Layoffs rise as more companies are downsizing

Just when it looked as if the economy was upsizing, more companies are downsizing. A mounting number of companies, including many tech firms, have been announcing layoffs, prompting some to worry about the proliferation of pink slips amid third-quarter earnings reports showing nearly zero growth.

"We've seen a spate of bad earnings announcements," says John Challenger of outplacement firm Challenger Gray & Christmas. "Companies often take fast action," which results in job cuts.

Colgate-Palmolive was the most recent example Thursday, with plans to cut 2,300 jobs. But that announcement just piled on top of similar revelations from firms such as online game company Zynga, heavy equipment maker Caterpillar, computer chipmaker Advanced Micro Devices and chemical firm DuPont in recent weeks.

Early data point to a disturbing rise in layoffs, as seen by:

-- Recent uptick in layoffs. Companies in North America announced plans to cut more than 62,000 jobs since Sept. 1, says Bloomberg News. That's the biggest two-month slashing of jobs since the beginning of 2010. Read more >>

DuPont and United Technologies plan massive job cuts

Foxbusiness.com
Faced with weakening revenue, two big companies warned on Tuesday that they would cut jobs as a way of protecting their profits. DuPont Co said it planned to lay off about 1,500 workers - roughly 2% of its global headcount - as the chemical company grapples with weakening demand from the construction and renewable energy sectors.

United Technologies Corp did not specify the magnitude of the cuts it was considering but said it would raise its full-year restructuring budget by 20% to $600 million as demand for its military equipment declines. Both companies reported weaker-than-expected sales for the third quarter, following an overall trend.

Of the companies in the broad Standard & Poor's 500 index that had reported results for the quarter as of Monday, 62% came in below analysts' revenue forecasts - well above the 38% sales-miss rate in a typical earnings season, according to Thomson Reuters I/B/E/S.

"Obviously we're looking carefully at the macro environment," United Tech Chief Executive Louis Chenevert told Reuters. "In Europe, the economy continues to be very sluggish, and in North America, it's a slow recovery.

DuPont and United Tech are by no means the only big U.S. companies to begin cutting jobs. Most dramatically, chipmaker Advanced Micro Devices said last week that it would reduce its 12,000-person workforce by 15% as it copes with weak demand and a consumer shift towards tablet computers.

Engine maker Cummins Inc , the PayPal arm of eBay Inc and for-profit college operator Apollo Group Inc announced smaller rounds of cuts earlier this month. Read more >>

Intel sales sink as PCs slump

Weak PC sales finally caught up to Intel, dragging the chipmaking giant's sales and profits lower in the third quarter. Back-to-school sales typically boost computer demand in the late summer, but a weakening global economy and consumers' shift to tablets cut PC demand to half its third-quarter norm, Intel said. The company's PC chip sales fell by 8% last quarter, in-line with the overall global PC market.

For the current quarter, Intel doesn't expect any improvement, anticipating that PC sales will grow at half their seasonal rate. Computer makers are taking a very cautious approach with their inventories as the global economy continues to slump. They are also taking a wait-and-see approach to Microsoft's Windows 8 launch, which will take place on Oct. 26.

"Our third-quarter results reflected a continuing tough economic environment," said Paul Otellini, Intel's CEO, on a conference call with analysts. "The world of computing is in the midst of a period of breakthrough innovation and creativity. Intel has a history of navigating industry's transitions and emerging better and stronger." Read more >>

AMD could slash up to 30 percent of its workforce

AllThingsD and CNET are reporting that 30 percent of AMD's workforce could be laid off, though one of several unnamed sources notes the cuts could be as low as 10 percent. If these reports hold true, this would be the second round of layoffs for AMD within a year's time.

The reductions will reportedly affect the firm's engineering and sales employees, and may be serious enough to cause a paring back of product lines.

The silicon giant could potentially reveal its plans as early as next week, which would coincide with the announcement of its third quarter financial results. With the company expecting a ten percent revenue drop in Q3, it looks like the latest figures will continue the trend of less than ideal results.

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