It’s a pretty slow news day today, what with most people still taking time off for the new year. So I thought this would be a good time to throw a bunch of smaller stories together into one post.
First off, let’s hit a topic that has been on a lot of people’s minds lately: Microsoft layoffs. An excellent post today on TechFlash from top MS-watcher Todd Bishop sums up the situation well:
Speculation about possible layoffs at Microsoft has been swirling for weeks now in the Seattle tech community and online. We’ve been digging for information on this for a while, talking to people inside Microsoft and others familiar the company. But so far, at least, we haven’t been able to get any reliable information or direct confirmation.
That doesn’t necessarily mean layoffs aren’t coming. We’re continuing to dig, and we welcome any and all tips. But it’s worth noting that none of the online reports so far seem to be based on first-hand knowledge.
…
If the company reduces its workforce, Microsoft’s contractors and vendors could be among the most vulnerable. The company doesn’t report those workers as part of its employment numbers, so the cutbacks wouldn’t be as public. The Seattle Times’ Ben Romano reported this week that he’s “heard from a handful of contractors whose contracts at Microsoft were abruptly cut short.”In the end, Microsoft may try to cut expenses through something more nuanced than a huge layoff.
Next up, we’ve got P-I columnist Bill Virgin (who we have been a long-time fan of here at Seattle Bubble) almost kindof calling for a bottom in housing in 2009:
With so much bad economic news about so many sectors crammed into the fourth quarter of 2008, it’s easy to forget that in housing, the bad news started way back in 2007. Plunging housing starts, rising defaults and foreclosures, falling prices on existing-home sales — those reports have become almost routine by now.
As with banks, we’re now looking for the “some point” at which those trends lose steam. Just the length of housing’s decline would suggest that the sector’s forest fire (yes, we’re switching metaphors from our earlier water theme) has consumed most of the available kindling.
I think Bill’s “forest fire” analogy is a pretty good one, because whenever the fire finally does go out, it will take many, many years to see any significant regrowth of the “forest.”
Also interesting was this short AP blurb about foreclosure assistance heading to Washington State:
Washington will receive $28 million in federal home foreclosure aid.
…
The money will help local jurisdictions buy foreclosed homes, fix them up and resell them to low- and moderate-income buyers. The funds also may be used in down-payment assistance programs.
That actually sounds like a reasonable use of the money. Rather than pouring my taxpayer dollars into futile attempts to keep people in homes they should have never bought in the first place, we can let the foreclosure process take its natural course and help facilitate a move toward actual affordable housing.
…and finally, so maybe people will stop posting this over and over again in the forums and the comments, I’m front-paging this amusing video some clever chap put together using the “Downfall” captioning meme. Enjoy.
(Todd Bishop, TechFlash, 01.02.2009)
(Bill Virgin, Seattle P-I, 12.31.2008)
(Associated Press, Seattle P-I, 12.30.2008)
The Canary » Jan 2, 2009 at 2:21 pm
As someone who has worked for and at (currently a vendor) Microsoft for 5 years, if you remove the contractors, consultants and vendors, nothing tangible will actually get done. There have already been massive vendor budget cuts that happened in October/November. As for a 17% layoff, whether thats through eliminating 15,000 employees, or, just eliminating a significant amount of the consultant/contractor budgets, the result will be the same, serious pain for Seattle’s economy. Until October, MS was picking up people leaving WAMU and others laying off. Without that, the job pool dries up very quickly.
Thomas B. » Jan 2, 2009 at 4:56 pm
I haven’t seen the video yet… hilarious. That pretty much sums up the mess.
I use to live in an apartment complex on the eastside that Microsoft use to contract with to put up new employees, temps, and people in town for training. When I first moved in, you couldn’t swing a dead cat without hitting a Microsoft type. When I left a couple of months ago, the apartment complex was emptying out. Microsoft is, at the least, not hiring as robustly as before.
LeftOverpricedSeattle » Jan 2, 2009 at 5:23 pm
I have to admit, seeing that redubbed Downfall video a while back on YouTube made me go find the movie on DVD. Found it at Target for $10.00 (I know, I know, heaven help me if it turned out to be defective and they didn’t have a replacement).
Pretty good movie I thought…
Great job making the actors look like the real people, except for Goebbels, he was a bit too scary looking compared to the original.
The Himmler actor was a dead ringer, IMHO.
Back to housing…
Jillayne » Jan 2, 2009 at 8:57 pm
“The money will help local jurisdictions buy foreclosed homes, fix them up and resell them to low- and moderate-income buyers. The funds also may be used in down-payment assistance programs”
I wouldn’t necessarily classify this as “foreclosure aid”
To me, foreclosure aid would be more like help for homeowners facing foreclosure. This sounds more like help for the the affordable housing crisis.
Jillayne » Jan 2, 2009 at 9:00 pm
Question for The Canary,
“if you remove the contractors, consultants and vendors, nothing tangible will actually get done”
As a Microsoft stockholder, what exactly are you saying the w-2 employees do all day? Create intangible nothingness? Who created the brand new XBox 360 sitting in my living room?
Max Rommel » Jan 2, 2009 at 9:19 pm
Dubai is in a free fall. Russia is panicked as its oil revenues contract. This is a world-wide event folks. Don’t just focus on little, puny Seattle. The entire global economy will determine “The Bottom.” In 2009 the real job losses will begin. Seattle housing prices will eventually reach 1998 levels. The Feds will pump 5 trillion dollars into the system. For a few years we will have deflation. Then, inflation as the Treasury bubble bursts. These things will happen. Remember my predictions…Max Rommel, January 2009.
David Losh » Jan 2, 2009 at 9:35 pm
The bank owns foreclosed properties. Fixing and selling into another government program for low income sounds like a way out for the banks.
What I was discussing this evening with a short sale client is that I don’t see the Real Estate Owned inventory. There has to be a huge back log of foreclosed properties out there that I don’t see in the market place.
As a speculation I would say that there are rentals or forebearance homes that banks own but are holding off the market. $28B may go a ways on getting that inventory unloaded unnoticed or looked at as a compassionate thing.
+veLooker » Jan 2, 2009 at 10:48 pm
The Apartment communities on EastSide(Redmond) are offering good deals for new customers.
I never dreamed of 1 Month Free for new customers who rent an apartment (near MS). This reminds of the days in Dallas, where 1st month is free when you sign a 8 month Rental Agreement.
Renting is now cheaper and more affordable in Redmond.
cheapseats » Jan 3, 2009 at 12:10 am
“$28B may go a ways ”
I would agree with that, unfortunately I read it as $28m which is about 70 median priced houses if it all went to KC.
Lake Hills Renter » Jan 3, 2009 at 1:51 am
Yes, the secret has finally gotten out — us full time Microsoft employees sit around all day doing nothing while the vendors and contractors do all the real work. All the code I’ve written and projects I’ve lead were just ways to pass the long days to keep from getting bored while we waited for the real work to be completed. And when I was working late on Christmas Eve, I was really just drinking coffee and polishing my badge, sitting around waiting for the contractors to finish my work. Because, you know, we full time employees don’t get anything tangible done – it’s only the contractors and vendors.
shawn » Jan 3, 2009 at 2:35 am
The whole premise “that the most valued/productive employee is the contractor” is flawed when one looks to the total compensation package given to vendors vs. what if given to FTEs.
alex » Jan 3, 2009 at 3:01 am
Here’s one more piece of news from doom: FedEx has stopped their 401k employer matching to cut costs. And it looks like it’s a trend other big companies have been following:
http://www.usnews.com/blogs/planning-to-retire/2008/12/18/fedex-eliminates-401k-match-for-employees.html
Now employees can only sink their own money into losing investements…
Toby Bouchey » Jan 3, 2009 at 7:50 am
It’s interesting to read the “Westsiders” point of view. From the Eastside of the State, we’ve depended on your high priced housing market to increase our sales and production of homes in the Tri-Cities. People from the Puget Sound can’t believe they can actually get a home and buy groceries too in our community. With the home prices falliing in your area of the State, we will be impacted by not having Westsiders migrate this way for affordable housing.
We’ve been stable, very little ups and downs, but we’ll probably see a ripple effect from your market changes.
Thomas B. » Jan 3, 2009 at 9:35 am
2009 Predictions
Starbucks gets bought out by Yum Brands.
Boeing delays the Dreamliner again.
Amazon, despite having a good holiday season, lays off workers and moves some of the backroom functions to other states.
Microsoft finally buys Yahoo, but keeps the core in the San Francisco area as part of the deal.
Paccar does something (I still have no idea what they do).
vince M. » Jan 3, 2009 at 10:51 am
Living on the East side, it is true that there is affordable housing, but culturally this area is the pits, so much so we are leaving the tri cities for West Seattle. I am happy to see the prices falling like a stone and believe they will continue. But please don’t tout the tri cities as the haven of affordable housing and bliss, this place sucks!!
Alan » Jan 3, 2009 at 11:02 am
To be fair, vendors and contractors do important work. We have a contractor on our team who fulfills a very important infrastructure role. If he were to be cut then someone else on the team would have to do that and we would have less manpower for feature work.
buystocks » Jan 3, 2009 at 11:49 am
I’m guessing MS will cut combination of contractors and employees, whatever increases profits on their balance sheet. MS’s revenue is decreasing, so they are gonna have to decrease costs. Should be a good excuse to restructure away some bloated management.
patient » Jan 3, 2009 at 12:10 pm
It’s easy to talk causally about layoffs but the reality for the impacted is grim. I wish no layoffs but the facts are that the world economy is in for a massive contraction that will have huge impacts on most businesses. The Seattle corporations will not be exceptions. The housing bubble here is extreme and it will deflate independent on how businesses do. It will be worse if local businesses do worse but it will deflate even if local businesses would do great. I’m looking forward to prices coming to down to earth but I dearly wish we could escape loss of employments but in reality I know we will not. Sometimes it can seem like people here are cheering for job losses, I think that is totally wrong and I think it’s the selfserving, disgusting tricks by the realtors that makes people here highlight that jobs will indeed be lost and MS etc can not keep the bubble going as indicated by many realtors and that serve no other means than tricking a few poor buyers into very poor decisions. That is upsetting and that’s what people here try to avoid.
alex » Jan 3, 2009 at 12:35 pm
Max Rommel@6, thanks for the words of encouragement!
Lake Hills Renter » Jan 3, 2009 at 1:47 pm
Alan @ 16: “To be fair, vendors and contractors do important work.”
Absolutely. Ultimately, I don’t care if someone is full time or not — I care about the quality of their work. I work with many contractors and vendors, and there are good ones and bad ones, just like with full time employees. But the idea that it’s only contractor/vendors doing “tangible” work at MS is ludicrous (and worth mocking).
Sinatra888 » Jan 3, 2009 at 4:55 pm
Ah, you doom n gloomers! Are you aware of the critical part you play in making others wealthy? Please, by all means – Keep it up!
Curtis » Jan 3, 2009 at 11:41 pm
It is not easy to be an FTE in MS which leads FTEs are the core drivers of the company. Of course there are many talented contractors supporting the company to grow and these two groups needs each other.
Problem is cost of FTEs with all these benefits is highly impacting to MS budget in bad economy. if a budget cut occurs, I think the first hit will strike on high pay less important FTE positions. ATT was a recent example. They just laid off 30% of contractors vs 12,000 FTEs nationwide.
Renter of Bellevue » Jan 4, 2009 at 12:15 am
My Prediction on the MICROSOFT LAYOFFS: It will be a “glorified re-org”
1. Contractors will be 80-90% gone.
2. Department Managers will be “encouraged” to get rid of those they have been wanting to
3. Some, perhaps many projects will be put “on hold indefinitely”. This is where most direct layoffs (Full-timers and contractors) will probably occur.
4. Another thing I havent seen mentioned is: if not layoffs, then many people will have their hours cut(some people drastically) with the semi-direct result of them looking for FULL-Employment elsewhere
5. Obviously virtually no hiring(which has already stopped), they will just move good people around.
What do you all think?
Also, what would you say even a 5% manpower reduction(FT and/or Contractor) at Microsoft would have on the housing market over the course of 2009?
John » Jan 4, 2009 at 6:45 am
Didn’t the full-time employees at MS just get a $10-20k bonus? MS isn’t starving for cash.
CheapSouth » Jan 4, 2009 at 7:40 am
John; is not a cash issue, it’s a performance issue. Companies MUST show growth quarter after quarter; otherwise stockholders sell. Nobody is questioning MSFT financial health; but unfortunately eliminating positions is an easy way to cut costs and show more $$$ per man hour.
Employees are more expensive than contractors.
Ben » Jan 4, 2009 at 1:07 pm
Sinatra888 – I have come to the conclusion that people who use the phrase “doom and gloom” are hopeless optimists who are unable to deal with the idea of bad things happening at all.
How many people using this phrase predicted that 2008 was going to be a bull year for stocks and that housing would be fine?
Virgin: Maybe no bottom in 2009 after all | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area. » Jan 13, 2009 at 9:27 am
[...] couple weeks ago we mentioned a recent Bill Virgin column in which he sorta kinda called a bottom for housing (and the economy) in 2009. Well, a lot has [...]