Here we go again


The news may turn out to be no more than rumour, but it is telling nonetheless. To cut costs, several blogs recently reported, Microsoft and IBM would soon both get rid of about 16,000 employees each, 17% and 4% respectively of their workforces. If true, these would be some of the biggest cuts in the history of the information-technology (IT) industry.

That such cuts are deemed credible is a sign of the industry’s plight. Hardly a day passes without reports of collapsing revenues and workers being laid off. This week Motorola said it would cut 4,000 jobs, and Seagate, a maker of hard disks, said it would reduce its staff by 800. The earnings season is likely to bring even more bad news. As The Economist went to press, Intel, the world’s largest chipmaker and an industry bellwether, was expected to report a drop in fourth-quarter revenues of more than 20% compared with a year earlier. Is the industry heading for a worse downturn than the one that followed the internet crash in 2001?

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