Chinese telecom equipment maker ZTE, which is facing U.S. trade sanctions that may upend its supply chain, is cutting nearly 3,000 jobs, including a fifth of positions in its struggling handset business in China, company sources said.
The sources said the Shenzhen-based company, one of the world’s biggest telecoms gear makers, is axing about 5 percent of its 60,000 global workforce.
Its global handset operations will shed 600 jobs, or 10 percent of the total, with the cuts concentrated in China, where it has been losing market share.
A local manager in one of the company’s overseas branches said a 10 percent quota was given to shed staff in his department by the end of January.
“I was also given names that must go because they had tried to apply for jobs at (rival) Huawei and are therefore branded as ‘unstable factors’,” said the manager, who is not in the handset unit and asked not to be identified.
The company declined to comment.
ZTE is the only Chinese smartphone vendor with a meaningful presence in the United States, where its 10 percent market share makes it the fourth-largest vendor.
The U.S. Commerce Department first announced in March that it would impose a ban on exports by U.S. companies to ZTE for allegedly breaking Washington’s sanctions on sales to Iran.
The ban has not yet come into effect following a series of reprieves, the last of which expires on Feb. 27, but if it does go ahead, the company’s supply chain could be severely handicapped. It relies on U.S. companies including Qualcomm, Microsoft and Intel for about a third of its components.
Satya Nadella isn’t stopping the job eliminations at Microsoft any time soon. The company announced that 2,850 people will lose their jobs by the middle of 2017, on top of the 1,850 cuts announced earlier this year.
According to a regulatory filing, those impacted will primarily be in its phone hardware business, which has already been hit hard by layoffs, and in global sales.
The cuts are more fallout from Microsoft’s decision to downsize its smartphone business, which it acquired from Nokia in 2015. Putting that acquisition in motion was one of the last things that former Microsoft CEO Steve Ballmer did before announcing that he would be leaving the company’s top job. His successor hasn’t taken the same shine to the phone hardware business that Microsoft bought.
Microsoft declined to comment about the job cuts beyond what was disclosed in the 10-K filing. Nadella has cut thousands of jobs since taking the top spot, many of them in the phone business.
It remains to be seen what this will mean for the company’s business overall. While Microsoft’s most recent quarterly financial report showed a year-over-year revenue decline, the company’s cloud businesses continued to grow. The phone hardware business has been a sore spot on Microsoft’s financials, seeing massive revenue declines for the past several quarters.
Finland’s biggest company has cut thousands of jobs in its home country over the past decade as its once-dominant phone business was eclipsed by the rise of smartphone rivals.
Nokia started the latest cost cutting program in April and is targeting 900 million euros ($1 billion) of operating cost synergies from the Alcatel deal by 2018.
The company has declined to give an overall figure for global job cuts, but has said it in talks with employee representatives in about 30 countries.
Nokia employs about 104,000 people worldwide, with about 6,850 in Finland, 4,800 in Germany and 4,200 in France.
Intel Corp announced that it will eliminate up to 12,000 jobs globally, or 11 percent of its workforce, as it refocuses its business towards making microchips that power data centers and Internet connected devices and away from the declining personal computer industry it helped found.
Tech companies including the former Hewlett Packard Co and Microsoft Corp have reorganized in the face of the PC industry decline. Many new tech users around the world turn to mobile phones for their computing needs, and corporations increasingly rely on big machines rather than desktop models to run their businesses. Global personal computer shipments fell 11.5 percent in the first quarter, tech research company IDC said on Monday.
Intel, the world’s largest chipmaker, lowered its revenue forecast for the year. It now expects revenue to rise in mid-single digits, down from its previous forecast of mid- to high-single digits.
Most of Intel’s factories are in the United States, although it did not identify where cuts would be focused geographically. It said it would record a pretax restructuring charge of $1.2 billion in the second quarter and expected annual savings of $1.4 billion per year starting mid-2017.
The company also said Chief Financial Officer Stacy Smith will move to a new role leading sales, manufacturing and operations. Intel said it would begin a formal search process for a new CFO.
Smith said that Intel now expects the PC market to decline by a percentage in the high single digits in 2016 versus a prior forecast of a mid single-digit decline. Declines in China and other emerging markets are also leading to greater than anticipated reductions in worldwide PC supply chain inventory, Intel Chief Executive Brian Krzanich said on a conference call.
The layoffs take effect April 11 and affected employees received 60-day advance notice of the move, Yahoo said in a notice filed with the California Employment Development Department. The layoffs were spread across a range of departments and job titles.
Yahoo shares closed up 1 percent at $27.10 on Wednesday and are down about 18.5 percent so far this year.
Yahoo Chief Executive Officer Marissa Mayer said during the company’s fourth quarter earnings call this month it will cut roughly 15 percent of its workforce as part of a strategy to revamp its core Internet business.
Yahoo had about 11,000 employees as of June 30, according to its website, down from a Dec. 31, 2014, total of about 12,500 full-time employees and what it called fixed-term contractors.
The company expects 2016 will be a key transition year as “we expect the effect of our new products to outweigh the decline in our compute products,” CEO Pat Gelsinger said on its latest earnings conference call.
The company has been facing challenges in its software business as its customers are increasingly using public cloud providers like Amazon Web Services and Microsoft Azure.
“Public cloud providers do provide VMware, but for many of the newer, cloud workloads, many are opting for containers or even OpenStack which doesn’t require what’s considered expensive VMware licenses,” wrote Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, in an email.
VMware reported that its total revenue under generally accepted accounting principles (GAAP) for 2015 was $6.57 billion, an increase of 9 percent from 2014, or up 12 percent year-over-year on a constant currency basis. The company expects 2016 revenue will be up to $6.935 billion, an increase of as much as 4 percent from 2015.
The guidance was influenced by concern about business from weakening economies like Russia, Brazil and China.
Gelsinger said during the conference call that the company recognizes that its blockbuster compute products are reaching maturity, and will play a decreasing role in the business. But the company expects newer emerging products will pick up the slack.
One of the company’s new focus areas is on extending customers’ private cloud workloads into the public cloud via vCloud Air Network and vCloud Air. But Gelsinger clarified that its vCloud Air cloud computing service will have a narrower focus, providing specialized cloud software and services distinct from other public cloud providers, suggesting that the company does not want to take the big players head-on in the commodity cloud business.
His comments came as SoftBank, which owns more than 70% of Sprint, reported its quarterly earnings.
“Sprint is now in the position to increase the pace of user acquisition while cutting costs,” Son said, according to Bloomberg and other news sources. “We will also cut staff. The cuts will be in the thousands.”
Son’s comments are not out of line with things Sprint CEO Marcelo Claure has been telling Sprint workers for months.
On Tuesday, Sprint’s stock price sagged downward after an earnings report included a statement saying that the carrier plans to cut $2 billion or more in operating expenses for its 2016 fiscal year, which begins in April.
Son also said the $2 billion is a “minimum target” and should be the amount slashed annually, according to a report by The Wall Street Journal. The company now has more than $25 billion in annual costs.
Sprint has been investing in attracting new customers — an effort that has been costly but effective. On Tuesday, Sprint reported it gained 237,000 postpaid phone customers in its second fiscal quarter, which ended Sept. 30. It was the first time the company had showed gains on that measure in two years. It also reported its lowest customer cancellation rate in company history.
In November 2014, Sprint had said it would cut 2,000 jobs as part of $1.5 billion in cost reductions. That announcement came after Sprint had cut 5,000 jobs from January through September 2014. The company had 31,000 workers at the start of its current fiscal year on April 1.
That automation will replace jobs is a workforce reality. For instance, in 1949 there were 182,500 people employed as telephone operators. It was the peak year. But by last year the number of operators employed by wired carriers had declined to 2,170, according to federal labor data.
Something similar is on the verge of taking place in back-office IT services jobs, due to automation improvements, with dramatic job cutbacks being forecast, according to a survey done of representatives from about 170 global sourcing firms. This includes the IT services industry.
Nearly a third of those surveyed said they expect job cuts of 25% or higher of their current workforces by 2020, according to a conference poll by the Information Services Group (ISG), a research and advisory services firm.
In this survey, 23% predicted workforce cuts of 15% to 25%, and some 28% said the cuts would range from 5% to 15%. Only 5% of respondents said current employment levels will grow.
Rob Brindley, a director at ISG, said improvements in automation, as well as continuing improvements in the capabilities of people, are bringing higher reliability and stability to IT systems, reducing calls for support. “Automation is going to be working be working in the background, evaluating events and incidents and resolving them before there is a customer impact,” said Brindley.
There also tools being developed, such as IPsoft’s Amelia cognitive engine, that an also be used to either augment or replace workers as time goes on.
In a 1955 Congressional hearing on “Automation and Technological Change” lawmakers and experts discussed the impact of automation on the workforce, and the decline of some types of jobs.
“I see only benefits in the long run,” said Dr. Vannevar Bush, president of the Carnegie Institution, regarding automation.
Taiwanese smartphone maker HTC Corp said it will eliminate some jobs and discontinue models as part of its strategy to focus on high-end devices to better compete with the likes of AppleInc and Samsung Electronics.
“The cuts will be across the board,” Chief Financial Officer Chialin Chang told reporters after HTC reported a second-quarter loss and forecast another for the third-quarter. “They will be significant.”
Chang said the cost reductions would extend to the first quarter of next year, but declined to give further details.
A pioneer in early smartphones, HTC has been dismissed by industry watchers as confused, unoriginal and uncompetitive.
The company has been losing market share over the past few years, hit by intense competition at the high-end of the market from the likes of Apple and Samsung Electronics while budget Chinese rivals have also eclipsed its low-cost offerings.
HTC shares have fallen 51 percent so far this year. The stock closed 1.69 percent lower before the results were announced.
Chang said HTC was banking on selling high-end models in emerging smartphone markets such as India, where he said the company has a 20 percent market share of phones priced between $250-$400.
Analysts, however, are less optimistic, saying HTC is likely to continue to struggle for the next four quarters at least.
“We believe HTC will keep losing share in the smartphone market and will keep losing money,” analyst Calvin Huang with Taiwan’s SinoPac Securities wrote in a recent research note.
Finland’s Rovio said on Monday it had inked a deal with Danish toymaker Lego to produce a line of Angry Birds building blocks as a bid to revive its ailing licensing business based on the popular mobile game.
Rovio, whose 2014 earnings fell 73 percent due to a drop in licensing the Angry Birds brand on toys, clothing and sweets, said the release of the Lego toys would coincide with the premiere of its full-length Angry Birds movie in spring 2016.
The Angry Birds game, in which players use a slingshot to attack pigs who steal birds’ eggs, is the No. 1 paid mobile app of all time, but the brand has been losing appeal and Rovio has struggled to produce new hit games.
The company is hoping the upcoming 3D movie will help the toy business turn back to growth.
Rovio recently cut about 110 jobs, or 14 percent of its workforce.
Sony Corp hopes to increase operating profit 25-fold within three years by growing its camera sensors and PlayStation units, its chief executive said, laying out a strategy that could see the company exit the ultra competitive TV and smartphone markets.
CEO Kazuo Hirai said on Wednesday the Japanese consumer electronics firm would no longer pursue sales growth in areas such as smartphones where its has suffered competition from cheaper Asian rivals as well as industry leaders like Apple Inc and Samsung Electronics.
Sony would instead focus its spending on more profitable businesses such as camera sensors, videogames and entertainment as it seeks to return to growth after forecasting for this financial year its sixth net loss in seven years.
“The strategy starting from the next business year will be about generating profit and investing for growth,” Hirai told a briefing, adding that Sony’s units would be given greater autonomy to make their own business decisions.
Asked about the TV and mobile phone units, Hirai said he would not “rule out considering an exit strategy”, Sony’s clearest statement to date about the possibility of selling or finding partners for these struggling units.
Sony is in the midst of a restructuring that has so far seen it sell off its personal computer division and spin off the TV business. It has also axed thousands of jobs.
Sony shares have risen more than 80 percent over the past year as investors applauded the restructuring, which accelerated since Hirai appointed Kenichiro Yoshida as his chief strategy officer in late 2013.
Blizzard is happy and why shouldn’t they be as World of Warcraft subscriptions are up. The reason for the increase can be traced to the release of the latest expansion pack which was recently released. The latest WOW expansion pack is called Warlords of Draeno and its release has driven subscriptions to 10 million.
Selling over 3.3 million copies of the Warlords of Draenor on the first day alone, growth has been seen in all major territories since release. The numbers do include those players that are using the 1 month free subscription that comes with the expansion pack. WoW subscriptions had climbed to 7.4 million last quarter after being down.
Of course the release of Warlords of Draenor has not been without its problems. Still Blizzard says that they are working around the clock to address them. Owners have been offered free play time as compensation.
Samsung Electronics Co Ltd said that it will discontinue its light emitting diode (LED) lighting business outside of South Korea, scaling back what was identified as a key growth business just four years ago.
The pullback comes on the heels of Dutch rival Philips recent decision to spin off its century-old lighting business. Price wars have slashed profitability to levels deemed too unattractive in the long run, despite an LED boom that has upended the global incandescent lighting industry.
Analysts say Samsung Electronics’ retreat reflects the growing competition from Chinese manufacturers even as demand for LED lighting remains strong. LED lamps last 10 times longer than fluorescent bulbs and 100 times longer than traditional incandescent tungsten filament bulbs.
“It appears that Samsung decided to fold the business because price competition was so fierce and there was not a lot of room for growth going forward,” said Seoul-based IM Investment analyst Lee Min-hee.
Philips said in September that it will spin off its lighting business to expand its higher-margin healthcare and consumer divisions. Two month earlier, Germany’s Osram Licht AG, which also makes LED lights, announced a cost-cutting plan that included nearly 8,000 job cuts.
A spokeswoman at Samsung Electronics said revenue contribution from the business was small but did not comment on specifics, including how much Samsung had invested.
“We will remain active in the LED industry through our LED component business,” Samsung Electronics said in an emailed statement, adding that it will focus on areas such as backlighting for displays of consumer products like televisions.
“We have been building our team on assumptions of faster growth than have materialized. As a result, we announced today that we plan to simplify our organization … we also need to consider possible employee reductions,” Chief Executive Mikael Hed said in a statement.
According to Rovio, the Angry Birds game, in which players use a slingshot to attack pigs who steal birds’ eggs, is the No. 1 paid mobile application of all time.
Rovio has expanded the brand into an animated TV series and merchandising of toys and clothing, but at the same time it has struggled to retain players, resulting to its earnings halving last year.
In August, the company named Pekka Rantala, a former Nokia executive, as its next CEO.
Microsoft Corp is said to be planning its biggest round of job cuts in five years as the software giant moves to integrate Nokia Oyj’s handset unit, Bloomberg reported, citing people with knowledge of the company’s plans.
The reductions, expected to be announced as soon as this week, could be in the Nokia unit and the parts of Microsoft that overlap with that business, as well as in marketing and engineering, Bloomberg reported.
Since absorbing the handset business of Nokia this spring, Microsoft has 127,000 employees, far more than rivals Apple Inc and Google Inc. Wall Street is expecting Chief Executive Satya Nadella to make some cuts, which would represent Microsoft’s first major layoffs since 2009.
The restructuring may end up being the biggest in Microsoft history, topping the 5,800 jobs cut in 2009, the report said.
Some of the job cuts will be in marketing departments for businesses such as the global Xbox team, and among software testers, while other job cuts may result from changes Nadella is making to the engineering organization, Bloomberg reported.
Last week, Nadella circulated a memo to employees promising to “flatten the organization and develop leaner business processes” but deferred any comment on widely expected job cuts at the software company.
Nadella said he would address detailed organizational and financial issues for the company’s new financial year, which started at the beginning of this month, when Microsoft reports quarterly results on July 22.