U.S. Markets closed

Tech Industry To See 330K Layoffs In 2016, Chowdhry Warns

Javier Hasse
  • Global Equities Research’s Managing Director Trip Chowdhry shared his view of the round of layoffs going on in the tech industry right now.
  • According to the note, layoffs in the industry are surging; over the next 12 months, the sector will see about 330,000 dismissals.

Yahoo! Inc. (NASDAQ: YHOO) is laying of 15 percent of its workforce, or about 1,600 employees, while VMware, Inc. (NYSE: VMW) will make 900 employees redundant – about 5 percent of its staff.

“This is just a start,” the analyst stated. Over 2016, he expects to see 1,900 more employees fired at Yahoo – bringing the total to 3,500 layoffs this year.

Related Link: Chowdhry: Major Tech Layoffs Are Coming, Fed's Dudley Is 'Clueless' On Labor Market

The firm’s reasons for the layoffs at Yahoo include:

  • A shift in users’ behavior.
  • A lack of new successful product launches.
  • “Inherent efficiencies and productivity gains within the Internet industry, that makes people redundant fast.”
  • “Rapid obsolescence of existing employee skills.”

Massive Layoffs

Chowdhry then disclosed his reasons to believe that the tech sector alone will see more than 330,000 firings over the next year. These included:

  • “Technology shift to Cloud Native and Mobile Native applications”
  • “Improving IT Efficiency by Micro-services, On-Demand and Spot Pricing”
  • “Value Migration from Technology Integration to Domain Specific Expertise”
  • A shift in consumers’ behavior.

Below is a list of how many employees Chowdhry believes will be fired at specific companies:

  • EMC Corporation (NYSE: EMC): between 10,000 and 14,000 layoffs – or 15 to 20 percent of its workforce.
  • Hewlett Packard Enterprise Co (NYSE: HPE): about 72,000 – 30 percent.
  • HP Inc (NYSE: HPQ): roughly 86,000 – 30 percent.
  • International Business Machines Corp. (NYSE: IBM): about 95,000 – 25 percent.
  • Cisco Systems, Inc. (NASDAQ: CSCO): about 14,000 – 20 percent.
  • Juniper Networks, Inc. (NYSE: JNPR): about 1,300 –15 percent.
  • Oracle Corporation (NYSE: ORCL): about 26,000 – 20 percent.
  • Microsoft Corporation (NASDAQ: MSFT): about 18,000 – 15 percent (“Microsoft is letting go about 200 to 250 people every week, and none of these are ever announced")
  • NetApp Inc. (NASDAQ: NTAP): about 1,800 – 15 percent.
  • Symantec Corporation (NASDAQ: SYMC): about 2,800 – 15 percent.
  • F5 Networks, Inc. (NASDAQ: FFIV): about 450 – 10 percent.
  • Yelp Inc (NYSE: YELP): about 1,000 – 30 percent.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Latest Ratings for YHOO

Date Firm Action From To
Feb 2016 B. Riley Maintains Neutral
Feb 2016 Cowen & Company Maintains Market Perform
Feb 2016 Credit Suisse Maintains Neutral

View More Analyst Ratings for YHOO
View the Latest Analyst Ratings

See more from Benzinga

© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.