The confidential internal memo is now public: Video game industry juggernaut Electronic Arts is laying off as many as 1,000 employees. As an EA alumnus and friend of some of the affected employees, this truly saddens me. Even in the fevered pitch of competition, no one likes to see good teams and good people affected by market change.

But you can’t stop evolution. Console game companies are standing on the same ground as others that were disrupted before them. Borders was shuttered by Amazon, Blockbuster buried by Netflix, and Encyclopedia Britannica withered by Wikipedia. When consumers get something faster and cheaper via the Internet, disruption occurs, and the companies that don’t evolve quickly inevitably decline. The cycle of change is rapid and relentless. This is industry Darwinism at work.

Free-to-play game companies have been riding this wave of disruption. It’s a wave analysts believe will generate more than $20 billion in 2015, or almost one-third of worldwide gaming revenue. There is no question that free-to-play games are here to stay.

When I started working in the free-to-play gaming industry in 2007, many of my video game colleagues wondered if the business model had legs. Why would core gamers ever pay for content via micro transactions? How could a game company possibly afford to give their games away for free? These questions may sound out-of-date today, but they were certainly reasonable back when traditional PC video games accounted for $50 billion, or more than 98 percent of the world’s annual gaming revenue.

Today, games on mobile devices make up about half that revenue alone. No one anticipated this even six years ago. When Steve Jobs unveiled the iPhone in 2007, he proudly showed off what you could do with it: Listen to music. Check voice mail. Search the Web. Find directions. Get a stock quote. But there was one thing Jobs did not tout: Play games. Games literally went unmentioned when Jobs introduced the first iPhone. That sort of omission would be unthinkable today.

While no one, not even Steve Jobs, might have called it right six years ago, gaming has inexorably become central to the mobile phone industry. For proof, take a look at the number of games versus other apps on the top grossing charts, where 83 of the top 100 grossing iOS apps are games.

My boss, Kabam co-founder and CEO Kevin Chou, says games represent the “Triple Crown” for mobile devices, with the unique combination of reach, engagement and monetization. As Kevin wrote in Wired, reach is the percentage of people who own a mobile device that engage in an activity such as playing games, checking email, or shopping, and gaming’s reach is 60 percent of all tablet owners. Engagement is the percent of time spent on the device, and 67 percent of all time spent on tablets is spent playing games. Monetization involves capturing the share of wallet, and gaming wins hands-down. More than 80 percent of all revenue generated last year by mobile applications — a $10 billion software industry — was from games, according to Flurry Analytics.

And it’s only going up. The universe of mobile users grows exponentially while the console universe is flat. For example, according to the investment banking firm Jefferies, the installed base for consoles was 240 million in 2012. Compare that with the installed base of 450 million for iPhones. That doesn’t include Android or tablets.

Mobile alone is reason enough for the console industry to go into rapid decline. But there’s more.

New generations of video game consoles come out only every four to six years. Compare that with the timeline for tablets. New tablets and smartphones come out every year with ever-increasing computing power, functionality, and fidelity. It’s only a matter of time before the majority of former console developers focus on free-to-play, leaving the console ecosystem in further disarray.

Consumers, of course, have the final say. They’re voting with not only their pocketbooks but their bags as well. Free-to-play has taught consumers they don’t need to shell out $60 for a game before they even try it.

Free-to-play has changed how we pay for our entertainment. Mobile devices have changed how we play our games. Together, they’re an unbeatable foe for the venerable console games industry.

As hard as it is to watch industry disruption impact so many good people at EA, there is good that can come from this. EA rose to the top of the gaming industry by hiring and training many of the industry’s most talented contributors. Some of these good folks will soon be in the job market for reasons very much outside their control. Now they have the opportunity to embrace change faster than they would have had at EA. I hope many will consider a future in free-to-play gaming.

Andrew Sheppard is president of Kabam Studios, a leading player in the western world for free-to-play core games.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Electronic Arts has shut down BioWare San Francisco and laid off its entire staff of around 30 employees, according to GamesRadar.

The studio, once knows as EA2D, made social and mobile games based on EA franchises. Sources told GamesRadar that EA concluded the studio was too expensive. San Francisco is an expensive place to operate, and it has gotten more crowded in the age of social and mobile game startups.

BioWare San Francisco made Dragon Age: Journeys, Dragon Age: Legends, Mirror’s Edge 2D, and The Fancy Pants Adventures. We’ve asked EA for comment. But the move is consistent with a blog post by Frank Gibeau, the president of EA Labels, on Feb. 21. At that time, he announced layoffs at studios in Los Angeles, Montreal, and some “smaller locations.” EA referred GamesBeat to that post for an explanation of the cuts.

Gibeau wrote, “These are good people, and we have offered outplacement services and severance packages to ease their transition to a new job. Console transitions are a complex and challenging experience. I’ve helped navigate several and agree with an old saying we have at EA: Transition is our friend. All the trend lines are converging to reward the creative and financial investments we have made in mobile and console technology. We have never been more ready or more excited about what comes next. “

We hear that EA has moved some of the staff to other roles within the company.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Following up on its promise to be more cost efficient, casual and social game publishing giant Zynga is shutting down its Baltimore studio today and consolidating locations in three other cities. About 1 percent of its work force, or maybe 30 people, will be out of work as a result of these moves.

The Baltimore shutdown isn’t a surprise since its leader, Brian Reynolds, the former chief game designer at Zynga, recently resigned. Zynga also shut down the game that Reynolds and the studio made: CityVille 2 (pictured above). Zynga is also consolidating studios that it acquired in locations that are near each other. So the two Austin studios are now one, two studios in New York are merging, and the McKinney, Texas, studio is moving to Dallas. In all of those moves, Zynga will save on real estate costs, but it is not laying off large numbers of staffers in those areas.

In a statement for GamesBeat today, chief operations officer David Ko said, “While these decisions are always difficult, these steps will affect approximately 1 percent of our workforce and enable us to focus our resources on the most significant growth opportunities.”

The move is consistent with comments made by Ko in an interview with GamesBeat just after Zynga’s last quarterly earnings report, when Zynga announced the CityVille 2 shutdown and closures of other poorly performing games. Ko said that Zynga’s focus for 2013 is on emphasizing game franchises — or titles like FarmVille that are developing more loyal followings and brand recognition — as well as Zynga’s network and profitability. To be more profitable, Ko said Zynga has set up “guard rails,” or controls that tell it when to shut money-losing ventures.

The latter isn’t easy to do in a service-based game, where companies launch a title and then continuously update it on a weekly basis to keep up with fan feedback and to draw players back into the game. When a game peaks and starts to lose players, Zynga has typically scaled back its investments or doubled down on them. Ko said that the company will pay more attention to the signs for shutting unsuccessful games down earlier.

A Zynga spokesperson said that the company is trying to find jobs within Zynga for the Baltimore employees. The moves impacting the other locations aren’t as severe. Zynga’s McKinney, Texas employees (acquired with the Words With Friends developer Newtoy) are about an hour from the Dallas location.  And the two offices in Austin, Texas, are just about a mile apart. The same is true for the New York locations.

In any event, these offices closures may lead to some turnover. Ko had said that the company would make tough decisions when it need to do so. Both the McKinney and Baltimore studios were essentially leaderless. The Bettner brothers who started Newtoy left last fall, and Paul Bettner started a new game startup to create titles for the Android-based Ouya game console.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Updated at 1:45 p.m. PST with information about Visceral.

Activision and Valve recently cut jobs, so now it’s Electronic Arts’ turn.

The publisher confirmed today that it laid off employees in its Los Angeles and Montreal studios. I have confirmed these cuts affect Visceral Montreal, which is working on the third-person shooter Army of Two: The Devil’s Cartel. That game has a March 26 release date.

But the rumor that EA shut down Visceral Redwood Shores is not accurate according to a source familiar with the matter.

EA president Frank Gibeau released a blog on EA.com explaining the reasoning for the layoffs:

Yesterday, Sony unveiled the PlayStation 4, signaling that after seven years, gamers will be treated to a massive leap in technology, creativity, and fun. In the months ahead, we expect more announcements on new platforms and partnerships.

For EA’s creative teams, this transition comes as no surprise. We’ve been investing and innovating on new technology for months. Console partners who have seen our early work agree, EA’s next-gen software is nothing short of astonishing.

Gibeau went on to write about Battlefield 4 and the gains EA made on iOS and Android before getting to the layoffs:

Thousands of our existing employees have been retrained and redeployed to work on the new platforms and initiatives.  But when it is not possible to redeploy a team, we soften the tough decisions with assistance. This week we let some people go in Los Angeles, Montreal as well as in some smaller locations. These are good people, and we have offered outplacement services and severance packages to ease their transition to a new job.

Console transitions are a complex and challenging experience. I’ve helped navigate several and agree with an old saying we have at EA: Transition is our friend. All the trend lines are converging to reward the creative and financial investments we have made in mobile and console technology.  We have never been more ready or more excited about what comes next.

Gibeau may find transition friendly, but the newly out-of-work developers probably disagree.

EA was absent from Sony’s PlayStation 4 press conference in New York City yesterday. Analyst Michael Pachter told GamesBeat that he doesn’t believe EA had any new properties ready to show, which is why Sony didn’t showcase the publisher.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Hewlett-Packard is closing a corporate work site in Germany, laying off 850 employees.

In a statement, the world’s largest maker of PCs and printers said it will restructure its enterprise service business, which accounts for a quarter of the company’s total sales. HP’s will shut down its site in Rüsselsheim, Germany. HP has about 10,000 employees in Germany. The restructuring is likely to result in the loss of another 1,100 jobs there over time. The layoffs aren’t the first — and they won’t be the last — as the world moves toward post-PC technologies.

Those losing their jobs will receive a chance to apply for open jobs at other HP sites in Germany. HP took a charge of $1.7 billion for restructuring in its recent third fiscal quarter. Over time, HP plans to cut 29,000 jobs, or 9 percent of the company.

A HP spokesperson said in an email to ZDNet: “HP Enterprise Services has an aggressive plan to optimize its portfolio and its sales and delivery model, and to improve its cost structure, resource management and operations.”

[Image credit: Shutterstock]

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Employees fired by the British entertainment retailer HMV decided to get even today by broadcasting their “mass execution” on the company’s official Twitter account, which has almost 64,000 followers.

The Twitter hijack occurred amidst a mass firing of more than 60 HMV employees. HMV has already removed the offending tweets, but a reader in the UK forwarded the following screengrab of the account mid-hijack.

“There are over 60 of us being fired at once! Mass execution, of loyal employees who love the brand. #hmvXFactorFiring,” read one of the initial hijack tweets. Judging from the screenshot, it looks like the hijack lasted about 20 minutes.

It’s a telling warning to other firms: If you’re firing people who have access to your social media accounts, change your social media passwords first!

Deloitte, which began managing the beleaguered HMV chain earlier this month, confirmed that it has fired 190 employees in a statement to the Telegraph. The firm is in charge of finding a buyer for HMV, which has been struggling over the past few years.

Hat-tip Theo Priestley

When I contacted Mike Mayzel, StumbleUpon’s director of communications, he said the layoffs were not the initial stages of a death spiral:

StumbleUpon is restructuring to enable the company to become more streamlined, focused and to better execute against its goals in 2013. As a result of these changes, the company will be profitable and will operate more quickly and efficiently and experiment more aggressively. We continue to grow and remain focused on providing the best discovery experience on the Web.

StumbleUpon reached 20 million users in late 2011 but has suffered somewhat as Reddit has become the Internet’s go-to hub for interesting content. Its audience skews a little older than Reddit’s, and its last few redesigns, including one just four months ago, have met with mixed reviews. Still, it has continued innovating with stunning mobile apps and a new Windows 8 app.

Unfortunately, despite all the work and innovation, StumbleUpon’s traffic graph looks like the Marlboro Man’s cigarette in the anti-smoking ads:

Source: Compete.com

StumbleUpon traffic, according to Compete

That’s 9.7 million unique monthly visitors at the beginning of 2012, dropping off to 5.8 million at the end of the year.

The restructuring may be about refocusing, getting quicker, and experimenting more aggressively, and being profitable is wonderful, but unless StumbleUpon can reverse this traffic decline, this layoff won’t be the company’s last.

photo credit: muffytyrone via photopin cc

Social curation and photo-sharing site Lockerz has closed its San Diego office and laid off about 30 percent of staff at its Seattle headquarters, according to a TechCrunch report.

Lockerz has offered a Pinterest-like experience since Feb. 2012 with socially curated photos and content. But unlike Pinterest, it offers rewards to its users for sharing content and driving other people to make purchases at the site. Before it focused on this model, the site was a photo-sharing service.

The company lost its CEO and founder, Kathy Savitt, to Yahoo back in August. Yahoo hired Savitt to be its chief marketing officer.

Leilani Augstine, Lockerz’s chief marketing officer, did not explicitly confirm the amount of layoffs to TC, but it did provide this statement:

Today we went through the process of realigning our organizational structure to best fit the needs of our product and business as we move forward. That means that some positions were eliminated and we will be increasing our investment in other areas we see as opportunity. I will not comment on how many individuals were effected or any specific individual… We remain bullish on the opportunities surrounding social commerce. We believe we are in the early stages of a transformational change in the way consumers discover and consume products and content. Our vision remains the same and and today’s changes will allow us to be much more nimble, which is an important component of success in this space.

Lockerz has raised $43.5 million to date from investors including Kleiner Perkins Caufield & Byers, DAG Ventures, Live Nation, and Liberty Media.

Machinima has seen huge growth, with 2.5 billion videos viewed per month. But the video entertainment network isn’t immune from the slowdown in the traditional video game business. Today, it confirmed that it laid off 20 employees, or 10 percent of the company.

The Los Angeles company has quickly become the No. 1 entertainment channel on YouTube, thanks in part to support from the young male gamers demographic of ages 18 to 34. Back in December 2011, Machinima had 1 billion monthly video views. Now it has well above 235 million monthly viewers.

But the its fortunes are evidently tied to those of traditional game companies, which have also been hurting lately as social, mobile, and online games eat away at the core business. Rob Smith, editor-in-chief of Machinima, told game news site Joystiq that 23 people out of 200 were laid off. They were across programming and production. He also said the company has 15 job openings.

“This is growing pains. Machinima has grown a lot in a short amount of time. We had to look at the business, look at where we’re focusing,” Smith said. “It has hit the editorial group, but we are still doing editorial coverage in a slightly different way.”

Gamers tune into everything from talk shows to “machinima,” or animated videos created by filming the actions of video game characters on screens. Gamers also use Machinima.com to create original shows and show off their exploits in popular games. Microsoft used Machinima to debut its five-episode live action series, Halo 4: Forward Unto Dawn, this fall. The company is backed by MK Capital and Redpoint Ventures.

“I just found out I am no longer employed,” tweeted Machinima.com editorial manager Bill Shibley. He added, “Along with many of my friends.”

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Atlanta-based WebMD, the largest source of medical information on the Web according to Comscore, will cut 250 jobs in the coming month as part of an ongoing effort to save $45 million per year.

The company will lay off 14 percent of its total workforce across all offices, a direct result of a disappointing third-quarter. As the Atlanta Business Journal originally reported, about half the employees at the company’s headquarters may be affected. It is unclear which departments will experience the worst layoffs, but early reports suggest it will be sales, video production, information technology, and editorial. The cuts come at a short-term cost increase: They’ll cost the company approximately $8 million in its first fiscal quarter of 2013.

In an official statement to the press, the company revealed that it will also put into effect other “cost-saving actions” during the first months of 2013. We have reached out to a spokesperson from WebMD for comment.

The company is seeing a decline in advertising from large pharmaceuticals, its bread and butter. In recent years, the Food and Drug Administration has tightened regulations on how big pharma can advertise. In addition, WebMD is facing competition for these ad dollars from a host of startups that offer consumer-friendly health information. Competitors include HealthTap, which provides patients with an online link to thousands of physicians, and Everyday Health, which provides medical news and information.

In November, the company announced that revenue had declined from $135 million during the year-ago period to $117 million. Despite the fact that traffic continues to grow (reaching an average of 107.2 million unique users per month and 2.56 billion page views in Q3), advertising and sponsorship income took a downward turn. CEO Cavan M. Redmond admitted that the company would need to adapt in an increasingly “challenging and changing” marketplace.

“Becoming leaner and more nimble will enable the company to extend our leadership in this highly dynamic and increasingly demanding marketplace,” said Redmond, in a statement. “In addition, anticipated changes in U.S. healthcare will provide meaningful new opportunities to link the needs of patients, consumers, and healthcare professionals to enable them to navigate their care. We are moving swiftly to implement these operational changes and new market initiatives.”

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Daily dud? LivingSocial, once the promising number two deals company behind Groupon, confirmed today that it has laid off 400 workers, or around 10 percent of its global workforce.

“After two years of hyper-growth in which the company went from 450 to 4500 employees worldwide, these moves will align our cost structure with our 2013 plan and free up resources for critical investments in marketing, mobile, and other areas,” LivingSocial’s head of communications Andrew Weinstein told VentureBeat.

The official statement confirms heavily circulated reports that the deals company was set to terminate a sizable chuck of its staff.

A majority of the laid off people worked in sales or customer service positions for LivingSocial’s U.S. operations, we’re told. A “couple dozen” International workers got the dreaded pink slips as well. The company said the U.S. cuts were the result of a decision to relocate its customer and merchant solutions team from Washington D.C. to a call center in Tucson, Arizona.

The depressing, pre-holiday cuts come while the deals market flounders in its maturation process. Leader Groupon has struggled to impress Wall Street with its changing business ever since its initial public offering last year.

Pink slip image via Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

PayPal president David Marcus announced layoffs in his division this week with a tone-deaf line about delighting customers and providing great experiences.

Never mind the 325 employees and 120 contractors who are going home without jobs this evening, and who could be facing months of unemployment, family stress, financial hardship, and more. Our focus is on the customers!

And that’s just two weeks after Paypal’s corporate parent, eBay, said the payments division was knocking it out of the park, with revenue up 23 percent compared to the previous year.

Marcus is a decent guy, according to at least two VentureBeat reporters who have talked to him. I don’t think he’s cruel or unusual among his peers: He is certainly not the first tech executive to handle layoffs in such a cavalier manner, and he won’t be the last. For example, last week Salesforce laid off 100 people in its Marketing Cloud division and led its statement to the press with bold words about how it “is the undisputed leader in social marketing.” This, just a few days after rolling out new features for Marketing Cloud and claiming that 55 of the Fortune 100 are using the service.

The playbook seems to be: Announce a new product. Tell the world how it’s raking in money hand over fist. Then quietly let go a chunk of the people who made it happen.

This approach does nothing to endear companies to their customers. More immediately, it runs the risk of demoralizing the remaining employees. Sadly, it’s all too common in tech companies and is a sign that the industry is getting seriously out of touch with the rest of the world.

Now, I get it. Not every company can boast that its revenue and profit graphs go straight up and to the right. It’s a rare company that doesn’t run into financial difficulties and have to lay people off at some point. Fortunately, many of the people eBay let go are in product and technology roles, which means many of them will likely find new work quickly, assuming they’re based in Silicon Valley, where software engineers and product managers are in high demand.

But really, people, there’s a good way to do this and a tacky way. For a chief executive to focus on the customers and not the people he’s laying off is insensitive at best.

At worst, it telegraphs the message that the tech industry can afford to be cavalier about jobs. Laid off? Get another one! If you’re lucky, it’ll be one where there’s a chef to cook you lunch every day or a policy for unlimited time off. Can’t get hired? Just start a company! Just make sure it’s one that delights its customers.

You have to wonder how PayPal’s customers in other parts of the world, where unemployment often floats well above the U.S.’s 7.8 percent nationwide average, feel about that kind of attitude.

Maybe they don’t care — many customers don’t pay that much attention to how a company conducts itself. But everything a company does reflects, subtly or not, on its brand. A move like this casts PayPal in exactly the same light as the banks and credit card companies it competes with: impersonal and concerned only with profits.

I submit that a better way to announce layoffs is with humility and with an acknowledgement that, somewhere along the line, the company and its executives screwed up. Let the responsible execs take a cut in pay, and make that part of the announcement. (I asked eBay if Marcus was taking a pay cut, but got no answer.) Apologize to those who lost their jobs, talk about how you’re helping them find their next gig, and thank them for their contribution.

Then talk about how you’re still committed to deliver amazing experiences to your customers.

Photo credit: hellvetica via photopin

Sept. 9 - 10, 2013 San Francisco, CA

Early Bird Tickets on Sale

This week, 100 employees received layoffs at Radian6, a company Salesforce acquired two years ago.

Salesforce called it a “rebalancing of resources” at Marketing Cloud, the new software suite that Salesforce created from Radian6 and Buddy Media, another relatively recent acquisition. But some in the media immediately reported “signs of trouble,” and referred to Buddy Media as a “money pit.”

Marc Benioff: Not crazy after all.

The layoffs reportedly occurred at Radian6, but within hours, Buddy Media found itself at the center of the storm. Business Insider released a snapshot of the company’s financials from the June 2011-2012 period, when it was still a venture-backed private company, and reported that it was “bleeding money” in the months prior to the $689 million acquisition.

Reality check: After two acquisitions of companies in a similar space, layoffs are a matter of course. Logically speaking, this creates some overlap of personnel.

“When you acquire two companies, it makes sense to slash a lot of jobs that are replicating each other,” said Jeremiah Owyang, an industry analyst at Altimeter Research. “How many managers or HR managers do you need on the same account?”

Salesforce is a public company and needs to make sure it’s still in the black — “downsizing the overhead makes sense at this time,” he added.

Adding to the speculation that Salesforce is in trouble, its competitors took the opportunity to offer the recently laid-off employees a job (most of the scale backs were in marketing and sales). View the comments here.

Still, the layoffs are not necessarily a vindication for competitors like Oracle and Adobe.

It’s also not out of the ordinary for a venture-backed software as a service (SaaS) company to overspend, then concentrate on monetization at a later stage. Before this summer’s acquisition, Buddy Media was still a private company in growth mode.

In response to the spate of recent articles that question Marc Benioff’s judgment, experts say it will be at least six months before we will say how the acquisition plays out.

“It’s just too premature to make a call,” said Jim Moore, the founder and managing director of J. Moore Partners, a M&A advisory firm. “If the layoffs were on the administrative, sales and marketing side, I don’t see any reason to say these acquisitions have not been successful.”

Salesforce declined to comment for this story beyond this official statement:

With the integration of Radian6 and Buddy Media, the Salesforce Marketing Cloud is re-balancing its resources to support its growth, including moving from a hub to a distributed model for certain customer-facing roles, consolidating marketing and dramatically increasing investments in R&D. Fewer than 100 people were impacted globally.

Top image via Sarah Deer. Benioff photo: VentureBeat.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The PC market is expected to stay sluggish for several quarters, said Rory Read, the chief executive of Advanced Micro Devices in a conference call with analysts. As a result, the second-largest maker of PC microprocessors plans to significantly diversify beyond PCs in the coming years.

The comments show how uncertain Sunnyvale, Calif.-based AMD is about the future of PCs, despite the launch of Microsoft’s Windows 8 operating system coming on Oct. 26. Read is accordingly cutting 15 percent of AMD’s staff (an estimated 1,700 employees of 11,813 total), trimming about $190 million a year in costs from the company’s cost structure.

Read blamed the shortfall in the third-quarter revenues to the growth of tablets — where AMD has no sizable business today — that are eating into the PC market’s sales. On top of this, the economy is weak, and computer makers are becoming cautious about maintaining chip inventory at a time when the market is in flux because of Windows 8.

“We fell significantly short of expectations,” said Read.

He said the restructuring would return AMD to profitability, with a break-even point targeted in the third quarter of 2013 at a revenue level of $1.3 billion.

AMD said the bright spot was the acceptance of the Trinity family of APUs (accelerated processing units that combine graphics and microprocessor functions on the same chip). Shipments were up 70 percent from the prior quarter and a third of total notebook chip shipments in Q3 were due to Trinity. Read said AMD gained market share at retail in notebooks priced at $600 to $800.

Read said 125 computers will ship in the fourth quarter with Windows 8. That includes some tablets and several new “ultrathin” computers.

Analyst JoAnne Feeney at Longbow Research pointed out that it’s contradictory for AMD to try to tackle new markets and still try to cut costs through layoffs. Read said that the markets are “adjacent,” such as servers, using the same chips as AMD already makes. He also said AMD would try to reuse more of its design components as part of modular chips in the future.

Read said that 85 percent of AMD’s business is dependent on PC chip sales now. He wants to reduce that to 50 percent to 60 percent. He will do so by focusing on server chips, game console chips, and tablets. Read said that AMD has been preparing for a transition in the market as tablets and smartphones affect the PC market, but the transition is happening faster than the company thought.

[Updated with company comment] Longtime video game developer Backbone Entertainment has reportedly laid off workers.

Rumors are traveling through the Twittersphere and on Facebook that the Emeryville, Calif.-based game studio owned by Foundation 9 Entertainment has laid off workers due to lower demand for console game development.

Backbone developed both work-for-hire and original games for all gaming platforms and multiple media as well. The company has been in existence since 1992, when it was called Digital Eclipse. It changed its name to Backbone Entertainment in 2003, when Digital Eclipse merged with ImaginEngine. One of the series Backbone created is Death Jr., a cartoon-style game where Death was a cute little character. In 2005, Backbone merged with The Collective, forming a conglomerate dubbed Foundation 9 Entertainment. To date, Backbone has created more than 100 titles.

Here’s a comment from James North-Hearn, chief executive of Foundation 9:

“I regret to announce a round of layoffs at Backbone Entertainment.  The studio will continue to operate at a reduced size and will honor its commitments  to existing partners. Due to a lower demand for conventional console development, the studio has made some difficult but necessary adjustments in both its capacity and services, with the goal of matching the changing needs of today’s market. The dedicated development staff at Backbone has put together some of the studio’s best work  for our partners in the upcoming fall releases, Dance Central 3 and Midway Arcade Origins. I would like to publicly thank the departing members for their incredible service to the company.  All of us at Foundation 9 are sorry to lose them and we’re here to help them to a soft landing.   We wish them well in their individual pursuits.”

Printer manufacturer Lexmark is in trouble today, announcing it’s letting go of 1,700 workers and is killing off its struggling inkjet printer business.

The layoffs represent about 13 percent of the company’s workforce, including 1,100 manufacturing jobs. Overall, the restructuring is expected to cost $160 million over three years and to return ongoing annual savings of $85 million in 2013, increasing to $95 million annually by 2015.

“Today’s announcement represents difficult decisions, which are necessary to drive improved profitability and significant savings,” said Lexmark CEO Paul Rooke in the company’s official statement on the news.

“Our investments are focused on higher value imaging and software solutions, and we believe the synergies between imaging and the emerging software elements of our business will continue to drive growth across the organization.”

Inkjet printers are without question a consumer product, and consumer interest in buying, maintaining, and actually using home printers is decidedly flagging. With cloud-based document management services (including totally virtual “faxing” and e-signature services) popping up all around the web, consumers now have access to more affordable, faster, and more environmentally friendly options than Ye Olde PC Load Letter.

The laser printer business, however, will remain at Lexmark; these machines are still going strong in businesses and the enterprise.

Lexmark will shutter its Cebu, Philippines, inkjet supplies manufacturing facility by the end of 2015. It will kill its inkjet development activities worldwide, from facilities to contract to remaining inventory, by the end of 2013. Advisors are helping Lexmark sell of its inkjet printing technology as well.

Through dividend payments and share repurchasing, Lexmark said it will have returned more than half a billion dollars to its shareholders since mid-2011 — this in spite of a 30 percent decline in share price, a 41 percent decrease in net income, and an 11 percent drop in revenue year over year:

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Sony is serious about streamlining its operations, and the latest moves by the company point to one big goal: Saving cash.

For starters, Sony is moving its Sony Mobile headquarters from Lund, Sweden to Japan, closer to its corporate headquarters. Sony Mobile is the division created when Sony bought Ericsson’s share from their Sony-Ericsson partnership last year.

By moving the division back to Japan, Sony aims to better integrate it into the company as a whole, streamlining the supply chain and decreasing the time it takes to get its products to market.

The Lund operation, however isn’t going away: Sony plans to continue to use the site for software and application development. So Sweden will still be home to at least some of Sony Mobile.

Sony’s ongoing restructuring efforts, while necessary, have been expensive, costing the company $356 million during its last quarter. And that’s not the end of it: Sony anticipates that it will put nearly $1 billion into restructuring before it’s all over.

Money is also at the heart of Sony’s decision to cut roughly 1,000 jobs from the global Sony Mobile headcount over the next two years. That’s a 15 percent cut that Sony says will increase operational efficiency and, more importantly, cut costs.

After all, there are few better ways to reduce expenses than by cutting salaries.

Photo: Flickr/Kullez

While startups scramble to hire the best engineers, tech workers at many companies this year have received the dreaded — and perhaps unexpected — pink slip.

Survey results show that layoffs at tech companies in the first half of 2012 are at their highest point in three years, totalling 51,529 job cuts between January and June.

In the same time period one year ago, around 14,000 jobs were cut, making this year’s figure a 260 percent increase in tech jobs lost and a 39 percent increase compared to the total number of jobs cut in all of 2011.

Computer companies cut 34,380 positions, and telecommunications companies slashed 13,059 jobs.

“While consumers and businesses are spending more on technology, the spending appears to favor a handful of companies,” said Challenger, Gray, & Christmas CEO John Challenger in a statement today.

“Those that are struggling to keep up with the rapidly changing trends and consumer tastes are shuffling workers to new projects or laying them off, altogether.”

Challenger, Gray, & Christmas specializes in corporate downsizing or “outplacement,” as the firm so euphemistically puts it. It released a report on the job cuts today. According to the report, many of these jobs were at HP, which saw a massive workforce cut this spring — as many as 30,000 employees. These five-figure firings have also been seen in companies in the book-selling and baking industries.

Joining HP in the restructuring are:

• Sony, which laid off 10,000 folks in April
• Nokia, also cutting 10,000 jobs in June
• Dell, which cut $2 billion or so worth of sales and supply chain jobs in June
• T-Mobile, which cut an unspecified number of jobs in a string of restructuring moves
• Yahoo, which has so far let go of 14 percent of its workforce, give or take a couple PR liabilities masquerading as CEOs

Image courtesy of Andrey Popov, Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Finnish phone manufacturer Nokia will cut around 10,000 jobs by the end of 2013 in a wide-ranging cost reduction measure, the company announced today.

Nokia is in a precarious position now as it tries to offer a smartphone lineup of Windows Phones (like the Lumia 900 in the photo above) after selling Symbian-based phones for many years. In April, the company’s head of sales stepped down after Nokia incurred a $1.7B first quarter loss. The company also showed it was willing to cut marketing costs by frustratingly shrinking its usually big Nokia World event.

CEO Stephen Elop will cut around 10,000 positions as well as shut down research and production sites in his largest bid to re-organize the company. About 3,700 of the positions getting cut will be from its employees in Finland, with active sites in Finland, Germany, and Canada will also getting shut down.

Elop is motivated to quickly find a path to success for the ailing company, especially since investors are fleeing and Nokia’s stock price is falling. The company’s stock has lost nearly 50 percent of its value in the past year. In light of this, the company lowered its outlook for the second quarter as well.

Several of the company’s executives will also be stepping down. Jerri DeVard will step down as chief marketing officer, Mary McDowell will step down as executive vice president of mobile phones, and Niklas Savander will step down as executive vice president of markets.

“These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength,” Elop said, in a statement. “We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities.”

Nokia Lumia 900 photo: Sean Ludwig/VentureBeat

No. 3 PC maker Dell plans to cut more than $2 billion in spending during the next three years as it seeks to focus on making data-center equipment, Bloomberg reports.

The company intends to trim costs by cutting down its supply chain and sales support staff. No doubt other types of job cuts will be included in the mix.

Dell’s PC sales are slowing, so the company needs to find other things it can focus on to survive. The company will work to push sales of networking equipment, software, accessories, and data storage, and it recently has bought other businesses to help in those areas.

To potentially help with lackluster investor demand, Dell also said it would offer a dividend with its stock yesterday. The company said its quarterly dividend will start at 8 cents a share, with a yield of about 2.7 percent. Dell’s stock price is up more than 4 percent today on the news.

Dell photo: Flickr/Dell

The cuts will be implemented by October 2014, giving employees affected considerable time to find new jobs. Dubbed a “multi-year restructuring,” the move is aimed at making the company more innovative and cost efficient. It will include an early retirement program and a one-time charge of $1.8 billion.

“We are making progress in our multi-year effort to make HP simpler, more efficient and better for customers, employees, and shareholders,” said Meg Whitman, HP chief executive. “This quarter we exceeded our previously provided outlook and are executing against our strategy, but we still have a lot of work to do.”

Regarding the layoffs, Whitman said, “These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business. While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company. We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders.”

HP will continue to invest in core research and development, enterprise servers, software, and services. This year, HP expects to shed about 8,000 employees.

The company made the announcement as it released a solid earnings report for the second fiscal quarter ended April 30. The layoffs are a part of chief executive Meg Whitman’s strategy to turn the Silicon Valley giant around.

HP also turned out better-than-expected earnings. The company reported non-GAAP earnings per share of 98 cents, compared to its own previous estimate of 88 cents to 91 cents a share. GAAP earnings per share were 80 cents.

Second-quarter revenue was $30.7 billion, down 3 percent from a year ago.

Analysts surveyed by Thomson Reuters expected HP to report revenue of $29.9 billion and non-GAAP earnings of 91 cents a share, compared to sales of $31.6 billion and earnings of $1.24 a share in the same period last year.

Investors will be focusing their attention on HP’s PC business to see whether the notebook weakness identified by Dell has reached Palo Alto.

HP may not be as bad off as Yahoo, the sick man of the valley, but it hasn’t kept up with the times. Its rival, Apple, has taken over HP’s old properties in Cupertino and is building a futuristic, spaceship-like headquarters on top of them.

In the first fiscal quarter, HP had revenue of $30 billion and GAAP net income of 73 cents a share, above its previous outlook of 61 cents a share. The company closed the quarter with $8.7 billion in cash.

For the outlook, HP expects 10 percent to 12 percent margins for the services business for the rest of the fiscal year. For the third fiscal quarter, HP expects 94 cents to 97 cents a share earnings. Overall, for the fiscal year, HP expects better earnings than it previously did.

Here’s the details on HP’s divisional sales:

Personal Systems Group(PSG) revenue was flat year over year with a
5.5% operating margin. Commercial revenue increased 3%, and Consumer
revenue declined 4% while Workstations revenue was down 1% year over
year. Desktop units were up 5%, notebook units were down 6% and total
units were down 1%.
– Services revenue declined 1% year over year with an 11.3% operating
margin. Technology Services revenue was flat year over year,
Application and Business Services revenue grew 1% and IT Outsourcing
revenue declined 3% year over year.
– Imaging and Printing Group (IPG) revenue declined 10% year over year
with a 13.2% operating margin. Commercial hardware revenue was down 4%
year over year with commercial printer units down 7%. Consumer
hardware revenue was down 15% year over year with a 13% decline in
printer units.
– Enterprise Servers, Storage and Networking (ESSN) revenue declined 6%
year over year with an 11.2% operating margin. Networking revenue was
up 2%, Industry Standard Servers revenue was down 6%, Business
Critical Systems revenue was down 23%, and Storage revenue was up 1%
year over year.
– HP Financial Services revenue grew 9% year over year driven by a 4%
increase in net portfolio assets and a 5% increase in financing
volume. The business delivered a 9.9% operating margin.
– Software revenue grew 22% year over year with a 17.7% operating
margin, including the results of Autonomy. Software revenue was driven
by 7% license growth, 17% support growth, and 72% growth in services.
Autonomy saw a significant decline in license revenue.

Hewlett-Packard plans to cut between 25,000 and 30,000 jobs next week in a move to restructure the company, according to reports by Bloomberg and AllThingsD.

CEO Meg Whitman will announce the layoffs next Wednesday on a conference call with analysts and press. The move coincides with Whitman’s decision in March to merge its PC and printer groups.

A reduction of at least 25,000 jobs amounts to cutting 8 percent of the company. The final number of jobs axed will likely fluctuate until the announcement Wednesday.

The largest cuts will happen to the HP’s enterprise services group, with 10,000 to 15,000 jobs targeted. That division of the company has seen recent declines in profitability, so it is a strong target for layoffs.

HP’s stock on the NYSE is nearly flat in late-day trading on the layoff news.

HP logo: Don DeBold/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

T-Mobile CEO Philipp Humm said there were going to be more layoffs when he axed 1,900 call center workers in March, and it looks like the day of reckoning is near.

Humm said the carrier will be going through a major restructuring that involved some “difficult decisions” when it comes to staffing, according to a memo sent to employees that was republished by the Verge. Employees and teams affected by the restructuring will be notified this week.

“We are announcing a new structure that further aligns our costs with our revenue realities, enables teams who support our field organization to act and react with greater speed and effectiveness to customer and market opportunities, and better positions us to return to growth,” Humm wrote in the memo.

It’s unclear how many employees are being let go, but Humm says they’ll receive “generous transition support.” (I’m sure that makes T-Mobile workers sleep easier this week.) He clarified that workers in T-Mobile’s remaining 17 call centers and corporate retail stores, as well as technicians in engineering, won’t be affected.

T-Mobile has been steadily losing subscribers over the last several quarters — mainly due to its lack of the iPhone, as well as fallout from the AT&T acquisition that went up in flames. After its February earnings report, the carrier announced a $4 billion “Challenger Strategy” to roll out 4G LTE in 2013 — which seemed too little, too late for the struggling company.

“Our rebuilt structure enables T-Mobile to realize significant savings, allowing us to invest in future growth — in particular modernizing our network to LTE, repositioning the T-Mobile brand, and aggressively pursuing the B2B segment where we plan to add 1,000 positions over the next few years,” Humm wrote in the memo. “We gain the agility to put resources where the current opportunities are, grow in areas where potential is greatest, and act on emerging opportunities quickly and rationally.”

A leaner, meaner T-Mobile may be able to survive another few years, though none of that matters if the company can’t stop bleeding subscribers.

Photo: Sean Ludwig/VentureBeat

Yahoo is in for some big changes and a huge shakeup in leadership, according to a memo issued today by Scott Thompson, the company’s still-new CEO.

Thompson (pictured) came to Yahoo from PayPal just a few months ago. The long-awaited placement for Carol Bartz, who left the company in disgrace after a turbulent tenure, Thompson was charged with shoring up a company that was publicly struggling to maintain a diverse product suite.

A big part of that maintenance has been deciding what to keep and what to cut. As Roy Bostock, who was chairman of Yahoo’s board at Thompson’s hiring, said at the time, “Scott’s primary focus will be… the strategic review process to identify the best approaches for the company and its shareholders.”

The company’s executives had an all-day meeting a week or so ago to determine key details about this restructuring. All those details will be fully disclosed at an all-hands meeting today, however, as much as 14 percent of Yahoo’s workforce already got the memo, colloquially speaking, in the form of a shower of pink slips last week.

With around 2,000 layoffs done, Thompson and the rest of the Yahoo execs have some exciting announcements in store for remaining Yahoo staffers. The company is being organized into three main branches: Consumer products, advertising, and tech. The consumer division will include social products and content. The ad sales department is called “Regions” and will divide (and conquer?) the globe’s brands and ad agencies. The Yahoo tech division will be responsible for — you guessed it — technology and infrastructure, something Yahoo actually seems to be fairly good at. Corporate, those fun cats over in HR and legal, will support the other departments.

And all this magic will begin on May 1 — the Yahoo board certainly isn’t wasting any time.

Thompson’s memo, which appeared this morning on All Things D, reads as follows:

Yahoos –
It’s time for Yahoo! to move forward, and fast. And as we do, I want every one of us to keep one thing top of mind: what we do is about our customers, not about us. For Yahoo! to win in our core business, every one of us must put our customers first. Specifically, we must focus all we do on the users who trust us to give them personalized content and communications, and the advertisers who want to connect with our users. To be very clear, our highest priority is winning in our core business and that will earn us the right to pursue new growth opportunities.
To accomplish that we’re establishing a new leadership structure, organizing all of our activities around Yahoo!’s customers. Effective May 1, Yahoo! will operate in three groups — Consumer, Regions and Technology — all supported by our established Corporate teams. Each of the three groups will be charged with delivering the best customer experiences and have very clear accountability for getting results.
Our new Consumer group will be all about creating great, engaging user experiences. Our geographic Regions will serve our advertisers and agencies and be accountable for all Yahoo! revenue. Our Technology teams will provide the advanced infrastructure, technology and science to enable our Consumer group and the Regions to deliver our best products and experiences into market, at scale, and fast.
Consumer
Our success is determined by how well we engage consumers and give them fun and informative experiences that they feel were designed just for them, on all screens. Our Consumer group will include three units — Media, Connections, and Commerce — and each will provide users the uniquely relevant and personalized content and services they expect and deserve, leveraging Yahoo!’s vast consumer interest data. We will redouble our focus on Yahoo!’s competitive advantage — our core, owned and operated (O&O) consumer properties. And importantly, we are bringing dedicated product engineering resources into each unit, much closer to our users.
• Media Our online media presence has long been our company’s clearest competitive advantage. Our Media group, led by Ross Levinsohn, will include all our media businesses globally with our marquee properties at the forefront: Homepage, News, Finance, Sports, and Entertainment. We will bring top design and engineering talent and differentiated technology — like Yahoo!’s Publishing Platform (YPP) — into close partnership with content producers and editors. Ross and his team will continue to drive real differentiation into our leading media experiences, including everything from our original coverage of breaking news events to tentpole events like the Royal Wedding and the upcoming Olympics and US Elections.
• Connections will be led by Shashi Seth, and include consumer businesses that connect and inform our users including Search, Communications and Social properties such as Mail, Messenger, Flickr, Answers, and more. The highest priority for Shashi and his team will be to think well beyond how users search, communicate and share online today. The Connections team is charged with fundamentally re-imagining how we design and deliver the next generation of these foundational Yahoo! experiences.
• Commerce We will renew our focus on commerce, and I expect this newly created team to play a critical role in Yahoo!’s future growth. Our Commerce teams will build on Yahoo!’s massive reach and strong consumer relationships, but their charter will go beyond traditional ecommerce. The focus of this team will be driving higher ROI for advertisers and agencies that reach users on Yahoo! by closing the loop for them between user interests, advertiser spend, consumer intent, and purchase behavior. The foundation of the new Commerce group will be Autos, Shopping, Travel, Jobs, Personals and Real Estate. We expect to name the leadership of this business unit shortly.
Regions
Advertisers and agencies are the primary customers and focus for each of our three regions. Our regional sales teams will be the advocate and voice for our advertising customers: listening to them and driving their needs into the products we develop. Regional sales must bring urgency and tenacious sales execution to all we do for advertisers. In addition, these teams will leverage our unique and vast data resources to position Yahoo! as the place to connect with users and generate the best, measurable ROI on their ad spend.
• Americas will be led by Rich Riley, who led the team responsible for extraordinary strides in EMEA in recent years putting the region on a path of consistent engagement and revenue growth, as well as meaningful market share and profit gains. Rich will be moving from Europe to our New York office soon.
• APAC, which includes many of our fastest-growing countries and strongest consumer products, will continue under the exceptional leadership of Rose Tsou.
• EMEA will be led on an interim basis by Christophe Parcot, EMEA’s regional sales leader, as we commence the search for a new leader for the region.
Americas, EMEA, and APAC will be fully accountable for Yahoo!’s revenue in their respective regions. I expect our Regional leaders and teams to work in very close collaboration with Ross and our other Consumer group leaders to fully align their goals for revenue and engagement as well as their execution, keeping our users and advertisers top of mind.
Technology
Our Consumer group and the Regions will continue to be supported by some of the most talented technology professionals in the industry, providing the advanced platforms and technology that allow Yahoo! to deliver great customer products.
• Core Platforms, led by Mark Morrissey, will provide the foundational platforms, technology, and research to enable great customer products and leverage Yahoo!’s vast data stores to enable deep personalization and optimized monetization. Mark’s teams will lead Apt, RMX, User Data & Analytics, our content optimization relevance engine (CORE), Yahoo! Labs and other key technology functions.
• Central Technology will continue to be led by David Dibble and include our data center and service engineering efforts, as well as our cloud infrastructure teams.
Yahoo! has made real progress in building modern, scalable platforms and infrastructure, but to move at the rapid pace our customers and our industry require we need more than scalable technology. This is among the most important changes we’re making: we must bring some of our best product designers and engineers much, much closer to consumer needs and demands. Many of our top engineers will continue building on our foundation platforms and technology to continue to drive speed and scale. But to ensure we really know and can serve our customers, we’ll also deploy top design and engineering talent into our Consumer business units, directly supporting our users’ favorite Yahoo! products to ensure we move much faster and meet customer needs with every product we deliver.
Corporate
Our major corporate functions will continue to support these new groups. Finance, Legal, and HR will remain under the strong leadership of CFO Tim Morse, General Counsel Mike Callahan, and Chief HR Officer David Windley, respectively. As we search for a Chief Marketing Officer, Penny Baldwin will serve as interim leader for the Corporate Marketing and Communications teams. John Kremer will lead a newly-created Transformation team that will ensure full implementation of and accountability for our restructuring and related organizational changes.
Chief Product Officer Blake Irving has decided to leave Yahoo! and will work closely with the new leaders over the next several weeks to ensure a smooth transition. He has made a tremendous contribution to the advancement of Yahoo!’s product strategy and execution over the last two years and I know you will join me in wishing him all the best in the future.
You will hear more from our business leaders about their plans to move each of these groups forward in the coming days and weeks. As we look to Yahoo!’s future, all of us must remember to always keep our customers first in everything we do. Ultimately, only our customers will decide whether we win or lose in the market.
I look forward to speaking with you at our All Hands Tuesday. If you have questions before we meet, please check Backyard for information and answers. If you don’t see the answers you need, please post questions on Backyard, or you may email questions directly to the leadership team.
Scott

Sony plans to cut 10,000 jobs, or 6 percent of its workforce, in a bid to get back to being profitable, according to a report from Nikkei.

The drastic move makes sense for Sony because it has been unprofitable for the past seven years, and it faces heavy competition across device sectors from companies including Samsung, Apple, Microsoft, and LG. On top of that, TV manufacturers like Sony and Panasonic have been hit especially hard in the current climate. In early February, Panasonic forecast a staggering $10.2 billion loss for 2012 because of the TV business.

Layoffs are likely part of new CEO Kazuo Hirai’s plan to turn around the company. Hirai took over as chief executive from Howard Stringer this month and he will give a briefing this Thursday to investors where he is expected to talk about layoffs and other strategies for moving the company into the black.

Previously, Hirai laid out a four-point plan to save Sony that will see it focus on its core business, further streamline its TV business, cut costs, and move forward with innovation. Hirai was one of the key executives who helped make the PlayStation game console a success in North America and it is widely expected that he will leverage his game credentials to help make Sony a success in mobile gaming.

Looking for a job photo: Luna Vandoorne/Shutterstock

Not one to sit quietly on the sidelines as Yahoo crumbles, the company’s largest outside shareholder Third Point has responded to Wednesday’s layoffs with a sharply worded critique that questions CEO Scott Thompson’s decision-making process.

“While this action was unfortunately necessary and widely expected, Third Point … is disappointed that this round of cuts occurred before CEO Scott Thompson has articulated his strategic plan for the Company,” the activist shareholder said in a press release posted to is valueyahoo.com website.

Investment advertiser Third Point, which owns 5.8 percent of Yahoo shares worth more than $1 billion, has been aggressively lobbying for four shareholder appointments to the board. The firm has had no qualms about airing grievances or criticisms about the company’s current leadership team. The saga continued Wednesday after Yahoo doled out 2,000 pink slips.

Third Point expressed no discontent at the layoffs, but did use its press release as an opportunity to berate both Yahoo’s newly appointed CEO as well as the company’s board of directors.

“As he approaches his 100th day as CEO, shareholders and remaining employees have heard few such specifics,” the firm said in reference Thompson’s previous statements on a strategic review. “Many of Yahoo!’s senior-level employees and investors have apparently seen enough and heard too little, and have independently staged an exodus, weighing on the company’s share price,” the group added.

While Thompson has yet to share his grand vision for Yahoo with Third Point or company shareholders, he did send a letter to staff Wednesday with some guidance on the company’s restructuring efforts. Thomspon said Yahoo would focus on its Core Media and Communications, Platforms, and Data businesses moving forward.

Third Point’s press release is embedded below.

Photo credit: Third Point

It’s raining pink slips at Yahoo today, as the iconic tech company announced it was laying off 2,000 employees — or 14 percent of its total workforce — as part of a massive restructuring effort.

Yahoo has suffered a great deal of turmoil over the past few years. Board members fired long-time CEO Carol Bartz in September 2011 as punishment for failing to increase revenues as well as significantly losing advertising share from Facebook and Google. During her tenure (and prior to it), Yahoo’s products grew stagnant and failed to keep pace with innovation from competitors. Overall the company suffered from a lack of leadership, which is something new CEO Scott Thompson was charged with fixing after assuming his post in January.

“Today’s actions are an important next step toward a bold, new Yahoo — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require,” Thompson said in a statement about the layoffs.

Yahoo estimates that it will save $375 million once all the layoffs have been completed, with an expected $125 to $145 million in a pretax cash charge relating to employee severance packages. The company declined to give a more thorough analysis of the layoffs until after its first quarter financial results on April 17.

Sources with knowledge of the matter previously indicated that the layoffs will touch all units of the company, with Yahoo’s product division getting hit the hardest, according to AllThingsD’s Kara Swisher, who first reported the news last night. Deep cuts are also expected for Yahoo’s Local Businesses, marketing, and research divisions, while Yahoo’s media division suffers the least.

The report also speculates that Yahoo could end up laying off even more employees in the next few months as it continues to trim the fat with its new strategy. Yahoo is still contemplating what it wants to do with its advertising technology businesses (Right Media and APT) as well as its search business — both of which employ thousands of workers.

Full statement from Yahoo below:

Yahoo! today confirmed that it is taking important next steps to reshape the company for the future.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require. We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose — putting our users and advertisers first — and we are moving aggressively to achieve that goal,” said Scott Thompson, CEO of Yahoo!. “Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they’ve contributed to Yahoo!.”

Yahoo! has a solid foundation — nearly 700 million users and thousands of advertisers that engage with Yahoo! properties regularly and trust the company with their data and their business. Through its restructuring efforts, Yahoo! intends to grow by responding more quickly to customer needs and competing more effectively in areas where it can win. Yahoo! has identified key parts of the business — a select group of core businesses, the platforms that support those core businesses, and the data that drives deep personalization for users and ROI for advertisers — where the company will intensify efforts and redeploy resources globally, all focused on increasing shareholder value. With a clear focus on profitability and growth, the company will be disciplined in its investments and radically simplify how it builds, launches and maintains many of its properties and products.

Today, the company will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or phased transition.

Yahoo! expects to realize approximately $375 million of annualized savings upon completion of all employee transitions. The company currently expects to recognize the majority of an estimated $125 to $145 million pretax cash charge relating to employee severance in its second quarter financial results. The company may incur additional charges in connection with this action. More information will be provided about Yahoo!’s future direction in conjunction with the release of its first quarter financial results on April 17, 2012.

Update 4/4/2012 (11:52 a.m. PST): A company-wide letter from Yahoo CEO Scott Thompson about the recent layoffs was recently obtained by The Wall Street Journal. In it, Thompson offers a more concise description for the company’s restructuring plans, which were vaguely touched upon in the press release. Essentially, Yahoo will focus its efforts on driving three portions of its business: Core Media and Communications, Platforms, and Data.

We’ve pasted Thompson’s  full letter below:

Yahoos –

Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business. The changes we’re announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.

Over the last 60 days, we’ve fundamentally re-thought every part of our business and we will continue to actively consider all options that allow Yahoo! to put maximum effort where we can succeed. As part of this process, I believe we have to focus to win in a select group of core businesses globally:

Core Media and Communications: Our content, media, and communications experiences must be best in class. That includes getting today’s core properties right and innovating on a next generation of great product experiences across all screens.∙

Platforms: We must make our core platforms and systems a genuine strength for Yahoo! – platforms that we can really leverage to support our massive scale, drive the deepest personalization, and boost speed to market.∙

Data: Our massive data sets must become a genuine competitive advantage for Yahoo!. We have to unlock the value in our data to allow us to really understand our 700 million users, encourage and win their engagement and trust, leverage everything they do with us to more fully personalize their experiences, and to give our advertisers the immediate insights they are rightfully demanding.

We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose – putting our users and advertisers first – and we are moving aggressively to achieve that goal.

Unfortunately, reaching that goal requires the tough decision to eliminate jobs, which means losing colleagues and parting with friends. Today, we will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or a phased transition. We value our people and for those who will be leaving, we thank you for all you have contributed to Yahoo!. We will treat all of our people with dignity and respect, providing resources to help manage through their transition.

Change is never easy. But the time has come to move Yahoo! forward aggressively with increased focus and accountability. Our values have always been about treating all Yahoos with dignity and respect, and today is a day to embrace those values. This is an amazing company with exceptionally talented people and I know we will all do our best to encourage each other through this difficult period of transition.

Pink slips image via Eric Von Seggern/Shutterstock

“After 17 years it’s time to head off into the sunset. A sincere thank you to all of our fans for everything you’ve done for us. Farewell.” Zipper had about 80 employees.

The rumors of the closing started circulating last week. At the time, reports said that the studio had a project canceled and was undergoing layoffs. Sony said a statement that it did not comment on rumors. Zipper’s last official game, Unit 13, debuted on the PlayStation Vita earlier this month. The company had some bad luck with its last SOCOM 4: U.S. Navy SEALS game, which debuted in April, 2011. That happened just as Sony shut down the PlayStation Network after a hacker attack.

That crippled the SOCOM game’s multiplayer play. Zipper also made MAG, a huge action online game for the PlayStation 3.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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Former Lolapps chief executive Arjun Sethi is leaving the recently merged 6Waves Lolapps after a number of the social gaming company’s developers were laid off.

Sethi, who was with Lolapps for four years, announced his departure in a blog post this afternoon, saying:

“Most important to me is the culture we built together. Everyone we have hired is an entrepreneur and a leader in their own way. I hope to see multiple new ideas and startups emerge because of the type of people and culture we have created over the years. It’s a culture that is seen as among the strongest! I am very proud of each and every one [of] this team and will miss you most of all.”

6Waves Lolapps recently cut a significant portion (nearly 80 percent) of its developers after merging with Hong Kong based 6Waves in July. Prior to the merger, 6Waves focused solely on placing third-party developed games on Facebook, as opposed to developing games in-house. Lolapps, on the other hand, produced games such as Ravenwood Fair and Ravensky City, which together amassed over 50 million players, according to Sethi. The merged companies, now called 6L, are taking on 6Waves’ original model for the time being. The company released this statement after the layoffs:

“6waves Lolapps will now focus on working with independent developers to launch and grow their mobile and social games. As a result we have restructured the company to focus on key functions which include developer outreach, product advisory, user growth initiatives and our publishing platform. The re-structuring means that we will have more resources to continue our leadership in the social and mobile game publishing space.”

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July 9-10, 2013
San Francisco, CA

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Fourth-place U.S. wireless company T-Mobile will soon lay off around 1,900 workers due to the closure of seven call centers around the country.

T-Mobile has been in a precarious position ever since AT&T’s offer to acquire the company fell through in mid-December 2011.

Since the breakup, T-Mobile has scored a 3G roaming deal and a nice chunk of precious wireless spectrum from AT&T. But even with the additions, T-Mobile still reported a terrible Q4 in February with a loss of 802,000 contract customers.

T-Mobile USA CEO Philipp Humm delivered the somber layoff news to employees today with a memo about “consolidating” call center operations, according to a report by The Verge. In the memo, Humm wrote, “The reality is our cost structure must be better optimized to match our customer base and call volumes.”

The job cuts will come from closing centers in Allentown, Penn.; Fort Lauderdale, Fla.; Frisco, Texas; Brownsville, Texas; Lenexa, Kansas; Thornton, Colo.; and Redmond, Ore. Around 3,300 employees at the seven impacted facilities will be let go, but T-Mobile will immediately be filling as many as 1,400 positions at its other 17 call centers. As a result, around 1,900 employees will lose their jobs.

On top of that, Humm notes that more “restructuring” will come later, which almost always means more layoffs. T-Mobile will announce those cuts before the end of May.

You can read Humm’s memo in full below:

Dear colleagues,

I have difficult news to share today: we are consolidating our call center operations and closing seven of our 24 facilities. This decision was not easily reached, but it is a necessary measure. The reality is our cost structure must be better optimized to match our customer base and call volumes.

The affected Customer Service facilities are Allentown, Pennsylvania; Fort Lauderdale, Florida; Frisco, Texas; Brownsville, Texas; Lenexa, Kansas; Thornton, Colorado; and Redmond, Oregon. The consolidations will result in 1,900 net job reductions. Approximately 3,300 employees at the seven impacted facilities will be affected, and we will begin hiring immediately at the remaining 17 call centers to fill as many as
1,400 positions.

Impacted call centers will remain open for three months following this announcement. Affected customer service representatives will have the option to transfer to any of the remaining 17 call centers. Employees who choose not to transfer and are employed on the date the center closes, will be offered transition packages with severance pay and outplacement support. T-Mobile is partnering with an outplacement firm to provide on-site career centers at all seven facilities. Every employee will have access to a personal career coach and be offered job search training and tools. In addition, T-Mobile will pay for two months of continued health care coverage under COBRA (which is available for up to 18 months for eligible employees who elect this option).

Looking ahead, we will also be restructuring other parts of the company. It is important to note this will not include our customer service representatives in the remaining 17 call centers, technicians in engineering or front line employees in our T-Mobile corporate-owned stores. In other parts of the organization, the majority of changes will be announced by the end of May 2012. Senior leaders are intently focused on making the best possible choices standing on the foundation of our shared T-Mobile Values. The outcome will be an organization that is structured efficiently and closer to the customer. Leaders will share more information as plans evolve.

These are not easy steps to take — or, I know, to read. We must address our business realities so we can focus on getting T-Mobile back to growth.

Our commitment, as we go through this process, is to provide clear perspective and understandable rationale, be forthright in our communications regarding our decisions, and be respectful and compassionate in our treatment of affected individuals.

Thank you for your ongoing commitment and support.

With sincere appreciation,

Philipp Humm
CEO & President
T-Mobile USA

Umemployed worker photo: Dmitriy Shironosov/Shutterstock