Job Cuts and Big Deals: Mixed Signals from the Tech Sector

by SixFigureStart | November 12, 2009

  • My Vault
The tech industry is having quite a week. Whether that's a good thing or a bad one depends entirely on your perspective. If you're employed at Electronic Arts, Adobe, or Applied Materials, chances are this isn’t the best week you've ever had: those companies have announced layoffs of approximately 17, 10 and 11 percent respectively—numbers that add up to between 3,300 and 3,600 fresh job losses over the course of the next 18 months.

For those on the deal-making side of the business, however, there are signs of companies beginning to position themselves to come out of the recession. EA, oddly, is one of those: it snapped up social gaming outfit Playfish for $275 million as it attempts to expand its footprint a rapidly expanding market (the company makes games that are played on social media sites such as Facebook). A host of other deals also went through, signaling that while job growth might still be some way from returning to the industry, at least financing is becoming available.

More intriguingly, the deals also offer an insight into where the companies in a position to make power plays at this stage see the future in their respective fields. Thus, while EA clearly sees at least a portion of its future in the social media realm, Google's decision to purchase Admob is a signal that we're all going to have to get used to seeing a lot more in the way of marketing and advertising on our cell phones. Logitech, meanwhile, clearly feels that videoconferencing is the way forward—that's what Lifesize specializes in, and Logitech just paid $405 million to buy it.

Of course, the deal to end all tech deals this week was HP's decision to buy 3Com for some $2.7 billion—a deal that's all about the exciting field of data centers. Given HP's record of layoffs in the aftermath of acquisitions, though, perhaps there's less reason to cheer that deal than any of the others.


AP Photo/ Adam Butler

--Posted by Phil Stott, Vault.com

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