To: Mannie who wrote (158925 ) 1/23/2009 4:46:56 PM From: stockman_scott Read Replies (2) | Respond to of 362386 Microsoft cuts not even a 'hiccup,' Seattle tech leaders optimistic techflash.com By John Cook on January 22, 2009 at 10:03 PST As speculation built over the past few weeks about the possibility of Microsoft layoffs, one theory that gained some traction in Seattle's startup community was that a sizable cutback could actually spur entrepreneurial energy in the region. After all, as the theory went, some of the talented engineers, marketers and researchers who lost their jobs would dust off business plans and start new companies. It's too early to say whether that will happen, or whether the type of people who are losing their jobs in the 5,000-person layoff actually have the entrepreneurial bent. But I bounced that theory off several technology luminaries this morning who had gathered at the Washington Technology Industry Association's unveiling of the Puget Sound Technology Universe, a massive map of 781 technology companies in the area. Microsoft's influence was not lost on the crowd. It sits at the center of the map -- an impressive bright yellow "solar system" -- overshadowing every other company. Could layoffs spur another wave of startup activity? Madrona Venture Group's Tom Alberg and University of Washington computer science professor Ed Lazowska think it might. But the general consensus among the half dozen or so people I interviewed was that the layoffs -- to take place over the next 18 months -- would have little effect on the region's overall tech economy. "I don't even think of it as a hiccup to be honest," said Lazowska, an adviser to Microsoft who believes the company will keep hiring. "I just think this is continual renewal, rather than something catastrophic." Alberg, a venture capitalist who sits on the board of Amazon.com, said that Microsoft layoffs could actually "stimulate" new companies in the region. He took the view that the layoffs aren't that big of a deal in terms of the overall tech landscape. In the context of Microsoft's size, Alberg said it is "not a huge layoff." "I don't think it is going to have an enormous negative impact on the area," he said. "It is not good news, but it is the not the worst news." Microsoft continues to grow, albeit slower than it once did. "When you get into recessions, companies all tighten their belt some and need to act in that manner whether they are small or big," he said. Alberg's colleague at Madrona, Matt McIlwain, said the layoffs are not that economically significant to the region if this is the only cutback the company makes. Microsoft is cutting about 870 employees locally in the initial round. "If this is all they do, I think it will have a minor benefit to the startup community as some talented people could be looking for new opportunities at smaller companies," he said. "But I think overall, it won't have a major impact on the technology employment market in Seattle." Voyager Capital's Bill McAleer, however, said the cutbacks could hurt some of the Seattle area consulting companies and service providers that have sprouted up to support Microsoft products. "I think it will put a little bump in the road in terms of the overall economy," he said. "A lot of these folks are relatively well paid and are spending in the economy, so if they are out of a job, they won't be spending." Steve Wood, who worked at Microsoft between 1976 and 1980, provided a slightly different historical perspective. After all, the company employed just four people when he arrived and about 100 when he left. "When I was there, 5,000 people would have been about five times or ten times as many people as we had in the company," said Wood. Even though Microsoft is not filling some positions and eliminating some contract assignments, Wood said what Microsoft announced today is that it "is time to be paying attention to the economic conditions." Eliminating 5,000 jobs over the next 18 months, means they probably will still have to hire people, he said. And Wood believes the company is still in a very strong financial position, bringing in more than $1 billion per month in cash. "I just kind of shrug my shoulders," said Wood. "Even in 1980 we were a very profitable company. The company has always been a very profitable company. And it still is. I think Microsoft is going to be just fine."