AT&T likely to cut 12,000 jobs

AT&T, the largest US phone company, will cut 12,000 jobs, striving to trim expenses as the US economy falters. The reductions amount to about 4% of the workforce, Dallas-based AT&T said on Thursday in a statement.

The company plans to record $600 million in expenses for severance this quarter. The reductions would bring AT&T’s total job cuts to more than 25,000 this year. The carrier and its smaller competitors are grappling with slowing consumer spending and a jobless rate at its highest level in 14 years.

AT&T fell 18 cents to $28.90 in early trading after closing at $29.08 on Wednesday on the New York Stock Exchange. The carrier also plans to reduce spending next year to cope with the slowdown, with plans to give specific forecasts for 2009 spending plans in late January.

The carrier said its still adding jobs in its wireless and video units. In July, the company said it would eliminate 10,000 jobs to reduce overlap in some departments after its 2006 purchase of BellSouth Corp. Before that, the company announced 4,650 cuts, some in its home-phone business, which has lost customers to cable operators and wireless competitors.

Source: Agencies

Recession times, HP freezes on pay hike!

Hewlett-Packard, the world’s largest personal-computer maker, is freezing salaries as part of chief executive officer Mark Hurd’s efforts to contain costs, people familiar with the plan said.

Employees have been notified by e-mail that they won’t receive a salary increase in fiscal 2009, which began in November, according to two people who asked not be identified because the message was confidential. The only exceptions will be in countries where pay freezes are illegal, the two people said.

Hurd has cut jobs, closed offices and merged data centers to lift profit, even as he expands through acquisitions. Hewlett-Packard also is limiting travel, curtailing hiring and eliminating favorite science projects to save on research costs in 2009, chief financial officer Cathie Lesjak said last month on a conference call. Hewlett-Packard, which has 3,20,000 employees, declined to confirm the salary freeze.

In this difficult macroeconomic environment, we believe it is prudent and responsible to reduce costs where possible, said spokeswoman Emma McCulloch. HP has a longstanding and disciplined approach to managing costs in order to invest in the company’s growth.

Hurd, who became CEO in 2005, received $25.3 million in total compensation in fiscal 2007. Worldwide technology spending growth will slow to 2.6% next year, less than half the rate initially predicted, research firm IDC said last month. Growth in the US will decelerate to 0.9%, the Framingham, Massachusetts-based company estimated.

Hewlett-Packard’s PC sales, which account for about a third of revenue, rose 10% to $11.2 billion last quarter, beating some estimates. Demand for notebooks offset declining printer sales in a shrinking economy. Last month, Hurd forecast a rise in profit to as much as $4.03 a share this fiscal year, more than the $3.89 anticipated by analysts in a Bloomberg survey. Investors took that as a sign the company is prepared to squeeze more profit out of sales as customers reduce spending.

It will be a challenging environment and were planning on such, Hurd, 51, said on a November 23 conference call with reporters. We can only control the things we can control, which is our cost structure and the competitiveness of our products.

Also in India
A HP employee in Bangalore said that employees in India too had received a mail from the company saying there wouldn’t be any salary increase in fiscal 2009. Salary increases in India’s technology sector have been amongst the highest in the world in the past few years. If HP does not hike salaries in fiscal 2009, this would be the first time in many years that a major technology company in India would be avoiding a salary increment.

Source: Agencies

Infosys Technologies will freeze new recruitments

Infosys Technologies will freeze recruitment after meeting this fiscal year's target of hiring 25,000 staff, a telling sign the Infosys global downturn is hitting India's $52 billion outsourcing sector.

India's second largest software services firm however has no plans to cut jobs and is sticking with its third quarter outlook, CEO Kris Gopalakrishnan told reporters.

He said the outsourcing sector's growth rate would halve next year as some customers delay orders.

"Last year the IT industry grew more than 30 percent, this year it is looking at somewhere in the region of 15 percent," Gopalakrishnan said.

India's export-driven IT sector, used to a scorching pace of growth, has been hit by the financial crisis and recession in the United States, which contributes more than half their revenue.

In the last few years, the outsourcing industry has created tens of thousands of jobs, mainly attracting young workers, as global companies look to trim labour costs.

Infosys hired 16,000-17,000 employees in the first half of the fiscal year that began in April and would honour commitments to 6,000 under training, Gopalakrishnan said.

Infosys, which counts Goldman Sachs and Philips Electronics among its clients, cut its full-year dollar revenue outlook in October due to the worsening global downturn.

Gopalakrishnan said on Thursday the company would freeze fresh recruitment, apart from meeting specific skill needs.

"We will have to look at controlling our cost, controlling our expenses making sure that we run an optimised business. We will have to look at what are things we need to do in order to prepare ourselves for the recovery."

"Growth is coming more and more from emerging markets so hese are the things we need to prepare ourselves. We should not lose momentum in this slowdown," he said.

But Infosys still expects its strong client base and a weakening rupee to help it meet a forecast for December quarter earnings of $0.57 a share. The rupee has fallen nearly six percent so far this quarter against the dollar.

"Infosys is seeing further degradation of the demand environment, with headwinds from leadership changes at customers, a shrinking large deal pipeline .... Pricing pressure has emerged," CLSA Asia-Pacific said in a report this week.

Billionth mark for Logitech mouse

Even as the discussions are on whether the technology called 'mouse', which is celebrating its birthday on next Wednesday (December 10), would soon be an extinct species in another couple of years, leading mouse manufacturer Logitech announced that it has shipped its billionth mouse.

"We've just done something that makes us all very proud at Logitech – we've shipped our one billionth mouse. How cool is that!?," read a blog posting by Rory Dooley, senior vice president, Control Devices, Logitech. "When all of this started for Logitech back in the early '80s, the mouse was primarily a tool for CAD (computer-aided design applications). Since then, the mouse has become something much more – it is truly the key to the kingdom – the device that unlocked the power of the computer."

He said the mouse opened up computing to the average person by providing a simple, intuitive way to interact with the computer.

Logitech has enthusiastically driven nearly every major innovation in mouse technology – persistently refining this ubiquitous interface between people and their digital experiences, said a press release.

With more than a billion people currently using computers worldwide and another billion expected to begin using computers by 2014, according to a report by analyst firm Gartner, Logitech continues to pursue compelling innovation to delight users of the next billion mice and input devices of the future, it said.

Founded in a farmhouse in Apples, Switzerland in 1981 and shortly thereafter establishing strong ties in Silicon Valley, Logitech introduced its first retail mouse in 1985 and reached the 100 millionth mouse mark in 1996, the company said.

"Since the first click of the Logitech P4 mouse in 1982, Logitech mice have played an indispensable role in the evolution of the personal computer," said Gerald P. Quindlen, Logitech president and chief executive officer.

"During the last few decades, the way people use computers has changed dramatically – what was once strictly a business tool has become highly integrated into our personal lives," he added.
Quindlen said Logitech has continually pursued innovations to meet those changing conditions, introducing – in the last five years alone – the world's first laser mouse, hyper-fast scrolling and the nano-receiver.
In celebration of its billionth mouse, Logitech is launching a worldwide contest that invites people to follow the travels of this notable mouse – from the manufacturing line to its final destination – and to try to figure out where in the world it will end up.

Logitech also said that the mouse's journey will be chronicled on Logitech's blog, Blogitech (blog.logitech.com).

Here is how Google is cutting costs!

Feeling the pinch of the global economic slowdown and the US recession in particular, Google, the Internet search engine giant, is resorting to austerity measures, The Wall Street Journal reported.

Prominent among them include cutting new projects, ratcheting back spending, chipping away at perks and reducing employee strength. Such measure from Google, which is known for its generous perks, has come as a surprise to many industry watchers.

The latest Google measures are understandable as its revenue growth has slowed down dramatically over the past one year.

“We have to behave as though we don't know what's going to happen,” Google chief executive Eric Schmidt was quoted as saying by The Wall Street Journal.

The company will curtail the “dark matter,” Schmidt said, projects that “haven't really caught on” and “aren't really that exciting.”

Schmidt said the company is “not going to give” an engineer 20 people to work with on certain experimental projects anymore. Popular social networking site Orkut was a product of this experiment by Google. Schmidt, however, promised to get this back when things improve.

Google executives had started preparing for the slowdown about a year ago, but things have now accelerated. In recent weeks, Schmidt has held meetings with top executives to determine where to focus investment more narrowly, the Journal said.

Top priorities include display ads, which use graphics and appear on Web pages; advertising on mobile phones; and the company's online business software.

Schmidt says the company is shifting more engineering and sales resources to those areas, and away from less-promising projects. Teams on projects the company is merely "fiddling with," he says, will get "naturally smaller as people get plucked off,” the report said.

The Wall Street Journal said the financial crisis has created a new sense of urgency within the company. Top executives say they remain committed to projects they believe hold long-term potential, but are prepared to “starve” lesser ones.

40pc of large businesses cut their IT budgets

More than 40 percent of large businesses have cut their IT budgets this year due to the global economic slowdown, according to a new survey by Forrester Research. The Forrester Business Data Services report surveyed nearly 950 senior IT managers across North America and Europe regarding their IT services spending and overall services strategies and priorities.

The economy’s affect on IT spending is evident in some specific data points contained in the report: Forty-three percent of firms have already cut their overall IT budgets in 2008 in reaction to the slow down in the global economy, while 24 percent of firms have put discretionary spending on hold. Twenty-eight percent of respondents said the economy has had no impact on their IT budgets.

Asked how the economy will affect IT services spending, 70 percent of respondents said they will likely negotiate lower rates with suppliers, and 16 percent said they have already cut their IT services spending.

IT departments in the financial services industry were hit hardest — 49 percent of IT shops in the financial services sector have cut their budgets. At the other end of the spectrum is the media, entertainment, and leisure industry, where only 39 percent of respondents said they have had to reduce spending.

IT departments in North America have been affected by the economy more than their European counterparts: 49 percent of North American firms have cut their IT budgets compared with 31 percent of respondents in Europe; although it should be noted that the Forrester survey was fielded in Q2 2008 prior to the deteriorating economic conditions in Europe.

“This is not an across-the-board spending slowdown; the impact of the economy on IT budgets varies widely by industry and geography,” said Forrester Research vice president and principal analyst John C. McCarthy, who is in India at present for a workshop. “With regard to the services sector, the slowdown has firms renegotiating rates, being more selective in choosing vendors, and examining spending plans more thoroughly, but they are still expecting to pay more for services. The demand for enterprise IT services has not dropped significantly.”

Regarding the state of spending on enterprise IT services, the report illustrates a number of trends: The demand for services holds steady. Forty-five percent of firms plan to increase their use of applications outsourcing, while 43 percent of firms are increasing their use of infrastructure outsourcing. Forty-three percent of respondents said they are moving more work offshore.

Infrastructure outsourcing expects to grow. Convergent telecommunications and network management is a hot area of growth as 20 percent of firms will outsource this service in 2008.
Few firms have fully tapped into offshore resources. Only 9 percent of firms use offshore resources wherever and whenever possible. A growing number of firms are interested in exploring more offshore work, with 14 percent ramping up use, 19 percent piloting, and 22 percent not using offshore but actively tracking developments. Of those firms not sending work offshore, a majority cite the questionable quality of the work done.

Satisfaction with outsourcing remains low. While overall firms are satisfied with their decision to use a third party, 52 percent say their biggest challenge with existing IT services and outsourcing relationships is that cost savings are lower than expected. Other noteworthy challenges include inconsistent or poor service quality (40 percent) and the inability of the vendor or contract structure to respond rapidly to changing business needs (35 percent).

US slides in slowdown in December 2007; Longer than average

The United States economy officially sank into a recession last December, which means that the downturn is already longer than the average for all recessions since World War II, according to the committee of economists responsible for dating the nation’s business cycles.

In declaring that the economy has been in a downturn for almost 12 months, the National Bureau of Economic Research confirmed what many Americans had already been feeling in their bones. But private forecasters warned that this downturn was likely to set a new postwar record for length and likely to be more painful than any recession since 1980 and 1981.

The Dow Jones Industrial average plummeted 443.80 points (5.03%) to 8,385.24 at 1807 gmt after five winning sessions. The techheavy Nasdaq slid 94.57 points (6.16%) to 1,441.00 and the broadmarket Standard & Poor’s 500 index dropped 53.86 points (6.01%) to 842.38. Part of the drop may have reflected profit-taking after last week’s surge in stock prices,but it also came in response to new data showing that manufacturing activity dropped to its lowest point in 26 years.

Both the chairman of the Federal Reserve, Ben S Bernanke, and the Treasury secretary, Henry M Paulson Jr, vowed to use all the tools at their disposal to restore a measure of normalcy to the economy.

Bernanke, speaking to business leaders in Austin, Tex, said it was “certainly feasible” to reduce the Fed’s benchmark overnight lending rate below its current target of 1%, signaling that the Central bank would lower the rate at its next policy meeting in two weeks.

Investors reacted to Bernanke’s remarks by pouring money into longer-term Treasury bonds, which briefly pushed already-low yields on 10-year and 30-year Treasuries to new record lows. Investors appeared to be reacting mainly to the clear signal from Bernanke that the Fed was preparing to pump money into the economy by buying up longer-term bonds.

Paulson, in a speech in Washington on Monday, vowed to look at new ways to use the $700 billion bailout fund that Congress approved in October. In Congress, Democratic leaders are drawing up a huge new fiscal stimulus plan that could total more than $500 billion. Democrats said they planned to have the measure ready as soon as Congress convened with a strengthened Democratic majority in January. Meanwhile, Democrats could take up legislation next week that would provide financial assistance to the automobile industry.

President Bush, increasingly the odd man out in the last weeks of his term, said his administration would do whatever was necessary to safeguard the system.

Many analysts said they saw no signs yet that the economy was nearing a bottom. American consumers, who for decades have been the country’s tireless source of growth when all else failed, have cut back on their spending more sharply than at any time since the early 1980s.

In officially declaring that the current recession began in December 2007, the National Bureau of Economic Research paid little heed to the fact that the nation’s GDP product actually expanded slightly in the first and second quarters of 2008.

Source: Agencies