This from “asad” on “An Interesting Sale and Theory“. In that post, fluj essentially contributes strong home sales and prices in the southerly neighborhoods of San Francisco to their gentrification largely as a result of the jobs available even further south (think Silicon Valley and such). “asad” is not so convinced it will last:
Wait til Google [and] Cisco start to announce layoffs early next year. Sure some people still have money but it’s like a tide going back to the ocean. You still have tide pools here and there but if the tide doesn’t come back in soon, the tide pools are going to dry out, they just take longer.
Good analogy. Thanks for the comment. Google announcing layoffs would be a huge deal for the national economy, so we’re all ears if anybody else would like to share some knowledge in the comments below.
It is a good anology, but not the way it is stated. Tide pools don’t get filled once and then magically disappear. They are constantly refilled by the ocean at high tide. And the water that is burned off of them at low tide drops back to earth somewhere else.
It is my experience that most people with a southern commute didn’t stretch to buy there place. They pulled money out of somewhere and put all kinds of it into there house. Sometimes paying off the whole thing. BTY, these purchases weren’t just people with a southern commute, but these commuters brought up the neighborhoods to a point where other professionals bought in them as well. So there will be some burn off in a bad market (less sales, lower sales), but the pool is there and will remain, and will eventually replenish. Google and Cisco will do good again, and they will make hires at somepoint when the stock is low. Those people will have great new stock options. Or other companies (Biotech) will grow. Either way the tide will return.
In the mean time the rain will sprinkle sales all over town on nice properties that are priced right.
The funny thing about Google was that the world didn’t really need it. Sure, at first their search was a little bit better than Yahoo’s. That could have been it. End of story.
I have always been very skeptical of Google. I worked for two aborted enterprises that could have darn near BEEN Google if the powers that be didn’t pull the plug prematurely. Google saw that Internet advertising actually did work. That was great, for them. What did they give the world that wasn’t already out there? Google is no Cisco.
I’m going to directly speak to the suggestion that Cisco and Google are going to have layoffs early next year.
No way.
Asad doesn’t have a working knowledge of Cisco or Google culture and future. Cisco just reduced their earnings outlook, not their headcount. I used to work at Cisco. Cisco has plenty of cash on hand and their management abhors layoffs so I would say their is zero chance of layoffs early next year.
As for Google, they too have tons of cash, market share etc. and management appears to genuinely care about their employees-which matters when it comes time for them to decide how to cut costs in a downturn, so again I don’t see layoffs happening in that time frame either, but I can’t speak with the same amount of assurance since I have not worked there.
Good analogy. But it assumes that the tide always brings in the same stuff. Sure, there may be layoffs in the future, but with each new tide, different organisms and nutrients are brought in… paving the way for new opportunities, innovation, improvement, and growth. Unless the ocean completely goes away, or tides cease altogether, that’s cause for worry. For now, the world will go on a’spinnin’ and I believe that the positive changes these nabes underwent are here to stay.
i see no reason why google and cisco wouldn’t layoff employees in the downturn. it will happen at every single company out there. who are people kidding?
40yr old- I was responding to: “Wait til Google [and] Cisco start to announce layoffs early next year.”
I said Cisco definitely, and Google probably, won’t be announcing layoffs early next year. I don’t have a crystal ball, so I can only speak to the next six months based on how these companies are faring today. It absolutely matters how a company regards their employees, and their philosophy on layoffs. If you don’t believe me, look how long it took Cisco to lay people off during the last downturn, even though it would have been prudent for them to do so much earlier.
If we go into a prolonged recession, of course all bets are off. Everyone and their grandma will be laying people off.
I feel I gotta defend the comment a bit now that people have been commenting on it. BTW I would love to be wrong about all this.
As to having a crystal ball, well I don’t have a crystal ball but maybe an acrylic one ?
http://www.mercurynews.com/news/ci_10983265
Sun has always hated to do layoffs but they didn’t have a choice this time.
I may not be familiar with Cisco culture but I am familiar with Cisco sales. Auden Cisco already has a hiring freeze, they let go of contractors earlier this year (they are not full time employees so no need to announce it) and are in full cost cutting mode. Those Webex employees are going to be looked at very closely. Cisco also pushed back bonuses.
I didn’t say they want to do layoffs but they might not have a choice, the stock has gone from 34 to 17. What if it goes from 17 to 9 or 8, do you think Chambers will just sit and watch the stock drop ?
Google is at 2005 prices, 75% of employees are holding options that are underwater. I agree google will want to push off layoffs as long as possible but what if their stock goes from 300 to 200 ? No one though it would get as low as 500, 400 or 300, it was below 300 earlier this week.
http://www.techcrunch.com/2008/10/10/google-employees-watch-in-horror-as-60-percent-of-their-stock-options-drown/
I know people who work at SEO firms, they are seeing customer cut back their search advertising by 50-75%. It’s going to take a while before this shows up. The earning call is on Monday so we’ll know more then.
The tide pool will eventually be refilled but when ? The longer it takes the smaller the chance of survival for the inhabitants.
If google is going to lay off jobs that is not going to be the end of the world. at some point they’re going to have to look at core business values and quit literally trying to take us to the moon. not to mention if they start doing poorly, the founders surely have plenty stacked up that they can salvage a downturn in their company. google is not going anywhere and cisco is doing fine. google does need to figure out how to make money off of something besides ads though, because i for one never click on the ads and i know i’m not alone.
i might click an add here from time to time to help alex out, but that’s about it.
You can’t even compare Sun to Cisco or Google. Sun has been struggling since 2001, and quite frankly, when a new CEO enters a company and immediately restructures by laying off 11-13% of its workforce (which happened in ’06), only to have another larger round two years later, I have to question how much he “hates” layoffs. He may not like them, but they have been a part of his business strategy.
Asad, Your attempt to imply that Cisco’s strategy to cut expenditures will naturally be followed by a round of employee layoffs early next year is incorrect because you do not understand Cisco’s business strategy. Chambers does not let the stock market dictate whether he lays off his employees or not. What he will pay attention to is profits, revenues and expenses- and how to cut down those expenses in a downturn, which is exactly what he is doing. Laying off full-time employees is not the way he wants to cut costs. Like any American company that has been hit over the past 2-3 months (which is basically all of them) Cisco is going to do a lot of things to cut expenses, but firing 5-10% of their full time workforce isn’t one of them. Any significant reduction in workforce is going to be a result of their hiring freeze– of natural attrition, and then not refilling their positions. This is where they are at right now, and I would assume with no plans currently to conduct layoffs. They don’t need to. They are an incredibly strong, cash flush company with excellent fundamentals.
Auden,
When companies’ credit dries up, capital upgrades fall off their priority lists. Cisco’s sales could drop like a rock next year. They can’t save much by any cost-cutting measure other than laying off people. If the CEO thinks the drop in demand is temporary, he’d try to keep the workforce by burning through cash reserves. If, however, he expected a changed environment going forward with reduced sales for many years, he’d have to restructure the company’s workforce.
There is a cognitive leap there, name. Credit —-> capital upgrades —-> sales — > savings —> layoffs. Yes, the sales COULD fall off. And that would be everything. Again, Cisco is probably pretty confident with the knowledge that Internet video demand will not abate any time soon, quite the contrary.
Don’t get me started on stock price = layoffs either. All of these people who post about where quotes are on a day as THE factor are pretty annoying. Stocks measure projected growth. Projected growth may or may not have anything to do with profit. And frankly, that is a flaw in our financial system.
Any port in a storm :P
Name,
Cisco is already restructuring:
“Cisco to save $2 bn from restructuring, but no layoff”
http://newshopper.sulekha.com/newsitem/iansnews/2008/11/cisco-to-save-2-bn-from-restructuring-but-no-layoff.htm
Like I said, if we enter a massive recession, everyone will be laying people off. But it doesn’t look like any short term plans.
I am so glad you have come to the blogging world with all of your expertise. ,