The week in review: Pink slips and parties
Layoffs, closures, collapsing stock prices and slumping morale ravaged the tech sector, but that didn't stop some down-and-out tech workers from having a good time.
The latest high-tech schmooze fest to hit San Francisco and New York showed how the dot-com economy can have fun even when it's showered in pink slips. People laid off from their dot-bombs have been the guests of honor at "Pink Slip" parties, the latest in networking and job-hunting for out-of-work tech workers.
And the piles of pink slips are growing by the week. Internet consulting companies were hit particularly hard this week, with some of the leading companies shedding workers. Viant announced plans to lay off about 17 percent of its work force and will close its Dallas office to reduce costs.
Web services company Scient cut about 460 jobs. The layoffs, effective immediately, amounted to about 25 percent of Scient's staff. The company also plans to close offices in Silicon Valley and Austin, Texas.
Struggling Web consultancy Xpedior said it intends to close several offices and trim nearly 32 percent of its staff as part of a plan to shift its business focus.
E-commerce companies didn't fare well this week either. Priceline.com announced it has laid off 48 employees, or 11 percent of its staff, and will postpone the introduction of new services. In addition, Priceline said it has abandoned talks with Softbank to create a Priceline affiliate in Japan.
Amazon.com-backed car site Greenlight.com laid off about 25 percent of its staff.
Sites geared toward women also were hard hit this week. Women.com Networks laid off 85 employees, or about 25 percent of its work force, as part of an effort to turn a profit in 2001. Earlier, Oxygen Media said it would lay off 65 employees and close its Seattle office.
DoubleClick plans to lay off between 100 and 150 employees, the latest sign of troubles facing the online advertising industry. The staff cutbacks represent less than 10 percent of the company's 2,100 employees.
NorthPoint Communications, a wholesaler of high-speed Internet connections that recently saw its deal with Verizon scuttled, has laid off 248 employees, or about 19 percent of its work force.
Red Hat, the leading seller of Linux software and services, closed three offices and laid off 20 employees, citing overlap after a series of acquisitions.
Earn or burn
In a further sign of the deteriorating state of the PC market, Intel warned that fourth-quarter revenue will be flat or possibly below the $8.7 billion the company reported in the third quarter. Intel executives said that over the past three weeks they have seen "increasing negative signs" as well as larger order cancellations from a number of major customers.
Apple Computer announced that sales will fall "substantially" below already lowered forecasts and push the company into the red for the first time in three years. The maker of the popular iMac computer said it expects to report quarterly revenue of about $1 billion--$600 million below its prior forecast--and a net loss, excluding investment gains, between $225 million and $250 million.
Online search company Ask Jeeves issued a revenue warning and announced that its chief executive will step down and end his tenure as a board member. The company said it expected a pro forma net loss of 50 cents per share--far greater than earlier expectations of a loss of 33 cents, according to First Call/Thomson Financial.
Citing the "preponderance of evidence" of sluggish PC demand, Goldman Sachs reduced its sales and earnings targets for Microsoft while maintaining a rating of "market outperform" on the stock. A Goldman Sachs analyst--noting that consumer PC sales make up only 10 percent of Microsoft's total revenue--made what he termed a "relatively moderate" estimate revision.
Motorola reduced already lowered earnings and revenue expectations, announcing that it won't meet sales and earnings targets for the fourth quarter or for fiscal 2001. Sales for the fourth quarter are now expected to be $10 billion, with earnings of 15 cents a share. Motorola had predicted sales of $10.5 billion and earnings of 27 cents a share.
Shares of Web giant Yahoo dropped after a Wall Street analyst downgraded the stock to "neutral," citing concerns about weakness in the online advertising market. A day earlier, Merrill Lynch analyst Henry Blodget cut revenue estimates for Yahoo for the first two fiscal quarters of 2001.
Sing along
Fans of rock band Rage Against The Machine were blocked from logging on to Napster, as they were identified as having downloaded Rage songs--a possible copyright infringement. But the band apparently was just as surprised by the action as its fans. After a day of complaints, a band member surfaced with an apology and said the band supports Napster.
MP3.com relaunched its controversial music-streaming service, My.MP3.com, in two forms--one paid, the other free--as the company attempts to emerge from its legal entanglements. Consumers can choose from two pricing models to use the service: a subscription account that permits storage of up to 500 CDs, or a free, advertising-based account that allows people to store up to 25 CDs.
Customers who order a CD through TowerRecords.com will be able to immediately listen to their purchases online using a password account via the My.MP3.com service. The pact marks MP3.com's first partnership with a major music retailer.
Coming soon
Intel and Analog Devices unveiled their long-awaited joint architecture for digital signal processors, the chips used in cell phones, digital cameras and other handheld gadgets. The two companies will each develop and manufacture chips based on the architecture, with the first chips available to development partners early next year.
Hitachi has begun shipping an Internet appliance that contains a Crusoe processor from Transmeta. Hitachi's Flora-ie 55mi is a combination of a notebook, a handheld and a cell phone. The device, which looks like a notebook screen with buttons down one side, hooks up directly to the Internet and is used to search Web content or run applications, similar to a standard PC.
Intel will come out with a portable digital-audio player, as the lines separating PC manufacturers, component makers, Internet service providers and consumer electronics companies continue to blur. The move reflects a strategic opportunity that has opened with the rise of digital entertainment and the proliferation of PC technology.
Also of note
America Online and Broadband Sports, an online sports media company, are giving sports fans the chance to cast ballots for college football player of the year...A pair of long-dormant Chinese telecommunications deals flowered as the world's largest market showed signs of thawing to the presence of ambitious American companies...Ken Barber, who recently assumed operational responsibilities at Web search engine AltaVista, will retire at the end of the year...Canadian police have launched an investigation into a Web store that customers say sold them Sony PlayStation 2 consoles but has yet to deliver them.