Despite public statements to the contrary, Apple did lay off around 50 enterprise salespeople last week, CNET News has learned.
Sources who wished to remain anonymous for fear of reprisal confirmed reports by Valleywag and 9to5Mac.com that roughly 50 salespeople were let go by the company for "business and economic reasons," according to one source. An entire sales group based in Austin, Texas, was let go as well as workers in Cupertino, Calif., where Apple is headquartered. Those affected were given severance packages and the opportunity to apply for other jobs inside Apple.
Apple spokesman Steve Dowling, when asked Tuesday about Valleywag's report regarding the layoffs in the sales group, declined to comment. An unnamed Apple spokesman then told Silicon Alley Insider on Wednesday that the Valleywag report was not true, the same language Dowling used on Friday in a brief interview with CNET News to describe another report that Apple had laid 50 people off in its Mac Hardware and Pro Applications groups as well as the original report involving the sales group.
Reached on Monday, Dowling declined to comment on the situation beyond the statements provided last week.
However, the layoffs in the sales group did happen, according to several sources who were brought into conference rooms in Austin and Cupertino last Tuesday and given white manila envelopes informing them that they had been laid off, amid plainclothes security officers. It's still not clear whether the Mac Hardware layoffs occurred on Friday.
The seeds for the layoffs began last year, when Apple began de-emphasizing its direct enterprise sales force in favor of a sales strategy that embraced resellers and channel partners as ways of getting its products into the hands of businesses. That shift, believed to come directly from Apple COO Tim Cook, started when former the Apple senior vice president of enterprise sales, Al Shipp, left the company. Shipp, now the CEO of software start-up 3VR, did not return a call seeking comment.
John Brandon, formerly the head of Apple's sales for the Americas resellers like Best Buy and Wal-Mart, assumed control of the group when Shipp left and began making changes. Under Brandon, Apple began to shift away from a sales strategy where representatives built personal relationships with business customers in favor of a channel business that will depend on resellers like Ingram Micro and possibly CompUSA to sell Apple products to business customers.
The decision does not seem to have been prompted by falling sales or poor performance within the group, rather a change in philosophy embraced by Brandon and Cook. But the enterprise group has never been the hot group inside Apple, famous for its consumer retail empire and led by Steve Jobs, a man who disdains much of the entrenched corporate IT mindset.
Apple's shift in its enterprise sales strategy isn't all that remarkable, but Apple's willingness to publicly deny that layoffs took place is another blow to its credibility, already having taken a hit this year over its handling of disclosures involving the health of its CEO, currently on a medical leave of absence until June.
Confirming that a few dozen enterprise salespeople had been laid off as part of a strategic shift--and not a downturn in business--probably would not have made that much of a ripple in the tech media, currently more interested in Apple-related topics such as Netbook rumors and Apple co-founder Steve Wozniak's debut on ABC's "Dancing With the Stars" later on Monday.
Although Apple has been considered one of the more resilient companies in tech after posting strong earnings in January, the continued economic decline is believed to be affecting Mac sales and has prompted some analysts to reduce their expectations for Apple's current quarter. Perhaps the company felt that anything that might be perceived as bad news could hurt its stock price, and since it didn't have to report the layoffs to the Securities and Exchange Commission because they made up a small fraction of Apple's workforce, it didn't have to acknowledge them, period.
For the second time in a week, Apple has denied rumors that it has laid off workers.
On Friday, Valleywag reported that a tipster informed it of layoffs in the Mac Hardware and Pro Applications group, describing Apple's Cupertino, Calif., headquarters as having "lots of security around" and saying "it seems like a lot" of employees were affected. Earlier in the week Valleywag published a similar report that 50 sales employees were laid off from Apple.
Apple spokesman Steve Dowling denied both reports Friday. "It's not true," he said, referring to the rumors involving both rounds of supposed job cuts.
Apple's ability to ride out the worst economic period since Ronald Reagan's first term has been questioned over the last several weeks, with reports that Mac sales are on the decline and a substantial drop in its stock price Friday amid rising unemployment and falling consumer confidence. But the company has a cash position that most of its competitors can't match, and was not expected to have to resort to layoffs at this point.
Over 32,000 people now work for Apple. The company went on a hiring binge last year, adding workers mostly in its retail division. Part-time workers in that group have reportedly endured some cuts, but no full-time employees have stepped forward this week to confirm they've been laid off, as happened at IBM earlier this year.
AMD will cut up to 10 percent of its workforce by the end of the third quarter of 2008, as it struggles to return to profitability with slowing sales.
The company announced the workforce moves Monday after the close of the stock market, two weeks after denying such a cut had already taken place. AMD also warned investors that first-quarter revenue is going to be $1.5 billion, about $100 million less than what Wall Street analysts were expecting for the quarter. "The decrease is due to lower than expected sales across all business segments," the company said in a release.
AMD is finally starting to get its Barcelona processor out into the market, after almost a year's worth of delays, but it's not clear that Barcelona had much of an impact on its first-quarter performance, given that systems using Barcelona aren't expected to become available until early in the second quarter.
The next several quarters will play a huge role in determining the future of AMD CEO Hector Ruiz, who has promised to get the company back to profitability in the second half of the year. One surefire way to cut costs is to cut jobs, and about 1,650 employees are now expected to be looking for work later this year.
AMD denied Thursday that it has started laying off people amid an economic downturn, but it declined to comment on whether it was about to do so.
A report from The Inquirer Wednesday said that AMD has already started cutting workers from its payroll, with plans to shed 5 percent of its workforce across the board. An AMD representative denied that any cuts have taken place as of Thursday morning, but when asked if cuts were impending, declined to comment on "rumors and speculation."
AMD is starting to right its ship after a disastrous 2007, with the fixed versions of its quad-core Barcelona and Phenom processors about to ship, a well-received integrated graphics chipset already out in the market, and the pending debut of its first designed-for-mobile notebook chip. But it's had to scramble to get to this point, and the effort to correct the mistakes made on Barcelona and Phenom might have caused problems in other parts of AMD's business.
The Inquirer said AMD is about to miss its quarterly earnings targets as well, but the AMD representative likewise declined to address that statement. AMD CEO Hector Ruiz has promised to get the company back to break-even by the second half of the year, and continued losses might force the company's board of directors into making a move.
Palm plans to get smaller in the coming weeks, as less money coming in the door means less money to spread around.
A company representative confirmed a report earlier Wednesday by PalmInfocenter that the struggling company has begun informing employees of job cuts, just as the holiday season kicks into full gear. The representative said Palm is not disclosing how many employees were affected by the decision to cut jobs, but PalmInfocenter said the number could be in the "hundreds." Palm had 1,247 employees as of May 31, according to its annual report.
Palm announced earlier this month that quarterly revenue and gross margin would be well below expectations after the company was unable to get a new product qualified for release, setting the stage for the layoffs. The company has struggled mightily this year as the Treo smartphone, so popular in years past, has fallen out of favor with consumers and businesses. The hardware look and feel of the Treo has grown stale against thinner models, and there still hasn't been a major update to the Palm OS since 2004, an eternity in this industry.
CEO Ed Colligan does not appear to be among those who will be laid off, at least yet. It's hard to see how fewer people will make it easier for Palm to create something new, but the company doesn't really have a choice if it wants to stay in business. It's really sad to see a company that has played such a pivotal role in the advancement of mobile computing on the brink like this.
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