Saturday, February 7, 2009

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Flavors of Layoffs

The specter of layoffs at companies like Microsoft, Sony and Intel is alarming. But David Mitchell, senior vice president of IT research at researcher Ovum, cautions that "all job losses are not equal." Rather, the recent layoffs fall into three broad categories, not all of which are scary:

SOS: "Some companies are in genuine financial distress and need to make immediate cost reductions in order to make payroll," says Mitchell. Smaller companies comprise the bulk of this category, and he warns that for many, job cuts "will still not guarantee their survival."

Course corrections: "Larger companies have used redundancies to refocus their efforts - these are planned course corrections to improve future results rather than decisions forced upon them." Examples include Microsoft (minor correction), as well as Intel (major correction required due to longer PC-refresh cycles, and the popularity of lower-margin netbooks).

Streamlining: Eliminating duplicate jobs after a merger or acquisition, for example at Hewlett-Packard.

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