Compaq, CSC and Oracle have all announced worldwide staff cuts as markets tighten, with the Australian branches of each company claiming to be unaware of the local impact.
Compaq issued its second earnings warning in as many quarters, projecting no growth for this fiscal quarter over the same period last year, and lowered revenue. Compaq also said it would cut 5000 jobs in a consolidation of its consumer and commercial product groups.
The company said it plans to eliminate about 7 per cent of its workforce worldwide, primarily from the new Access unit formed by the consolidation of its consumer and commercial product groups, as well as jobs from the supply chain and marketing organisation.
Compaq said it will take a restructuring charge of $125 million to $150 million in the first quarter resulting from the consolidation, while recognising about $120 million from a one-time gain primarily from the sale of the company's investment in the Road Runner joint venture.
Compaq Australia spokesperson Letitia Walker said the local impact of the job cuts will not be known until the company posts its results at the end of the month.
Oracle announced it will lay off as much as 2 per cent of its worldwide staff, or about 866 workers, as part of an effort to cut costs in the face of an ongoing economic downturn. "Based on current business conditions, at this time Oracle expects to reduce its worldwide workforce by approximately 1-2 per cent through normal attrition and regular business performance assessments, in line with our ongoing global e-business process improvements," Oracle said in a brief statement.
The database vendor had 43,308 staff on its books at the end of its February quarter, said Oracle spokeswoman Stacey Torman, meaning it will shed roughly between 433 to 866 staff.
Oracle executives recently painted a grim outlook for the company's fourth fiscal quarter, citing ongoing uncertainty in the US economy. Earnings for the period, which ends May 31, will likely be flat compared to a year ago, executives said.
In a conference call after last week's results were announced, Oracle executives stressed that predictions are hard to make in the current climate, and hinted that layoffs would follow. "With the sole exception of R&D, Oracle should constantly be reducing head count in every area," Larry Ellison, Oracle's chairman and chief executive officer, said during the call.
Brian Mitchell, managing director for Oracle Australia, said that while the cuts were being made worldwide, most would be made in the US, as the majority of the current economic problems are occuring there.
Computer Sciences Corp (CSC) became the latest IT consulting and services firm to announce cutbacks, saying it will eliminate 700 to 900 jobs because of revenue and earnings that are far lower than expected.
CSC said financial results for its fiscal fourth quarter ending March 30 are being affected by a decline in demand for technology consulting and systems integration services - a situation that has now spread from users in the US to users in Europe. The company said its healthcare software licensing and services business has also been hit hard. CSC had previously indicated that economic uncertainties and capital spending constraints put in place by users were dampening its revenue expectations. But it has now admitted that demand has "deteriorated" on a more widespread basis during the current quarter, resulting in lower profit margins and longer sales cycles.
In response to the ongoing business deterioration, CSC said it's implementing a restructuring plan that includes the promised job cuts and other cost-cutting actions. The cutbacks would lower the company's workforce of 68,000 employees by only about 1 per cent, but CSC said it's developing further plans "in the event of a delayed economic recovery".
In an attempt to minimise the workforce reduction, CSC said it's shifting some consulting and systems integration employees to lower-margin assignments. The company expects to take a restructuring charge of $100 million to $150 million against its fourth-quarter financial results to cover the costs of the cutbacks.
Again, CSC Australia was unable to comment on whether there were likely to be any cuts locally, directing enquiries to the US.
These staffing cuts are slightly less severe than those announced last week, when networking equipment maker Cisco Systems said it would lay off 3000 to 5000 full time employees, along with 3000 temp or contract workers. Intel on March 8 said it would cut 5000 jobs over the next 9 months, much of it through attrition.Photograph: Oracle's Larry Ellison