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| "They've Squeezed All They Can" - Apr. 21, 2004 |
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By Kevin Murtaugh
(C) Copyright 2004, View from Silicon Valley. All rights reserved.
This week's blitz in the newspaper hoping to convince us Silicon Valley
is back to growing will be a long one. Here are a few of the headlines,
accompanied by some of the more obvious flaws in the claims.
Businesses find they've squeezed all that they can
http://www.mercurynews.com/mld/mercurynews/business/8461847.htm
This is my favorite. A CEO grumbles he cannot demand his current staff
increase hours from 50 -60 to 80 hours per week. If he wants more work
done, he needs more people, presumably working "only" 50 -60 hours per
week. He's not worried about scaring off potential employees by
admitting this since, in the current employment environment, 50 and
60-hour work-weeks will discourage -- almost nobody! -- from wanting to
work for this company. A paycheck is still a paycheck.
Region still best-suited to thrive as tech's cradle
http://www.mercurynews.com/mld/mercurynews/business/8461796.htm?1c
A CEO is referenced as saying, "First, the best chip designers are here.
Second, money is plentiful -- about a fifth of the world's venture
capital is dispensed from Menlo Park and Palo Alto. Third, 'the weather
is quite nice.'"
1) Chip designers in Asia work for 10% of the locals' salary. Silicon
Valley chip designers may be twice, or even three or four times, as good
but are they ten times as good? Will they still be that much better
next year? The year after?
Apparently Ciena doesn't think so. Ciena announced this week plans to
lay off 25% of staff. It's the 25% of their staff that lives in San
Jose!(*) This announcement is also blow for the Edenvale Technology
Park. Edenvale opened to great fanfare in the late '90's with
Electroglas and then ONI Systems as headline tenants. ONI was bought by
Ciena and now will be completely gone. There were already acres and
acres of empty offices in Edenvale before this announcement.
2) VC's are on the record saying there are not enough good ideas to
spend all their money. It may be a valid strategy to start up a
company with the sole intent of capturing VC money but this is separate
and distinct from having a viable, profitable business.
3) If the Pacific Decadal Oscillator is really turning over, even the
local weather may become less attractive than in years past.
Not to mention the impact of a natural gas price above $5 in a region
heavily dependent on it for power. Palo Alto reports their power
contract expires at the end of this calendar year. Initial reports
suggest power prices could double next year for city residents and
businesses.
Also, the regional power grid operator is already asking for
conservation as the system is again running close to capacity. I have
heard this condition attributed to the so-called business recovery. In
reality it is due to the proliferation of new houses built in the
central valley (outside Silicon Valley but on the same power grid) where
the summer weather is so hot that they must use air conditioning.
This article also references Epiance as an example of the coming
recovery by saying they have, "about 85 employees in India, but plans to
hire 30 to 40 people in the Bay Area over the next year."
This sound byte is revealed as less positive after you read, "Pauline
Reid, a real estate agent for Coldwell Banker, says Epiance and another
client from Singapore take half of her working time. Her previous job of
selling high-end homes had dried up. She's even helping Shankar's kids
find schools."
A real estate agent admitting "high-end home (sales) had dried up," can
expect to be drummed out of the agents' cartel. If she's searching for
schools for children, this suggests clients are moving in from outside
the area. In-migration is positive for Silicon Valley but does little
for Santa Clara County's 60,000 unemployed living here now.
The article goes on to rave, "Igor Sill, a San Francisco recruiter, will
be busy through next year as he searches for key executives for Epiance.
His firm has doubled its business from last year."
Again, CEO- and, maybe, VP-level executives may have prospects but what
percentage of the currently-unemployed are qualified for such jobs?
Then Monday's article was:
Valley keeps strong faith in future of tech growth
http://www.mercurynews.com/mld/mercurynews/business/8465656.htm
"Barry Campbell has lost two jobs in the past two years. He's traded a
sprawling home in the Milpitas foothills for a one-bedroom apartment,
and a Lexus coupe for a Honda Accord. He's now been out of work for six
months -- and the unemployment checks just stopped."
Even so, he says, "Silicon Valley is still the primo place to do tech,"
said Campbell, who is looking for a job in high-tech marketing. "It's
the aura of this valley. This is where the money is."
Memo to Mr. Campbell: Silicon Valley WAS the primo place to do tech.
Unless you are going to run a company, the primo places are now in Asia.
Silicon Valley MAY become the primo place to do bio-tech, if you can
wait five or ten years.
In another examples, the wife of a recently re-hired tech worker is
quoted, "At the end of the week, he wonders if he'll still have a job...
It's hanging in the air for everyone I know."
Why the worry? Don't the new jobs "prove" the economy is recovered?
There are worries because it is clear that to these new employees
business is still weak. Maybe there is enough to keep busy today...
There is a little bit of balance in this article with, "You need to hire
junior folks and they need to grow in those jobs and be nurtured." Chary
Aasuri continued with, "They're the ones who might start new companies
and come up with great ideas. If you take those jobs away, how do you
nurture those people?"
Bravo! Somebody "gets it"!
In what should be a wake-up call to unemployed tech workers, the article
concludes with, "Even though I have nothing to do with tech, it's
exciting to be around it."
Excitement doesn't pay the bills...
Perhaps neither does this series since the paper did not run new
chapters on Tuesday or Wednesday.
____________________________________________
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http://news.moneycentral.msn.com/ticker/article.asp?Feed=BW&Date=20040420&ID=3605247&Symbol=US:CIEN
For more insight into what's really happening in Silicon Valley, visit
www.viewfromsiliconvalley.com.
We've updated and added more industry
statistics on http://www.viewfromsiliconvalley.com/id54.html.
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