Friday, April 17, 2009

Will Cisco layoff 6,600 employees?

Is it pinkslips time at Cisco? Predicting a significant drop in revenue for the fourth quarter, a JP Morgan analyst has reported that Cisco Systems Inc "could" soon announce a workforce reduction of 10 percent (this could be equal to about 6,600 employees).

In his 49-page first-quarter 2009 preview of communications equipment and networking companies, analyst, Ehud Gelblum, of JP Morgan wrote, "We expect Cisco to guide fourth fiscal quarter revenue down 17-22%, year over year, as demand continues to deteriorate, in-line with our estimate for a 21 per cent year over year decline," "We believe Cisco could also announce a 10% headcount reduction, which we calculate could save $900M annually," he wrote.

The recent lowering of sales projections by two of Cisco's competitor's Juniper Network and F5 Network has led to a similar speculation about the company.

Cisco spokesman reportedly refused to comment on JP Morgan report directly. However, in a statement he said that on our fiscal second quarter 2009 earnings call in February we discussed a limited restructuring where we could in the near term see a total reduction of between 1500 and 2000 jobs company wide. This does not represent a broad-scale layoff in our workforce.

The spokesman added that this limited restructuring is part of our ongoing, targeted realignment of resources. While Cisco constantly manages its business priorities, resources and overall employee alignment as part of our overall business management process, we are sensitive to the impact these decisions have on employees during this challenging economic environment. We are doing everything possible to minimize the impact on employees affected by the limited restructuring.


Infosys to cut variable pay compenent

Infosys has cut the variable pay for employees, with the cuts being deeper at the higher levels. For senior executives, the variable pay, which constitutes nearly 50 per cent of their total compensation, has been slashed by 58 per cent.

“Some boardroom executives have even taken a 70 per cent to 85 per cent variable pay cut,” said T V Mohandas Pai, head of HR in Infosys. The company's hiring has been steadily declining.

In Q4, it added (net) only 1,772 people, compared to 2,772 in Q3, and 2,586 in Q4 of 2007-08. In the whole of 2008-09, it hired (net) 13,663 people, down from 18,946 in the year before.

The company maintained that it will not seek to trim its payroll by laying off software professionals. There will, however, be no salary hike this year, as the company plans to keep its operational costs under control.

“We are not laying off anybody and there are no such plans,” said Infosys Technologies HR-director, TV Mohandas Pai.

Infosys plans to hire 18,000 professionals in the current fiscal, including almost 16,000 fresh graduates and experienced hires. It will also recruit around 1,000 non-Indians outside the country to increase the number of foreign professionals in its workforce.

Times News Network

Thursday, April 16, 2009

New email server for Microsoft

Microsoft Corp said it will launch a test version of its Exchange Server, marking the latest development in the technology used by 65 percent of businesses worldwide to run their email systems.

The public beta test version of Exchange Server 2010, as the product is called, is the first of a wave of upgrades to Microsoft programs as the software giant gears up for the next release of its highly successful and profitable Office suite of applications.

Microsoft, which is gradually moving toward Internet distribution for some of its products to counter threats from Google Inc and other new competitors, said the latest Exchange Server can work entirely as an online service, which may attract customers looking to save money on hardware and support for their email and messaging systems.

For users, the new Exchange Server offers a few innovations, including the ability to "mute" streams of email, or opt out of conversations of limited interest to the recipient.

The new system also offers a range of tips to avoid embarrassment or wasting time, by warning users before they send mail to large distribution groups, to out-of-office recipients or to people outside the organization, which Microsoft hopes will protect against information leaks and reduce unnecessary e-mail messages.

It also has a function to transcribe voice messages sent to the computer. The full public roll-out of Exchange Server 2010 is scheduled for the second half of 2009 while Microsoft's Office 2010 is expected to be available in the first half of 2010.


Will Yahoo layoff hundreds of employees?

Yahoo Inc is gearing up for its third round of mass layoffs in 14 months, signaling the long-slumping Internet company is still struggling to snap out of its financial malaise under a new leadership team.

The cuts will likely affect several hundred employees, a person familiar with the plan said, confirming a report first published on The New York Times' Web site.

The person asked to remain anonymous because Yahoo isn't publicly discussing anything that might affect its stock price until the April 21 release of the Sunnyvale, California-based company's first-quarter earnings report.

Most analysts expect those results to be lackluster, extending a pattern of disappointing profits that began in 2006.

Yahoo hired technology veteran Carol Bartz as its chief executive in January to steer a turnaround. The blunt-talking Bartz has spent much of her tenure trying to understand Yahoo's strengths and weaknesses while promising to throw out the dead wood. She already has reorganized Yahoo's management team.

Bartz's predecessor, Yahoo co-founder Jerry Yang, also tried to shake things up by laying off about 1,000 workers in February 2008 only to expand the payroll again in the next few months. Just before Bartz's hiring, Yahoo eliminated more than 1,500 jobs to enter 2009 with 13,600 workers.

When they made the last cuts, Yahoo executives warned more layoffs could be coming if the recession worsened — an unwelcome turn that occurred during the first three months of the year.

The deepening downturn has caused more advertisers to trim their spending, a trend that has hurt all companies like Yahoo that depend on advertising for most of their revenue. The retrenchment has been a bigger problem for more traditional media, particularly newspapers, but it's also forcing Internet companies to tighten their belts.

Even Internet search leader Google Inc, which generates three times more revenue than Yahoo, decided to lay off about 340 workers and curb other expenses during the first quarter to bolster its profits during the tough times.


Microsoft to provide free training for the unemployed

Microsoft Corp announced that it would be giving away more than 30,000 vouchers over the next 90 days to help unemployed people in Washington state get new computer skills.

The vouchers will entitle them to take computer classes for free -- either in person or online -- and take Microsoft certification exams at no or low cost.

At a news conference in Seattle, Gov. Chris Gregoire commended Microsoft for stepping up to the challenge of helping the nation come out of the recession stronger.

"When this downturn ends, we will need more skilled workers ready to enter the job market. Microsoft's generosity will provide thousands of men and women the skills they need to work with the software that runs our businesses," Gregoire said.

Washington's WorkSource job centers across Washington started giving out the vouchers on Monday. Washington state had the 17th highest unemployment rate in the country last month with a jobless rate of 8.4 per cent.

The vouchers are part of a new national programme Microsoft announced at the National Governors Conference in February. Elevate America hopes to offer job training to as many as 2 million Americans over the next three years.

Sue T Carter of Bellevue picked up one of the first vouchers. She said she has been working part time for more than two years and really needs to find a job that will help her pay her rent, because she is less than a month away from eviction.

Carter earned several college degrees years ago and has picked up most of her computer skills on her own, but she knows companies seek employees with professional training.

"Knowledge is power and I'm willing to do anything to make myself a more viable candidate in the workplace," Carter said. "It always makes you more viable if you've got more skills to offer."

She expressed enthusiasm that the training programme is not costing taxpayers anything. Brad Smith, Microsoft senior vice president and general counsel, said the company also is excited about the public-private partnership because it will help both people and businesses.

"This programme is all about equipping people with the new skills they'll need to get a job in the changing economy," Smith said.

The free training will be for Microsoft software, from basic technology literacy to intermediate-level courses on programmes such as Excel and PowerPoint.


Tuesday, April 14, 2009

Is IBM set to layoff thousands of jobs?

International Business Machines Corp plans to cut “thousands” of staff in the UK, Germany and Ireland as it shifts jobs to eastern Europe, China, India and South America, the Observer reported.

Job reductions have already been carried out in western Europe and more will be made within months, the newspaper said, citing Lee Conrad of Alliance@IBM, a network for company employees.

Indian workers at the company earn about 10 per cent of the amount paid to US employees performing similar tasks, according to the newspaper.

An IBM official told the media that a number of US employees have been laid off, declining to comment on future job reductions.

London-based IBM spokesman Joe Hanley said IBM declined to comment on “speculation regarding resource actions.”


BT likely to layoff another 10,000 jobs

British Telecom (BT) is preparing to axe another 10,000 jobs. The huge redundancy programme will be announced next month alongside a horrendous set of year-end figures that will include provisions of about £1.5 billion.

The results will mark one of the lowest points in BT’s history since it was privatized in 1984. The share price has crashed to 81 pence, valuing the telecom company at £6.3 billion. It will also seriously damage the legacy of Ben Verwaayen, BT’s former chief executive, who left eight months ago and has since become chief executive at Alcatel-Lucent .

The dividend is likely to be cut by up to 60%, while profits will be further dented by a big contribution to address a pension deficit that will exceed £8 billion. The redundancies, which result from an improvement in BT’s efficiency, are in addition to the 10,000 job cuts made last year and will be spread around BT’s 160,000 workforce. There is no guarantee that this will mark the end of job losses. Some analysts believe next month’s figure could be higher than 12,000.


Is Google showing signs of vulnerability?

With three rounds of layoffs announced since the year began, Google Inc is showing rare signs of vulnerability. As it prepares to deliver first-quarter results on Thursday, investors are anxious to see if the Google machine has any visible cracks, or if the No 1 US Internet search company continues to sidestep the worst of the storm.

"Whenever Internet companies cut costs, people take any cost cutting as a really negative signal," said Sanford Bernstein analyst Jeff Lindsay. But he said Web searches on Google continue to increase, while revenue from paid clicks, people clicking on Google's text-based search ads, appears to be holding up.

"We think they've been cutting costs prudently and sensibly, and it's probably a good indication that they're going to have good margin performance," said Lindsay, who rates Google's stock "outperform." With global economies sputtering, and one recent report forecasting a 5 percent decline in US online advertising spending this year, business conditions for Google and other Internet companies are as bad as they have ever been.

Analysts expect a sequential drop in revenue for the first time in Google's history as a public company. The average forecast, according to Reuters Estimates, is for first-quarter revenue of $5.53 billion, a 3 percent fall quarter over quarter, or a 6.6 percent gain year on year. Still, that is better than Google's rivals.

Yahoo Inc has projected sales falling as much as 16 percent year-over-year in the first quarter. And some analysts expect revenue at Time Warner Inc's AOL unit to slide 19 percent or more in the first quarter from a year ago. Thus Google's stock, which was trading at around $378 on Monday, has risen 23 percent since the eve of its last quarterly earnings report, outperforming the broader market. Google shares trade at 18 times forward earnings versus the 38 times multiple for rival Yahoo.

Shares outperform

Analysts, on average, expect Google to earn $4.20 a share in the first quarter, up about 2 percent from $4.12 in the year-earlier period, according to Reuters Estimates. Roughly 97 percent of Google's revenue comes from advertising. Of that, the vast majority is tied to Google's search-based advertising system.

Because advertisers only pay when a Web surfer clicks on one of Google's search ads, analysts say the ads provide customers with a better return than other forms of advertising such as broadcast radio ads or Internet banner ads. But JP Morgan analyst Imran Khan said in a recent note to investors that the tight credit market could force small businesses, which he reckons accounts for 20 percent of Google's revenue, to cut back on ad spending.

Google does not give financial guidance but Wall Street will be paying close attention to the comments executives make about the economy on Thursday's conference call. Google said in March that it was laying off 200 workers in its sales and marketing groups, following job cuts in its recruiting group and its shuttered broadcast radio advertising business in January and February.

"It is not news that Google is being impacted by the economy. The real question is how much will the economy impact Google from here on out and how long will this recession last," said Cowen & Co analyst James Friedland. "If the ad pie keeps shrinking, eventually Google's ad pie will shrink," said Friedland, who has an outperform rating on Google. While the company ended 2008 with $15.8 billion in cash and short-term securities on its books, investors and analysts are also eager for any updates about how Google plans to use the money.


Is it tough times ahead for Indian IT firms?

Major information technology firms are expected to post a decline in revenue growth in the fourth quarter of 2008-09, primarily on account of project cancellations, say analysts.

"Indian vendors have witnessed several project cancellations during the third and fourth quarter of the fiscal year 2009. The magnitude of project cancellations is different for different vendors," domestic brokerage firm Motilal Oswal said in its India strategy report.

Along with project cancellations, delays in client decision making will cast a toll on 4Q FY-09 volumes, it said. "We expect IT companies to report quarter-on-quarter dollar revenue declines owing to stressed volumes and declining realisations. This is the second consecutive quarter where the sector will see dollar revenue degrowth," it said.

The rupee has depreciated 4.69 per cent against the US dollar during the March quarter, while on an year-on-year basis it has depreciated over 27 per cent.

"Hence, the top-line growth even in rupee terms is expected to remain flat to marginally negative on an organic basis during the quarter," brokerage firm Sharekhan said in its IT earnings preview. Meanwhile, the appreciation of the dollar against other international currencies (euro and pound sterling) would impact the dollar term revenues of the front-line IT firms.

"This is likely to have a negative impact of 2-3 per cent on the dollar term revenue growth rate as the IT companies bill around 25-30 per cent of their revenues in the pound sterling, the euro and Australian dollar," it added.

IT major Infosys would kick-start the quarterly earnings season from April 15 followed by other IT majors -- Wipro, HCL Technologies and Tata Consultancy Services.

"Forward earnings for most companies are not expected to be good. The earnings for the entire IT sector are expected to be bad and the Infosys results are likely to give a new direction to the market," Arun Kejriwal of Kejriwal Research and Investment Services said.

The Sharekhan report stated that amid global turmoil and uncertainty, investor focus would remain on FY-10 guidance. "Going forward, the street would be keenly watching the guidance for FY 2010 as the same would influence the sentiments towards the IT stocks. In rupee terms, the street expects a guidance of a flattish growth in revenues," it noted.

"The street is expecting a revenue growth of 3-4 per cent in rupee terms in FY-10 despite a five per cent y-o-y decline in dollar terms," Sharekhan added. During the January-March period, Infosys scrip has gained 15.38 per cent to Rs 1,324.10 and TCS was up 9 per cent.

While shares of Wipro fell one per cent since January 1, HCL Technologies was up 17 per cent at the end of March 31. "Technology stocks are likely to underperform the markets over the next few quarters," Sharekhan said.

According to Motilal Oswal following substantial across-the-board price cuts, IT companies are hopeful of restricting price cuts to five per cent in the March quarter. Besides, focus on off-shoring would improve the impact from declining realisations.

"We expect growth to start picking up from second half of FY-10, as clients begin to adopt off-shoring to cut costs. As the freeze in technology spending begins to lift, we believe large players would start booking volume growth," Motilal Oswal added.

The Sharekhan report stated that in terms of earnings, Infosys is likely to meet the lower end of its dollar guidance.

Besides, HCL Technologies is likely to report a revenue growth on the back of acquisition of British consultancy firm Axon, which would cast its toll on the operating profit margin of HCL.


Monday, April 13, 2009

Logica on a hiring spree in India

At a time when adding new jobs is being taken out from the agenda of most of the companies, IT and business services company Logica plans to recruit about 3,000 people by 2009, in which 2000 will be in Chennai. The remaining jobs will be in Philippines, Czech Republic and Morocco, reported The Times of India.

The company provides consulting, outsourcing solutions and services and blended delivery services across many industry verticals. In India, it provides support services like infrastructure management, BPO services and financial accounting outsourcing.

"Logica employs 5,700 people and plans to ramp it up to 8,000 by the end of this year," said Abhay Gupte, CEO, Logica India. Logica's Chennai center has about 900 employees.


No Layoff Of 'Minds' At MindTree

Unlike IT majors TCS, Infosys, and Wipro, MindTree Ltd, a global IT and R&D services company, will not layoff even a single employee (minds), said COO N. S. Parthasarathy.

IT companies are currently among the largest sectors impacted by the global recession resulting in layoffs and salary cuts over the last few months.

Talking to CXOtoday at 'Awaaz', an event of the Amrita School of Business (ASB), Parthasarathy said, "Till date we have not sacked any staff in the history of MindTree despite having seen some impact due to the recession." The recession has hurt MindTree especially during the fourth quarter of the last fiscal. "We have felt the impact of the slowdown in the form of pricing pressure with companies now asking for a price reduction. Also, many companies are now offshoring their jobs to cut costs," said Parthasarathy.

The closest MindTree came to layoffs was in 2001, when the company was only two years old and had a manpower of only 400 employees. "There were 35 non-performers who were listed to be sacked, but our leadership team took the decision of a pay cut rather then layoff then," said Parthasarathy.
Since then the company came out with a policy not to layoff any 'minds', as MindTree terms their staff instead of manpower or employees.

The company has grown over the years and currently has over 8,000 'minds' with the acquisition of Aztecsoft in May 2008.

MindTree is hopeful of seeing the economic slowdown improve during quarter two and three this financial year.

Tech Mahindra bags Satyam Computers sale bid

IT services provider Tech Mahindra is the new owner of Satyam Computer Services. The company bid the highest at Rs 58 per share,
pipping rivals engineering firm Larsen & Toubro and billionaire investor Wilbur Ross to the post.

Engineering firm L&T bid at Rs 45.90 per Satyam share, Kiran Karnik, chairman of the govt constituted Satyam board told reporters.

Karnik also said that the Cognizant-Wilbur Ross combine had put in their bid at Rs 20/share for the fraud hit IT co.

Tech Mahindra will have to pay Rs 1,757 crore to buy a 31% stake in Satyam Computer Services. The IT co will have a market cap of Rs 5,666 crore on expanded equity. Tech Mahindra will have to pay a total of Rs 2890 crore for 51% stake in Satyam.

The acquisition will help the company, an arm of the Mahindra & Mahindra Group, to diversify into new areas instead of just depending on the telecom sector.

The Satyam acquisition will help Tech Mahindra diversify its software services business, and compete aggressively with bigger rivals such as TCS, IBM, Infosys and Wipro.

Satyam, which serves customers such as GE, GM and Ford will also help Tech Mahindra build a better portfolio of customers.

Satyam has a 46,600 strong work force, land assets of 450 crore, besides the order book position. Its liabilities include the legal liabilities arising out of the class action suits filed by shareholders in the US, besides any liability arising out of the tussle with UK based mobile payments services provider Upaid.


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