Creative Technology slices 2,700 jobs

Axeing more than half the size of its 2007 workforce, the Singaporean music device maker says the retrenchment exercise was focused on a Malaysian subsidiary.
Written by Victoria Ho, Contributor

Creative Technology has joined the growing assembly of large corporations laying off staff.

The Singaporean portable music device maker cut 2,700 jobs last fiscal year, according to its annual report filed with Singapore’s stock exchange on Dec. 31.

The figure comprises almost half of its global workforce from the year before. The company had 3,100 full-time employees at the end of June last year--47 percent fewer than the year before, said the report.

A spokesperson from Creative said in response to a query from ZDNet Asia, the axed staff were mainly factory workers from a Malaysian-based subsidiary: "The bulk of the reduction in worldwide workforce was due to the sale of Cubic Electronics, the manufacturing subsidiary of Creative in Malaysia, in July 2007.

"In Singapore, there is no significant change in our overall employment figures."

The company is still opening its doors to engineers for its research and development (R&D) department in Singapore, the spokesperson added.

Creative's report also stated the company posted the lowest revenue in five years, with a net loss of US$19.7 million on sales of US$736.8 million for its fiscal year, which ended Jun. 30 last year.

News of layoffs have hogged the headlines recently, with Lenovo and Microsoft the two latest additions to the fray.

Springboard Research CEO and research executive vice president Dane Anderson, thinks the economic slowdown has made a definite impact on technology firms, but sees most of the layoffs as a temporary exercise to wait out the storm.

"Some technology firms--especially in the telecom hardware, computer hardware, and some software segments--are definitely being squeezed by the slowdown and have to change their cost structures; layoffs are one of the means to right-size so they can innovate and compete," Anderson said in an e-mail response to ZDNet Asia.

But he said the slowdown is but one of the reasons for the retrenchments. "The lack of innovation and development of new products before the crisis took hold" has also contributed to the heat for many companies.

"In the technology space, a lot of the layoffs at established companies that are still doing comparatively well are mainly the trimming of fat, but in many cases, I would not say that trimming through layoffs is the best for the long term.

"While layoffs help short term, they also create an environment of disloyalty that can affect a company when the market rebounds and retention becomes more important," said Anderson.

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