MySpace recently got a new CEO in Owen Van Natta, and according to reports, they may have a few more problems to deal with than they’d originally thought.
“The business is in a lot worse shape than Fox Interactive was positioning,” stated an anonymous source. According to a report, while MySpace’s old CEO Chris DeWolfe boasted loudly about their 120 million unique visitors, the real numbers are nowhere near. And, it’s being reported that when Google renews their $900 million advertising deal with MySpace, they’ll only guarantee $50 million per year, cutting MySpace’s ad revenue in half from $600 million to $300 million.
It’s expected that the new head honcho will make some huge layoffs, possibly cutting down their 1,500 employees in half to just 750 (but hey, it’s News Corp, how would that not be expected?).
As if the 5,000 laid off at Microsoft weren’t enough of a warning signal that times are tough, the Redmond based software giant is also being forced to close down its on campus bar just a few days before its official opening. The pub was set to debut alongside several other retail outlets offering everything from cell phones, to haircuts, but apparently it didn’t make the final cut.
You would think with all the layoffs that were recently announced, they would want somewhere employees could go and drown their sorrows, but according to Microsoft Spokesman Lou Gellows, "We had to take another look at this. We are sensitive to the business environment and that meant not having a pub."
This cut is but one of many in a larger initiative designed to deal with non essential expenses. Employees are encouraged to look for ways to save on everything from external vendors, to travel expenses. The pub which was scheduled to launch on Monday had already hired staff, and had installed beer taps. Not exactly the long weekend they were hoping for I would imagine.
Times are tough, but even if people aren’t buying Vista, they’re still buying beer aren’t they?
Microsoft made headlines yesterday when it was discovered the company had been asking some of the 1,400 employees it laid off last month to pay back money it had overpaid as part of their severance. The letter blamed the mistake on an "inadvertent administrative error," which had our readers divided on whether or not Microsoft was justified in asking for the money back. Reader 'Phated1' pointed out how even a small overpayment could add up if multiplied by a large number of employees, but the best reader comment came from 'punditguy':
"Now I'll have to redo my Silicon Valley edition of Monopoly: 'Microsoft Error in Your Favor. Pay $200.'"
While a Microsoft spokesperson at first refused to offer any details saying it was a "private matter between the company and the affected people," the software maker is now saying it will not pursue trying to get its money back, perhaps figuring out the alternative is not worth the bad publicity.
"Last week, 25 former Microsoft employees were informed that they were overpaid as a part of their severance payments from the company," Microsoft wrote in a statement. "This was a mistake on our part. We should have handled this situation in a more thoughtful manner. We are reaching out to those impacted to relay that we will not seek any payment from those individuals."
According to Microsoft human resources chief Lisa Brummel, the 25 former Microsoft employees received, on average, about $4,000 or $5,000 in extra pay. An additional 20 former employees were underpaid, and Microsoft said it will immediately reimburse them.
We expect to hear more than a few expletives being fired off in Microsoft's direction by some of its 1,400 ex-employees that were laid off last month. That's because Microsoft has begun sending letters to some of those that have been let go claiming it overpaid severance and would now like some of the money returned, according to TechCrunch.
"An inadvertent administrative error occurred that resulted in an overpayment in severance pay by Microsoft," the letter states. "We ask that you repay the overpayment and sincerely apologize for any inconvenience to you."
CNet says a Microsoft spokesperson confirmed the authenticity of the letter but wouldn't comment further, saying it was "a private matter between the company and the affected people." It's also unknown how many of the letters have been sent out, what exactly the "administrative error" was, or what the overpayments add up to, but apparently under-compensation also occurred.
Hit the jump and tell us if you agree with Microsoft asking for the money back.
Citing an un-named studio source, CNet says the Motion Picture Association of America (MPAA) has gone through a "significant" round layoffs. Significant in this case means over 10 percent, with even more layoffs on the way, according to the source.
The MPAA apparently confirmed the layoffs to CNet, but wasn't as forthcoming on the exact number. Nor did the company say how the staff reduction would affect its antipiracy efforts, including its current legal battle against RealDVD over alleged copyright infringement, which is scheduled to go to court again on April 1. But an MPAA spokeswoman did say that its leadership is mostly unaffected, perhaps suggesting that the trade group has no plans of letting up its copyright crusade on behalf of the six largest film studios it represents.
Along with Sony, it looks like Microsoft is going to be heavily cutting jobs. The Redmond based software-maker is looking to cut nearly 5,000 jobs (or 5 percent of their workforce) over the next 18 months. Nearly 1,400 of these layoffs happened immediately.
“Economic activity and IT spend slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact,” said Chief Financial Officer Chris Liddell in a statement. “We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half, relative to the previous year. In this environment, we will focus on outperforming our competitors and addressing our cost structure.”
Reportedly, they’ll be delaying raises and lessening their vendor and contractor workforce as well. Microsoft projects that moves like these will cut its annual operating costs by $1.5 billion and reduce fiscal-year 2009 expenditures by $700 million.
This year Sony is reporting that they will post a $3 billion annual operating loss due to the deterioration of the global economy. Alongside that, they’re looking to restructure their company a bit, which will include massive layoffs and factory closings.
“The massive economic upheaval being experienced across the world is sparing no one in the consumer electronics world,” said Howard Stringer, the Sony chief executive. He claims that the main problem had been “a significant deterioration” in the company’s core electronics division. Business was notably down across every major line, including games, movies and financial services.
Sony’s stock has declined by nearly 65 percent over the past 12 months, and there doesn’t look to be an immediate fix in sight. One can hope that they’re able to weather the economic storm and get through this, though massive layoffs seem to be an inevitability at this point.
Logitech’s income has dropped significantly from $133.6 million to $40.5 million over the course of Q3 last year to Q1 this year.
It hasn’t yet been reported on what exactly has caused the gigantic drop in value for the company, but it is expected that the struggling economy has a lot to do with it. Because of this, they will be cutting much of their spending on researching and developing the higher end products.
“We already made some decisions to trim some products that were interesting, but maybe more high end,” stated Jerry Quindelen, Logiech’s CEO. Products that “aren’t perfect for this timeframe and set of conditions” will most likely be delayed.
Their layoff plans hope to save them $50 million this year, and will come to the tune of around 500 jobs.
Even behemoths like Microsoft are not immune to the financial crisis. The Redmond-based company might be quite close to large job cuts, according to the WSJ. The much feared announcement could be made as early as next week.
Many analysts have prognosticated a 10 percent to 17 percent reduction in Microsoft’s workforce in the imminent future. Microsoft is due to announce its fourth-quarter results today. PC sales in the last quarter were dismal and are expected to have an impact on Microsoft’s earnings.
Better than expected Black Friday sales weren't enough to offset what has been a supremely disappointing third-quarter for Best Buy. For Q3 2008, Best Buy reported earnings of $52 million, or 13 cents per share on revenue of $11.5 billion. Wall Street was expecting much better numbers to the tune of 24 cents per share. The disappointing earnings represent a 77 percent tumble from the same quarter last year.
"The historic slowdown in the economy and its effect on our business over the past 90 days have been the most challenging consumer environment our company has ever faced," Best Buy CEO Brad Anderson said in a statement. "We believe that there has been a dramatic and potentially long-lasting change in consumer behavior as people adjust to the new realities of the marketplace."
Moving forward, Best Buy will look to restructure starting with offering voluntary buyouts to most of its 4,000 corporate employees, followed by possible layoffs if the buyouts aren't taken.
Rival electronics retailer Circuit City has also been going through financial woes of its own, recently entering into bankruptcy and closing many of its stores.