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January 20, 2014

Working for Large Computer Companies No Safe Haven as Intel, HP Plan Massive Layoffs

There’s apparently a new Moore’s Law for up to 5 percent of Intel (News - Alert) workers – you’re fired!

This stunner comes on top of last’s month’s revelation that HP will shell some 5,000 employees, continuing HPs recent legacy of shedding thousands of workers.

So is Intel in a free fall? To the contrary. Its business this year is expected to be flat, and not decline.

The layoff came during the chip maker’s fourth quarter earnings report where it said the PC market is now stabilizing and that its profit was actually up 6 percent quarter over quarter, little solace to those on the losing end of a pink slip. Especially since profits in that quarter alone were $2.6 billion, which can pay for more than a few workers.

That is no stopping the planned bleeding. “Intel will be aligning resources to meet the needs of the business this year,” Intel said. “This will include targeted workforce reduction in addition to realignment of resources.”

On the positive front, workers do leave or retire, and Intel puts attrition at some 4 percent annually. If the reductions are spread across the entire year, they could be far less than 5 percent. But if they show up early this year, attrition won’t do much to save jobs.

And there is no guarantee that attribution would reduce the layoffs, as Intel could use both as a way to save money.

In its more recent report, Intel had some 108,000 workers so a bit more than 5,000 jobs may be in jeopardy, almost identical to the number HP plans to cut loose.

 “From time to time we change organizational priorities and this can lead to the need for different skill sets within various organizations,” Intel said. “It can also mean that we reprioritize certain activities which can lead to movement of the work force from areas with little or slow growth to areas of growth as well as new businesses.”

HP News Just as Bad

In a recent SEC (News - Alert) filing HP said this year it will lay off some 5,000 workers, meaning HP overall will have shed 34,000 people.

“Due to continued market and business pressures, as of October 31, 2013, HP expects to eliminate an additional 15 percent of those 29,000 positions, or a total of approximately 34,000 positions, and to record an additional 15 percent of that $3.6 billion in total costs, or approximately $4.1 billion in aggregate charges. HP expects to record these charges through the end of HP’s 2014 fiscal year as the accounting recognition,” HP said.

HP is a fine company with many terrific technologies. But now it has to find a new central meaning for its existence. IBM (News - Alert) is mostly a services company, and Dell is still a go-to company data center infrastructure. However, neither of these outfits is guaranteed to return to their glory days.

While the layoffs will surely rub employees the wrong way, many will be alarmed by reports that workers in India will be largely spared. In an interview last year, HP CEO Meg Whitman said of India “We not only have all our business units here, but also our R&D and back office.”

Not all big computer companies survive. Look at Sun Microsystems (News - Alert) whose technology is largely lost in the Oracle portfolio.

Edited by Cassandra Tucker

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