November 11th, 2009
As reported in the Wall Street Journal Adobe Systems has just repeated what one prays does not continue as an annual event, the pre-holiday season layoffs. Last year it was 600, or 8% of the workforce; this year 680, or 9% of the workforce. This layoff is in addition to the some 100 laid off from Omniture staff of 1200 (9% of it’s workforce), now owned by Adobe.
The early word from Adobe and Omniture executives is that few layoffs were expected at Omniture. Omniture CEO Josh James said in an interview: “Like with every transaction, there’s a bit of overlap, but the majority of the people will stay and we’ll hire more.” And as I noted in my report “Adobe’s Designs on Web Analytics: The Omniture Acquisition” Adobe CFO Mark Garrett said in the Q&A period at Financial Analyst’s Meeting on October 7, “We can’t assume a lot of cost synergy [in the acquisition],” implying, as I understood it, that there was little overlap in the functional areas of the two companies. Is a layoff of 9% cost synergistic? A report by the International Labour Office in Geneva notes that “few statistics are available on the employment impacts of mergers and acquisitions in commerce, or for that matter in other industries.”
TechCrunch maintains its sobering “Layoff Tracker” which records over 500 tech industry layoffs totalling over 350,000 employees since August 27, 2008. So Adobe’s is but the latest. There are over 200 comments on TechCrunch about the Adobe layoff. Some appear insightful although an alarming majority strike me as stridently racist. Most of the other press reports are just rehashes of press releases or SEC filings. Of course the financial analysts are always there to remind us that the business and money remain, as always, amoral. As noted in the WSJreport on the layoffs, “Brigantine Advisors analyst Steven Frankel said in a research note that the job cuts, combined with the expected second-quarter release of Abobe’s Creative Suite 5 product, should help the company ramp up margins in 2010.” (Interestingly the WSJ reported today that “Oppenheimer downgraded Adobe Systems Inc. (ADBE, $35.27, -$1.33, -3.63%) to perform from market perform as the shares approached the firm’s $38 price target. The worst is “likely behind” the software company, but the analysts ‘feel the environment remains more challenging than most investors are modeling.’ Tuesday’s news of a 9% headcount reduction underscores that, the firm said.”)
The huge number of tech layoffs lead to what is an even more serious issue. With unemployment so high in Silicon Valley and the tech industry generally, the problem is that no matter how generous a severance package each of these 780 laid-off staff received, the odds are increasing that they will not be able to find suitable employment (or perhaps any employment) when the cash runs out. An article in today’s Wall Street Journal, “Life on Severance: Comfort, then Crisis,” paints a human face on this sorry tale.
I note also that this past August the second edition of “Healing the Wounds: Overcoming the Trauma of Layoffs and Revitalizing Downsized Organizations” by David Noer was published by Wiley. Sounds like valuable reading for all concerned.