Hewlett-Packard Co said it will cut the base salaries of some employees in its EDS business by 10 per cent for the month of April. The temporary salary reduction is in addition to a company-wide pay cut HP instituted last month.
The salary cut impacts only EDS workers based in the United States and Puerto Rico and will not affect those making less than $40,000.
A company spokeswoman said in a statement via email that the move is a "temporary cost action to keep the organization strong while increasing financial flexibility."
HP bought EDS last year for $13.2 billion. Last month, after the company cut its full-year outlook and posted weaker-than expected quarterly revenue, HP moved to reduce base pay for all its employees, including a 5 per cent cut for most salaried workers.
HP Chief Executive Mark Hurd has stressed the company's commitment to lowering costs. HP is the world's largest maker of personal computers, and second-largest technology services company.
Thursday, March 19, 2009
IBM
IBM looking at acquiring Sun Microsystems
There are reports that IBM is in talks to acquire Sun Microsystems. The deal is expected to be upwards of USD 6.5 billion. IBM's reported bid to acquire Sun Microsystems Inc. (JAVA) signals an emerging war between technology titans.
The IBM move follows Cisco Systems Inc.'s (CSCO) splashy entry into the market for data centers and servers. A battle between IBM, Cisco and Hewlett-Packard Co. (HPQ) may lead to an arms race as the companies look to use cash hoards to bulk up through acquisitions. With share prices battered by a deteriorating stock market, a lot of bargains are available.
"The smart companies and the ones that look beyond the current slowdown and want to position themselves as the market leader - you'll see them be very aggressive," said Trip Chowdhry, analyst at Global Equity Research.
Acquisitions can shore up one's position, as Sun would do for IBM, or provide a new capability, as Nuova Systems did for Cisco in the server business.
In attacking the $85 billion data-center market, Cisco has $4.2 billion in cash and $24.6 billion in fixed-income securities, Hewlett-Packard Co. (HPQ) has more than $11 billion, and Dell Inc. (DELL) has more than $9 billion in cash and short-term investments.
Given the size of the market, analysts say room exists for all four companies, although smaller players will likely feel the squeeze once Cisco starts to expand. Of the four, Dell may be hurt the worst by Cisco's entry and IBM's move to take out Sun.
IBM's reported $8 billion deal to buy Sun Micro would allow the Armonk, N.Y., company to further integrate hardware and software, and glue them together with its consulting and services expertise.
H-P, meanwhile, also has expanded beyond simple hardware and, through last year's $13.25 billion purchase of Electronic Data Systems, is looking at consulting and outsourcing as part of its service. Cisco brings a more closed system than the others, but adds networking expertise and a simpler, more integrated approach.
Jean Bozman, an analyst for IDC, said the Sun deal positions IBM for the expected consolidation in the server market. She said IBM is aware of Cisco's ability to reshape a market it enters. IBM is the largest server vendor, with a market share above 31%, according to IDC.
IBM shares fell 1.3% to $91.72, H-P shares dropped 3% to $28.85, and Cisco shares added 2.4% to $16.51. Sun Micro shares surged 82% to $9.04.
Possible Deals
Despite the sheer amount of cash on hand, industry observers only see a few major acquisitions, with a majority of deals in the hundreds of millions of dollars. Chowdhry said he expects the number of tech companies to fall by 40% to 60% as a result of consolidation and bankruptcy.
Beyond Sun, Red Hat Inc. (RHT) and Satyam Computer Services Ltd. (SAY) are prime candidates for takeover, Chowdhry said. Red Hat offers the kind of software Cisco and H-P need, while Satyam provides IT services. Neither company was available for comment.
If H-P wants to stay competitive, it should pick up IT services provider BMC Software Inc. (BMC), he said. H-P, however, is still working through its EDS buy.
BMC shares rose 1.5% to $30.21. Shares of Red Hat rose less than 1% to $15.65, while Satyam shares added 5% to $1.66.
For H-P, Blade Network Technologies Inc. and Arista Networks Inc.are two of many start-ups that could get bought in the coming months. Both companies make switches that go on top of so-called blade servers - a necessary component to keeping up with Cisco's integrated system.
Blade CEO Vikram Mehta said he believes the proprietary approach Cisco is taking won't fly with budget-conscious IT managers. Arista couldn't be reached for comment.
Cisco, meanwhile, could pick up an EMC to augment its data center business. The companies are working together with Cisco's new server initiative. NetApp Inc. (NTAP) is another data storage expert that has been named as a potential candidate.
EMC shares gained 2.4% to $11.24, while NetApp jumped 7% to $15.87.
"This is a great market to be a buyer of anything," said Carl Howe, an analyst for research firm Yankee Group.
Dell could look for acquisitions, but given its stock, the company or its server division could potentially be a candidate for acquisition. Dell shares gained 2.5% to $9.57.
Dell declined to comment on rumor and speculation.
H-P questioned IBM's deal with Sun, saying there is a lot of product overlap. Also, the company isn't sure that the high price tag willpressure it to do anything, according to someone familiar with the questions H-P executives have about the deal.
Cisco was more open to the deal.
The IBM move follows Cisco Systems Inc.'s (CSCO) splashy entry into the market for data centers and servers. A battle between IBM, Cisco and Hewlett-Packard Co. (HPQ) may lead to an arms race as the companies look to use cash hoards to bulk up through acquisitions. With share prices battered by a deteriorating stock market, a lot of bargains are available.
"The smart companies and the ones that look beyond the current slowdown and want to position themselves as the market leader - you'll see them be very aggressive," said Trip Chowdhry, analyst at Global Equity Research.
Acquisitions can shore up one's position, as Sun would do for IBM, or provide a new capability, as Nuova Systems did for Cisco in the server business.
In attacking the $85 billion data-center market, Cisco has $4.2 billion in cash and $24.6 billion in fixed-income securities, Hewlett-Packard Co. (HPQ) has more than $11 billion, and Dell Inc. (DELL) has more than $9 billion in cash and short-term investments.
Given the size of the market, analysts say room exists for all four companies, although smaller players will likely feel the squeeze once Cisco starts to expand. Of the four, Dell may be hurt the worst by Cisco's entry and IBM's move to take out Sun.
IBM's reported $8 billion deal to buy Sun Micro would allow the Armonk, N.Y., company to further integrate hardware and software, and glue them together with its consulting and services expertise.
H-P, meanwhile, also has expanded beyond simple hardware and, through last year's $13.25 billion purchase of Electronic Data Systems, is looking at consulting and outsourcing as part of its service. Cisco brings a more closed system than the others, but adds networking expertise and a simpler, more integrated approach.
Jean Bozman, an analyst for IDC, said the Sun deal positions IBM for the expected consolidation in the server market. She said IBM is aware of Cisco's ability to reshape a market it enters. IBM is the largest server vendor, with a market share above 31%, according to IDC.
IBM shares fell 1.3% to $91.72, H-P shares dropped 3% to $28.85, and Cisco shares added 2.4% to $16.51. Sun Micro shares surged 82% to $9.04.
Possible Deals
Despite the sheer amount of cash on hand, industry observers only see a few major acquisitions, with a majority of deals in the hundreds of millions of dollars. Chowdhry said he expects the number of tech companies to fall by 40% to 60% as a result of consolidation and bankruptcy.
Beyond Sun, Red Hat Inc. (RHT) and Satyam Computer Services Ltd. (SAY) are prime candidates for takeover, Chowdhry said. Red Hat offers the kind of software Cisco and H-P need, while Satyam provides IT services. Neither company was available for comment.
If H-P wants to stay competitive, it should pick up IT services provider BMC Software Inc. (BMC), he said. H-P, however, is still working through its EDS buy.
BMC shares rose 1.5% to $30.21. Shares of Red Hat rose less than 1% to $15.65, while Satyam shares added 5% to $1.66.
For H-P, Blade Network Technologies Inc. and Arista Networks Inc.are two of many start-ups that could get bought in the coming months. Both companies make switches that go on top of so-called blade servers - a necessary component to keeping up with Cisco's integrated system.
Blade CEO Vikram Mehta said he believes the proprietary approach Cisco is taking won't fly with budget-conscious IT managers. Arista couldn't be reached for comment.
Cisco, meanwhile, could pick up an EMC to augment its data center business. The companies are working together with Cisco's new server initiative. NetApp Inc. (NTAP) is another data storage expert that has been named as a potential candidate.
EMC shares gained 2.4% to $11.24, while NetApp jumped 7% to $15.87.
"This is a great market to be a buyer of anything," said Carl Howe, an analyst for research firm Yankee Group.
Dell could look for acquisitions, but given its stock, the company or its server division could potentially be a candidate for acquisition. Dell shares gained 2.5% to $9.57.
Dell declined to comment on rumor and speculation.
H-P questioned IBM's deal with Sun, saying there is a lot of product overlap. Also, the company isn't sure that the high price tag willpressure it to do anything, according to someone familiar with the questions H-P executives have about the deal.
Cisco was more open to the deal.
Wednesday, March 18, 2009
H1-B, NRIs
Silicon Valley Wants More Skilled Foreign Workers; H-1B Issue Remains Big
Source: semiconductor.net
Despite steep job losses, Silicon Valley firms continue their long quest to allow more skilled foreigners to work in the U.S.
The high-tech hub lost 15,600 jobs in December alone, 1.3% of its 1.2 million total jobs, but executives and officials say that hasn't lessened the need for highly skilled workers. The federal H-1 B program gives temporary visas to skilled foreign workers like engineers and scientists, but caps the number at 85,000 per year.
And even with today's high unemployment, when it might be easier for companies to find skilled U.S. job hunters, there's a push to end the cap.
"We're not in favor of controls at all. It should be wide open, the more the merrier," said Russell Hancock, president of Joint Venture Silicon Valley, a large public-private group supported by many of the region's tech companies.
In fact, the situation has been exacerbated by the economy. A report this month by the Kauffman Foundation says skilled immigrants are going home in large numbers, seeing less entrepreneurial opportunity in the recession-wracked U.S. The report is titled "America's Loss."
Executives say U.S. colleges and universities don't graduate enough tech workers to meet the needs of high-tech companies. As a result, Silicon Valley has long relied on skilled foreign workers to fill the gap.
An H-1 B visa can lead to a "permanent residence" green card visa if a foreign worker gets a permanent job with an American company.
Half of the nation's H-1 B visa holders, according to trade group Tech-America, are tech workers. Tech-America members include many of the valley's tech companies, such as Intel, Apple and Hewlett-Packard.
"H-1 Bs and green cards remain very important," said Jeff Lande, executive vice president of TechAmerica. "The economy has gone negative, but companies still need to have access to certain skill sets. If they can't find them locally, they need to look elsewhere."
Vivek Wadhwa, a senior research associate at Duke University's Pratt School of Engineering and one author of the "America's Loss" report, says about half of Silicon Valley tech companies were founded or co-founded by immigrants. He names such companies as Google, Intel, eBay and Yahoo.
Even before the recession, a large number of highly skilled immigrants had started voluntarily returning to their homes in countries like India and China, where they see better opportunities than they see here, he says.
"It's a problem when such people are leaving on their own, or being forced to leave because they are laid off," he said. "The best and brightest are seeing more opportunity elsewhere."
Many Valley companies agree.
Sunnyvale, Calif.- based flash memory chipmaker Spansion is cutting jobs and has filed for Chapter 11 bankruptcy reorganization, but it's not looking to shed its H-1 B employees, says Ajit Manocha, chief operating officer.
Spansion employs 75 H-1 B visa workers among its 5,700 workers.
As the company goes through bankruptcy, it will focus on worker skills, not nationalities, he says.
"We look at what talent we need to come out of this bankruptcy process that will make us a stronger company," Manocha said. "If someone with an H-1 B visa has the right talent, we want to keep that person."
Despite steep job losses, Silicon Valley firms continue their long quest to allow more skilled foreigners to work in the U.S.
The high-tech hub lost 15,600 jobs in December alone, 1.3% of its 1.2 million total jobs, but executives and officials say that hasn't lessened the need for highly skilled workers. The federal H-1 B program gives temporary visas to skilled foreign workers like engineers and scientists, but caps the number at 85,000 per year.
And even with today's high unemployment, when it might be easier for companies to find skilled U.S. job hunters, there's a push to end the cap.
"We're not in favor of controls at all. It should be wide open, the more the merrier," said Russell Hancock, president of Joint Venture Silicon Valley, a large public-private group supported by many of the region's tech companies.
In fact, the situation has been exacerbated by the economy. A report this month by the Kauffman Foundation says skilled immigrants are going home in large numbers, seeing less entrepreneurial opportunity in the recession-wracked U.S. The report is titled "America's Loss."
Executives say U.S. colleges and universities don't graduate enough tech workers to meet the needs of high-tech companies. As a result, Silicon Valley has long relied on skilled foreign workers to fill the gap.
An H-1 B visa can lead to a "permanent residence" green card visa if a foreign worker gets a permanent job with an American company.
Half of the nation's H-1 B visa holders, according to trade group Tech-America, are tech workers. Tech-America members include many of the valley's tech companies, such as Intel, Apple and Hewlett-Packard.
"H-1 Bs and green cards remain very important," said Jeff Lande, executive vice president of TechAmerica. "The economy has gone negative, but companies still need to have access to certain skill sets. If they can't find them locally, they need to look elsewhere."
Vivek Wadhwa, a senior research associate at Duke University's Pratt School of Engineering and one author of the "America's Loss" report, says about half of Silicon Valley tech companies were founded or co-founded by immigrants. He names such companies as Google, Intel, eBay and Yahoo.
Even before the recession, a large number of highly skilled immigrants had started voluntarily returning to their homes in countries like India and China, where they see better opportunities than they see here, he says.
"It's a problem when such people are leaving on their own, or being forced to leave because they are laid off," he said. "The best and brightest are seeing more opportunity elsewhere."
Many Valley companies agree.
Sunnyvale, Calif.- based flash memory chipmaker Spansion is cutting jobs and has filed for Chapter 11 bankruptcy reorganization, but it's not looking to shed its H-1 B employees, says Ajit Manocha, chief operating officer.
Spansion employs 75 H-1 B visa workers among its 5,700 workers.
As the company goes through bankruptcy, it will focus on worker skills, not nationalities, he says.
"We look at what talent we need to come out of this bankruptcy process that will make us a stronger company," Manocha said. "If someone with an H-1 B visa has the right talent, we want to keep that person."
Wipro
Wipro Infotech implements Oracle's eBusiness suite in Mexico
Wipro Infotech, the India and Middle East IT Business of Wipro Ltd and a leading provider of IT and business transformation services, on Tuesday announced that the company has implemented oracle's eBusiness Suite 11i for Flex mericas, S.A.DE C.V (subsidiary of uflex Ltd,India), in Mexico.
This implementation is a global business process rollout of Oracle's eBusiness Suite at their Mexico facility, a Wipro press release said.
Wipro has implemented Oracle eBusiness Suite (EBS) 11i with multi lingual support in both English and Spanish. The Modules rolled out at Flex, Mexico are: Oracle Financials (AR, AP, GL, FA and CM), Purchasing, Order Management, Inventory, Process Manufacturing and MAC Costing.
The project involved rolling out the existing Oracle Apps implementation done at Noida to Mexico, South America.This was needed to be done with Mexican localization features, which include bi-lingual Forms and Reporting in English and Spanish Languages, it said.
Uflex, as part of its global strategy is setting up state-of-the-art manufacturing facilities in all major continents to ensure faster response time to localized customers embarked on this project in Mexico.
This implementation is a global business process rollout of Oracle's eBusiness Suite at their Mexico facility, a Wipro press release said.
Wipro has implemented Oracle eBusiness Suite (EBS) 11i with multi lingual support in both English and Spanish. The Modules rolled out at Flex, Mexico are: Oracle Financials (AR, AP, GL, FA and CM), Purchasing, Order Management, Inventory, Process Manufacturing and MAC Costing.
The project involved rolling out the existing Oracle Apps implementation done at Noida to Mexico, South America.This was needed to be done with Mexican localization features, which include bi-lingual Forms and Reporting in English and Spanish Languages, it said.
Uflex, as part of its global strategy is setting up state-of-the-art manufacturing facilities in all major continents to ensure faster response time to localized customers embarked on this project in Mexico.
Cost cutting
Mindtree denies paycuts
Courtesy: ITExaminer.com
Indian IT firm Mindtree Consulting maintains it doesn’t see the need to lay off employees at its Bangalore offices. In fact, the firm said it is not even contemplating salary cuts. But one employee told IT Examiner that salary cuts have been announced.
The employee, working on a telecom project, said the company has communicated internally that salaries will be rolled back to the previous year's levels.
Our source, however, could not confirm if the company was trimming salaries across the board.
A Mindtree spokesperson rubbished the news. 'No. There is no truth in this statement. In fact, Mindtree has stated clearly to its employees that salary reductions are not part of its current plans. Nor are lay-offs part of Mindtree’s plan,' she said.
Mindtree did not share details about cost-cutting.
The company reportedly cut salaries in 2001, during the dotcom bust. But the headcount back then was under 500. Mindtree now employs over 5,000 people in India’s technology capital.
'In fact, during the earlier recession cycle [2000-01] when Mindtree was only about two years old, it was clearly stated that Mindtree wouldn’t lay off even a single employee, and it was abided by,' the spokesperson said.
Our source also said the company is adopting other cost-cutting measures like consolidating operations at a single office, moving employees from a leased facility in the city to its own campus on the outskirts of Bangalore within two months.
Indian IT firm Mindtree Consulting maintains it doesn’t see the need to lay off employees at its Bangalore offices. In fact, the firm said it is not even contemplating salary cuts. But one employee told IT Examiner that salary cuts have been announced.
The employee, working on a telecom project, said the company has communicated internally that salaries will be rolled back to the previous year's levels.
Our source, however, could not confirm if the company was trimming salaries across the board.
A Mindtree spokesperson rubbished the news. 'No. There is no truth in this statement. In fact, Mindtree has stated clearly to its employees that salary reductions are not part of its current plans. Nor are lay-offs part of Mindtree’s plan,' she said.
Mindtree did not share details about cost-cutting.
The company reportedly cut salaries in 2001, during the dotcom bust. But the headcount back then was under 500. Mindtree now employs over 5,000 people in India’s technology capital.
'In fact, during the earlier recession cycle [2000-01] when Mindtree was only about two years old, it was clearly stated that Mindtree wouldn’t lay off even a single employee, and it was abided by,' the spokesperson said.
Our source also said the company is adopting other cost-cutting measures like consolidating operations at a single office, moving employees from a leased facility in the city to its own campus on the outskirts of Bangalore within two months.
Accenture, BPO
Accenture BPO looks at single digit pay hikes
Some of the IT and BPO companies are riding against the tide to hand out pay hikes to employees despite the economic slowdown. Accenture BPO turns out to be one but only with rather small increases.
The IT major has handed over raises to some of its middle level staff but is yet to announce the variable pay which is due by the end of March. However, employee promotions are currently on hold.
One employee said, “There is no talk going in Accenture about the variable pay. This means that it would be paid out like it was in the prior years. There was an increase in salary for whom it was due however there is no promotions i.e. movement from one level to the other. Apart from that, variable payout and sub-level movement is happening.”
Last year, Accenture paid a double digit per cent pay rise.
Variable pay is a chunk of an employee’s gross remuneration that is based on his/her annual performance assessment as well as the company’s annual performance.
Sources said, “Everything is not fine but I guess it is trying to differentiate between key resource and discardable resource because hike given to key resource is maximum single digit per cent hike and for others it falls between four per cent to six per cent”.
The IT major has handed over raises to some of its middle level staff but is yet to announce the variable pay which is due by the end of March. However, employee promotions are currently on hold.
One employee said, “There is no talk going in Accenture about the variable pay. This means that it would be paid out like it was in the prior years. There was an increase in salary for whom it was due however there is no promotions i.e. movement from one level to the other. Apart from that, variable payout and sub-level movement is happening.”
Last year, Accenture paid a double digit per cent pay rise.
Variable pay is a chunk of an employee’s gross remuneration that is based on his/her annual performance assessment as well as the company’s annual performance.
Sources said, “Everything is not fine but I guess it is trying to differentiate between key resource and discardable resource because hike given to key resource is maximum single digit per cent hike and for others it falls between four per cent to six per cent”.
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