too.
Blizzard is to axe 600 jobs following an internal review. Around 90 per cent of these reductions will be unrelated to internal development, and the World of Warcraft development team is not affected.
“Constant evaluation of teams and processes is necessary for the long-term health of any business,” said CEO of Blizzard Mike Morhaime.
“Over the last several years, we’ve grown our organisation tremendously and made large investments in our infrastructure in order to better serve our global community. However, as Blizzard and the industry have evolved we’ve also had to make some difficult decisions in order to address the changing needs of our company.
“Knowing that, it still does not make letting go of some of our team members any easier. We’re grateful to have had the opportunity to work with the people impacted by today’s announcement, we’re proud of the contributions they made here at Blizzard, and we wish them well as they move forward.”
Blizzard’s World of Warcraft shed around 1.7 million subscribers between October and September last year, with total numbers as of November 2011 at 10.3 million players.
The publisher said that forthcoming releases, such as Diablo 3, would not be affected by the redundancies.
Big Blue is getting even smaller with the announcement that it has fired 1100 workers in North America this week.
Lee Conrad, national coordinator at Alliance(at)IBM, said that employees are reporting that the cuts have been made across business segments in the US and some parts of Canada. Alliance(at)IBM, which is affiliated with the Communication Workers of America, is not recognized by IBM and Big Blue has not given any comment.
IBM is still the world’s largest computer-services provider. It employed 433,362 worldwide as of December 31, according to regulatory filings. The layoffs are surprising after IBM reported in January that its fourth-quarter earnings rose to beat expectations on stronger revenue and improved margins. For all of 2011, IBM earned $15.86 billion.
Reports from the US, starting at The Verge, say that the firm is laying off 275 people from a pool of about 600 and is looking to redeploy them elsewhere.
“As WebOS continues the transition from making mobile devices to open source software, it no longer needs many of the engineering and other related positions that it required before. This creates a smaller and more nimble team that is well-equipped to deliver an open source webOS and sustain HP’s commitment to the software over the long term,” HP said in a statement.
“HP is working to redeploy employees affected by these changes to other roles at the company.”
The waters around WebOS are murky. HP has not found the marriage with Palm easy, and the future of its offspring has always been unsure. Léo Apotheker was more than happy to let it go, but since he went instead the firm has apparently been keen to stay involved, though not that involved.
This has created some unfortunate ripples. Just a few weeks ago, former Palm CEO Jon Rubenstein left his HP role as VP, just as HP was getting ready to release the OS to the open source community.
But two weeks later HP’s CEO Meg Whitman said she was confident about the future of WebOS. “The industry needs another mobile OS. Apple is great, it’s on fire, but IOS is a closed system. Google could end up that way with the purchase of Motorola, Android could end up being a closed system,” she said.
“We love partnering with Microsoft and Intel, but I think there’s an opportunity for another option within the development community.”
Visitors to the WebOSnation web site are not so sure about HP’s commitment to the operating system though, and in responses to a report there about the job losses they were dismissive of the firm and its motives.
“Just release the full damn source code and pull the hell out, HP… you’re killing that tiny bit of what’s left of WebOS,” said one user. “If we didn’t see the writing on the wall before, it should be more than obvious by now,” said another.
The three factories focus on smartphone product customisation, serving customers mainly in Europe and the Americas. Nokia said it expects to transfer its device assembly to factories in Asia, where the majority of component suppliers are based.
The firm said the cuts follow a review of smartphone manufacturing operations that it announced last September.
Nokia announced in April of last year that it would cut 7,000 jobs and in September confirmed a further 3,500 job losses.
“With the planned changes, our factories at Komarom, Reynosa and Salo will continue to play an important role serving our smartphone customers. They give us a unique ability to both provide customization and be more responsive to customer needs,” said Niklas Savander, Nokia EVP of Markets.
“Shifting device assembly to Asia is targeted at improving our time to market. By working more closely with our suppliers, we believe that we will be able to introduce innovations into the market more quickly and ultimately be more competitive,” said Savander. “We recognize the planned changes are difficult for our employees and we are committed to supporting our personnel and their local communities during the transition.”
The job cuts will be phased in through the end of 2012. Nokia said it will offer a comprehensive locally tailored support program for former employees, including financial support and assistance with local re-employment.
The announcement of 2,000 job cuts on Monday came a month after the Canadian company acknowledged that it would reduce headcount for the first time in a decade.
One analyst said the job cuts were slightly deeper than expected but were key to RIM’s recovery from a slump triggered by product delays and intense competition from Apple’s iPad and iPhone as well as devices powered by Google’s Android software.
RIM’s U.S.-listed stock, already near multi-year lows, was down as much as 2 percent before the market opened. It was trading down 1.8 percent at $27.40 on the Nasdaq
just before the open.
“This is not totally unexpected. I think the size of (the cuts) is a little bit bigger than what they were intimating before,” said Jefferies & Co analyst Peter Misek. “I think this is obviously realigning the cost structure to a new growth, or sales, reality.”
RIM said one-time charges from the job cuts were not included in its outlook for the second quarter or for the full year, and it would explain the financial impact of the cuts when it reports second quarter results on September 15.
RIM said the job cuts are “a prudent and necessary step” for its long-term success.
“Cost-cutting is unlikely to change the competitive position for the company” or accelerate RIM’s revenue growth, BGC Partners analyst Colin Gillis said.
Job cuts would help if the company were moving downstream toward entry and mid-market phones, but in such a case even 11 percent job cuts wouldn’t be enough, he said.