Layoffs Are High and Headed Higher in Silicon Valley
By ERIC J. SAVITZ
You think the dot-com bust was bad? Brace yourself.
BY THE TIME THE ECONOMY HAD WRUNG OUT the excesses of the Internet bubble, Silicon Valley-or more precisely, California's Santa Clara County-had lost 200,000 jobs, or more than 20% of its total job base. At one point in 2002, its unemployment rate hit 8.4%. This time, I fear, could be even worse.
Certainly, the trend is heading in the wrong direction. California's unemployment rate hit 8.2% in October, up from 7.7% in September, reaching the highest level since September 1994. Keep in mind that this time it isn't just the tech industry that's hurting. The state's construction industry has lost 69,500 jobs this year. In Santa Clara County, home to Apple , Hewlett-Packard , Google , Yahoo! and a host of other industry icons, the jobless rate already stands at 6.9%, worse than the national 6.5% rate.
And those numbers don't reflect many of the reductions announced by tech companies in the past few months. Hewlett-Packard (ticker: HPQ) is cutting 24,000 jobs. Sun Microsystems (JAVA) is eliminating 5,000-6,000. More than 1,000 jobs each are disappearing at Yahoo! (YHOO) and eBay (EBAY). Google (GOOG) last week confirmed that it is paring back on contract employees; analyst speculate a cut of 3,000 or more.
There have been especially severe cuts in the semiconductor-equipment sector, where Applied Materials (AMAT) is slashing 12% of its staff, KLA-Tencor (KLAC), 15%, and Cymer (CYMI), 8%. Chip makers National Semiconductor (NSM), Advanced Micro Devices (AMD) and Nvidia (NVDA), among others, are cutting. Orbitz (OWW) is chopping 10% of its workforce. Symantec (SYMC) is trimming 4.5%. Palm (PALM) is cutting staff but won't say how many; rumors are of a 10%-20% reduction. Now in Chapter 11, electronics retailer Circuit City (CC) has already cut 20% of its workers, and more could be on the way out. Jobs are disappearing at law firms and other service providers to the tech industry, and start-ups are slashing employment in the face of a nearly frozen venture-capital environment.
There were even rumors that Apple (AAPL) was cutting back hours for some employees of its retail stores (the company wouldn't comment on the reports). As it happens, I visited an Apple store in Palo Alto recently, and the place was bustling; I can't imagine they need to shrink the workforce in that store. But if even Apple is considered a potential source of lost jobs, it's more evidence that almost no one in the Valley feels entirely secure. That's not good for retailers. It's not good for restaurants. It's not good for real-estate prices. It's not good for anyone. |
