Tuesday, January 22, 2008

Rate cuts, Yahoo job cuts and storage

Today the Fed cut its rates as the Politicians in Washington react to the growing credit securitization problems. There are plenty of people pointing fingers at each other, but the reality is that folks need to look to themselves now to see how they can maintain their businesses in these turbulent financial times. According to the Wall Street Journal even Yahoo is under pressure to grow earnings and will lay off employees to try to increase profitability.

Yahoo Inc. expects to cut staff in some areas under a drive to rein in its budget and focus its activities, people familiar with the matter said. The exact extent of any future layoffs at the Sunnyvale, Calif., Internet company isn't known, though one person familiar with the matter estimated they potentially may affect hundreds of workers. Yahoo expects to finish 2008 with about the same number of workers as it had at the end of 2007 while planning to add staff in some areas deemed priorities, these people said. The company, which has experienced executive turnover and increased competition for selling online advertisements in recent years, now has about 14,000 employees.


According to the Blog of James Burke of NetApp, Yahoo email is run on NetApp filers. As a major customer of NetApp, Yahoo probably gets pretty good prices from NetApp for service, support and systems. But they may be able to save some employees jobs by tightening their budget on NetApp upgrades and software support costs. Are they going to look at cutting their support costs for their filers? I'll bet their stockholders would appreciate it.

Losing technical support and institutional knowledge is hard on companies and their customers, because when systems go down, often the guy who knows how to fix things is no longer employed. Personally, I have visited many companies over the last few years that have been able to save technical staff positions by cutting their hardware support costs. When budgets get tight are you going to save people and cut back on support costs? Yahoo in the past has not been interested in the options we have provided them. When they contacted me in the past it was to purchase their excess NetApp inventory, not to cut their support costs.

Businesses have to adapt to the economic environment that they are operating in and faced with. Turbulent times are going to see businesses evolve in new ways to meet the challenges they face. I expect to see a lot more companies contact Zerowait as they look to adapt to these business conditions. Like many business people I have 20/20 hindsight, but my forecasting abilities are often myopic. In today's environment, I will be cautious with our budgets as we grow in 2008.

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