150 pink slips for Pillar
Cuts headcount 30 per cent
The phony recession war is over and the first real storm cloud has hit the storage industry. Pillar Data has laid off 150 employees - that's 30 per cent of its workforce - to help it survive the recession.
Pillar Data is a tier 2 storage array company along with 3PAR and Compellent, both of whom have just reported their first profitable quarters. Larry Ellison's Taco Ventures funds Pillar which is still, technically, a startup, although it now has 420 customers in 16 countries. Pillar spokesperson Chris Drago said Larry Ellison supported the management action.
This is the first storage industry company to take such action that isn't known to be in dire financial shape, meaning it isn't Overland Storage, Plasmon, or Tandberg. We might estimate that Pillar could save around $5m a year in staff costs through this cut, depending upon the average salary of the laid-off workers. Let's hope they find alternative employment as quickly as they can.
Was CEO Mike Workman seeing projections of $5m negative net income over the next twelve months? Cutting thirty per cent of the employees in a 500-person company is a pretty deep cut to make.
He wrote in his blog: "Pillar is anticipating a tough economic climate will persist throughout 2009 and into 2010, so we have decided to batten down the hatches and lay off some of our employees. These decisions are always among the toughest decisions a CEO has to make."
He's anticipating the recession lasting through 2009 and into 2010. That's a rough ride ahead. He added: "... our long term viability is ensured by prudent financial actions such as these. ... At the end of the day, I am sorry to say we are in a long line of companies doing the same thing to protect their customers and shareholders. But good management teams prepare for the worst, and drive for the best, and I am happy to say that Pillar is no different."
A sub text is that every storage company CEO is into cash conservation now, or should be. If this is going to become common storage industry practise, that is 30 per cent lay-offs, then we're in for a really bleak 2009. ®
Volvo truck sales down 99.63%
Mish is such a misery guts these days:
Apparently Volvo sold only 0.37% of the sales it made in the same quarter last year.
Meanwhile the US fed is doing swaps with Brazil, Mexico, South Korea, Singapore, which I think it means it is swapping US$ for Singapore $, Mexican pesetas etc.. I assume they simply printed a lot more US$ and are now trying to find ways to stuff them into the world system without a collapse in the value of the US$, so they're swapping them for hard(er) currency. Since they're not doing that swap with Europe or UK or Japan, I guess we've had enough of it.
Mish suggests it's a loan to them, but I don't see that they need lending at this point.
Bernankes and Paulsons of this world can see no problem with the massive increases in US money supply. Given M3 was hidden in 2006, I guess they thought they could keep it going for 2 years till the idiot was out of power.
IMHO, the US economy needs to shrink by $3-5 trillion (the amount of the false loans plus the fees from credit derivatives from those bad loans), and we all need to take a little pain while that happens.
Or they could flood the world with US$ hoping it will create real growth somewhere, anywhere. Unlike all the previous times they flooded the world with US$ and created fake bubbles of fake assets.... like the bubble that's bursting now. Yeh, if you create more money for the same worth, engineers will invent something that sells to create growth, the economics of wishful thinking....
They should have impeached him back in 2006 instead of letting him stay in power for another 2 years.
Should just set up their own storage businesses
That's the response to this, crowd the market and offer a better service at a slightly cheaper price.
All these old companies will be on the ropes, as they have been managed for the credit economy, now that has gone, they are precariously structured financially. A new company isn't burdened in that way, and in a prime position to get equipment and bandwidth cheaply.
There is also a chance to actual focus in what makes sense for remote storage, the chance to rewrite core programs, and to use an economical platform.
There be gold in them there hills.