Tech continued to escape the brunt of the financial collapse, despite extensive business with Wall Street where some financial firms have gone belly up or are severely cutting back on spending. U.S. unemployment rates for computer and math-related professions rose from 2.8 percent in 2008 to 5.4 percent in 2009. Likewise, unemployment for architecture and engineering occupations rose from 2.3 percent in 2008 to 5.4 percent in 2009.
“It is still a very low level,” said Jed Kolko, an economist with the Public Policy Institute of California. “People in most industries and most occupations would be thrilled if their unemployment rate was 5.4 percent.”
Global semiconductor sales fell about 29 percent in January amid slumping demand for an array of products that use chips, ranging from personal computers and mobile phones to automotive products.
A couple of stories in the NY Times review the Venture Capital climate in 2008, and make some predictions for 2009. The stats from last year were pretty grim:
Only six venture-backed companies went public last year, the fewest since 1977 and down from 86 in 2007, according to data released Monday by the National Venture Capital Association and Thomson Reuters. Venture capitalists sold 260 companies, down from 360 in 2007.
In the fourth quarter, there were no initial public offerings and only 37 acquisitions, compared with 31 public offerings and 88 sales in the fourth quarter of 2007.
Despite the credit crunch, the VC fund freeze, and the stock market meltdown, panelists at the AlwaysOn Venture Summit think that “good companies” will still be able to go public. Someday.
Before that happens, a lot of other marginal companies will go out of business.
It’s the circle of life, Simba.
Meanwhile, what advice do these experts have for struggling companies?
“Everyone should act as though there will not be another round of funding,” Buyer said. “You should operate with what you have, because it may be all you get.”
The NYT says that tech companies had hoped they were skiing in front of the avalanche that’s claiming the rest of the economy. Clearly they got caught in the carnage, judging by all the layoff announcements in the past month. Tech Companies, Long Insulated, Now Feel Slump.
In the span of just a few weeks, orders for both business and consumer tech products have collapsed, and technology companies have begun laying off workers. The plunge is so severe that some executives are comparing it with the dot-com bust in 2000, when hundreds of companies disappeared and Silicon Valley lost nearly a fifth of its jobs.
Of course, this didn’t come as much of a surprise. Every tech CEO has been watching over the past year as financial markets collapsed and spread through the general economy. Like time slowing down in a car crash, we all knew it was going to hit us, and there was nothing we could do to stop it.
The tech industry is getting hit from two sides: consumers and corporate customers are holding off on purchases due to economic uncertainty. And since credit markets have frozen up, tech companies are having a hard time financing operations.
But the NYT article ends on a somewhat optimistic note. We’re all getting hit hard, but high-tech is still doing better than other industries.
For all the gloom, the tech industry is still far healthier than Wall Street. Unlike the banks, many technology companies are flush with cash. Cisco has close to $27 billion; Google, $14 billion; and Apple, $24 billion. It is likely that some of these funds will go toward acquiring struggling competitors. “The guys that aren’t as strong will be good pickings,” Mr. Coleman said.
Powered by technology, Silicon Valley has stood out as a bright spot for jobs in the United States, with employment growing at about 2 percent a year while national employment slowed. Through 2007, the region continued to add 20,000 jobs, although that positive trend has started to change.
According to a new report from Challenger, Gray & Christmas, the tech sector has announced 140,000 layoffs as of Oct. 31 of this year. They predict the industry might cut 180,000 jobs by year’s end. John Challenger suggests that Cisco, Nokia, and Qualcomm might all announce layoffs this year.
That would make 2008 the worst year since 2003, when the industry cut 228,300 jobs. Yet it’s much better than at the depths of the dot-com implosion. In 2001, the tech industry lost almost 700,000 jobs. Compare that to 107,000 layoff announcements in 2007, or 175,000 in 2005.
In one of the largest tech layoffs announced this year, Sun Microsystems said today that it will lay off between 5,000 and 6,000 workers, more than 15 percent of its global workforce, over the next year.
An amazing experiment to map the spam economy – by hijacking 75,000 computers in Storm Worm’s botnet! Surprisingly, researchers estimate that spam campaigns still earn a profit, even at a response rate less than 1 in 107!
A single response from 12 million e-mails is all it takes for spammers to turn annual profits of millions of dollars promoting knockoff pharmaceuticals, according to an unprecedented new study on the economics of spam.
The research team estimates that about three-quarters of all e-mail sent by the Storm worm was snagged by junk e-mail filters, ISP blacklists, and other e-mail security applications.
“Under the assumption that our measurements are representative over time, we can extrapolate that… Storm-generated pharmaceutical spam would produce roughly $3.5 million dollars of revenue a year,” the team concluded.
“By the same logic, we estimate that Storm self-propagation campaigns can produce between 3,500 and 8,500 new bots per day.”
Intel of Santa Clara, […] significantly scaled back its estimate for fourth-quarter revenue. Instead of the $10.1 billion to $10.9 billion it predicted it would take in, the company said it now predicts its revenue will be closer to $9 billion, plus or minus $300 million, a drop of at least 8 percent.
Applied Materials of Santa Clara, […] said its profit in the most recent quarter was 45 percent lower than for the same period last year and announced it will trim 1,800 positions, or about 12 percent of its workforce.
Citing weak demand for cell phones and other gadgets that use chips, Santa Clara-based National Semiconductor lowered its sales forecast by at least 9 percent for the next quarter and said it will reduce its roughly 7,000 positions by about 330.
A month ago, when it reported third-quarter revenue of $10.2 billion, Intel predicted its business would stay flat through the fourth quarter. But Paul Otellini […] promised to provide analysts with an updated fourth-quarter forecast on Dec. 4. Intel chose to provide that revised forecast Wednesday because mounting evidence had made it clear the company’s previous estimate was far too optimistic.
“We saw in just the last few weeks a really rapid deceleration in demand and that’s what prompted the update now,” said spokesman Chuck Mulloy. “We just decided, ‘Why wait until Dec. 4. We know what the answer is now.’ “
Advanced Micro Devices said Thursday that it would cut close to 3 percent of its staff […] The layoffs will affect close to 500 workers, leaving A.M.D. with about 14,960 employees. […] It plans to have the majority of workers stay on at A.M.D. to handle processor designs, while roughly 3,000 employees will head to a new manufacturing operation jointly owned by A.M.D. and investors backed by the Abu Dhabi government.