The Age of PC Company Layoffs

Advanced Micro Devices Inc. (NYSE: AMD), one of the weakest companies in the PC supply chain, just laid off 15% of its workers. That is about 1,800 people. The slow attrition of computer sales has dented its revenue, as sales at other PC-related companies have been dented as well. AMD has the disadvantage of a huge competitor in Intel Corp. (NASDAQ: INTC). But the questions about head count have to be in the minds of Intel management as well. As tablets and smartphones undermine the PC market, tens of thousands, or more, jobs are at stake. And the threat to those jobs is immediate.

Hewlett-Packard Co. (NYSE: HPQ) announced cuts of 2,000 people recently as it deferred a recovery of its fortunes by three years. It is not very long ago that former CEO Mark Hurd cut 29,000 jobs, although that was mostly because the buyout of IT firm EDS had not gone well. Downsizing may have solved the EDS problem. The PC problem has not been solved, at least not yet.

Gartner and IDC, which keep the official counts of global PC sales, have pointed out two trends recently. The first is that global PC sales have begun to drop. The second is that the most successful manufacturers are in Asia now. The period when Dell Inc. (NASDAQ: DELL) and HP ruled the industry are over.

Dell, HP, Intel and AMD dominate the PC supply chain in America. But at the top of the chain is Microsoft Corp. NASDAQ: MSFT), with its Windows OS on nearly every PC. The launch of Windows 8 will be telling. Most analysts expect a huge boost in Microsoft sales and earnings as the new product is released. But it would not be terribly surprising if faltering global PC sales blunt that success more than expected.

Microsoft and Intel have not cut their payrolls, at least not significantly, and neither has Dell really. However, if PC sales continue their trend into 2013, layoffs will come in big waves. And one of the largest industries and largest employers in the country will be in a rapid retreat.

Douglas A. McIntyre