13 ms·

Arm to drop up to 15 percent of staff, about 1k people

250 points by analyst_9 5y ago

ProAm 5y ago
This is just pre-IPO behavior for the road show. They're going to make the books look good for a fiscal year
rob74 5y ago
> The planet is not exactly flush with such folk at present, and much of Arm's appeal to investors lies in its deep technical expertise. It is therefore likely that most of the redundancies will be staff not directly involved in Arm's core activities. This "cost-cutting exercise" (lovely euphemism) may not directly target technical people, but for some of them it may be a wake-up call nevertheless: "if they start lay-offs now, who says this will be the last round? And who says that I won't be next?". So they start looking around for alternatives, which I hear are plentiful at the moment, and hey presto, you got rid of the people you didn't actually want to get rid of...
- Clubber 5y ago
  I agree. To add, usually when this happens seemingly at random, it's to make the company look more attractive for a sale, in my experience.
  - noir_lord 5y ago
    Given the outcry after the last attempt at a sale and the fact that nVidia got blocked (a US company) who would risk buying arm at the moment given that multiple competition watchdogs are currently paying attention.
    - rossdavidh 5y ago
      You could sell to private capital, or a company not currently in the semi industry that wanted to enter. [edit] Oh it says it right in the article: "SoftBank, Arm's owner, responded to that setback with a plan to float the chip design firm by March 2023."
    - cinntaile 5y ago
      They're preparing to IPO in 2023. It's a shame the Nvidia sale didn't go through, now they'll likely die a slow death because they don't have enough R&D resources to compete with the big boys who are just going to design their own CPUs instead of buying the design.
      - Kon-Peki 5y ago
        That's an interesting idea. The Apple M1 lineup, for example. The M1 standard, pro, max, and ultra are not differentiated by their ARM cores other than the quantity of them. It's really the GPU cores and media encoding components. And that Neural Engine thing is really important for many apps and OS features. At what point do the general purpose CPU cores on a modern chip become minor players that have very little impact on overall chip performance? I don't think we're there yet, but it certainly could happen. EDIT - I'm saying M1 vs M1 Pro vs M1 Max vs M1 Ultra. Not M1 vs Intel i7
        yywwbbn 5y ago
        That not really true though. M1 had considerable better single core performance at the time of release than anything else with a comparable TDP. And the Neural Engine is only useful is fairly narrow use cases.
        kcb 5y ago
        Apples ARM cores have been significantly ahead of off the shelf ARM designs for years now.
        mkr-hn 5y ago
        I wonder if there were similar conversations about math coprocessors when they joined the CPU. What did people say about increasing specialization of cores then? The closest recent analogue is GPUs joining the CPU on mobile devices, but it was only recently that those weren't complete garbage.
      - swamp40 5y ago
        Small ARM Cortex's have taken over the microcontroller market. Billions made each year from every large microcontroller manufacturer. They aren't going anywhere. It's hard to believe ARM wouldn't make enough from licensing fees and from each one sold to make an easy profit. Maybe the license doesn't account for individual sales, IDK? New secure ARM Cortex's are launching everywhere too, so they are very much alive and well, for the next 20 years minimum.
    - hnlmorg 5y ago
      Would either of those things genuinely put other companies off? If I were looking to expand into that market then it wouldn't put me off. They're manageable hurdles to purchasing rather than reasons that buying ARM would be bad business.
  - redleader9345 5y ago
    I've seen companies go on hiring sprees just prior to being acquired, which I don't fully understand. I guess the company tries to puff itself up to fetch a larger asking price? Guessing base cost factors in to sale price. It's shitty, cuz their playing with people's lives. As soon as the acquiring company takes over, their like "what's with all these unnecessary people?"
    - guiriduro 5y ago
      Maybe it is to create the 'inefficiencies' which the merger can then 'synergize' away, so that the acquiring execs can get bigger bonuses. Because I've yet to see one instance where real (non-stupid/contrived) synergies actually occurred as foreseen, but plenty of cynical M&A. Also plenty of absolutely atrocious dysynergies in corp history of course.
      - scarface74 5y ago
        Off the top of my head: - Instagram/Facebook - Next/Apple - Beats/Apple - LucasArts/Pixar/Fox/Marvel (maybe)/Disney - MetroPCS/Sprint/T-Mobile
- pfortuny 5y ago
  It is also a great way to make technical people do non-technical work and end up wasting a ton of time. Overall, cost-cutting in the short term. Just that.
- m463 5y ago
  There's also culture death during layoffs. People get nervous, start focusing on their own tasks and don't altruistically help others.
  - pjbeam 5y ago
    Which then in turn puts pressure on the spiral of talent loss in the departments management wasn't targeting.
  - ethbr0 5y ago
    Counter-take: There's also cultural improvement during layoffs, when you no longer have to interface with someone who doesn't want to do their job and/or is bad at it.
    - mschuster91 5y ago
      The "bad" people will hold on as long as they can - partially because they won't have it as easy to find a new job, partially because they gamble on enough "high performers" leaving that they cannot be fired because otherwise everything would collapse.
    - gedy 5y ago
      That should really be taken care of as it comes up in a case by case basis, not mass layoff.
      - ethbr0 5y ago
        I'm not pro-stack ranking, but I also can't argue that sweeping layoffs don't also have some benefits.
        herval 5y ago
        Can you cite a couple of examples where it _did_ improve things?
        caoilte 5y ago
- hgomersall 5y ago
  I've heard it suggested that the best way to stimulate a bunch of startups is to collapse a big tech firm. I know of at least two clusters that can be traced back to big companies going under.
  - mikepurvis 5y ago
    The Toronto-Waterloo tech corridor can be pretty heavily tied back to the slow implosion of RIM/BlackBerry over the course of the early 2010s. Even the companies that predate those events still benefited a lot from the glut of qualified personnel coming available, and there are others which had been funded or bootstrapped by early RIM employees.
    - bregma 5y ago
      Where I work at BlackBerry it seems to be all ex-Nortel people. So it goes.
  - petercooper 5y ago
    Or even half an industry. I don't think it's a coincidence a lot of significant technical developments or companies came out of the post dot-com "fallow" period of 2002-2006 (like the spread of Ajax, Rails, Django, .NET and Mono, Skype, WordPress, much of Web 2.0's innovation with Flickr, Twitter, and Facebook all founded in this period, AWS).
  - navaati 5y ago
    Sun
  - mattkevan 5y ago
    Pretty sure that most of Silicon Valley, including Intel, was founded by people exiting Fairchild Semiconductor when things got rough there in the ‘70s. https://computerhistory.org/blog/fairchild-and-the-fairchildren/ https://computerhistory.org/blog/fairchild-and-the-fairchild...
- Yoric 5y ago
  Yep. I've been exactly there ~15 months ago (not at Arm, but in another fairly big tech company). I haven't checked the actual numbers but it is my understanding by some former colleagues that the number of tech people who decided to leave was comparable to the number of people who were laid off.
- Calamitous 5y ago
  Yep. As soon as the layoffs start (or even reliable rumors), I’m polishing my resume.
- tlogan 5y ago
  Large layoffs is always a politic game and in many cases very smart people working of cool projects ended up being laid off. I was in one large corporation (not large anymore) which did something like that. And sure, cafeteria was still full of marketing and sales people even after layoffs.
- gadders 5y ago
  https://steveblank.com/2009/12/21/the-elves-leave-middle-earth-%E2%80%93-soda%E2%80%99s-are-no-longer-free/ https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...
- Johnny555 5y ago
  So they start looking around for alternatives, which I hear are plentiful at the moment On the other hand, if you think the layoffs are due to an impending economic downturn, you could end up moving to a new job and being the new guy, so if they need to make cuts, you're first to go. I was working for a small (~500 people) but well established startup around the time of the original dot-com bust. I have some friends that tried the same thing -- saw the writing on the wall and tried hopping to a bigger more established company for job protection, but they were the first to lose jobs when layoffs hit the industry. We had relatively layoffs in some areas of the company, but not in the core engineering team.
- vishnugupta 5y ago
  > you got rid of the people you didn't actually want to get rid of And to add salt to the wound you will end up retaining those who are good at surviving such layoffs by doing some optical work. It's the worst of all the worlds. It should also be pointed out that people are not plug-and-play parts of a machinery. They carry domain knowledge, context (Chesterton's fence), intra-company network they have painstakingly built and such intangible value. Besides, layoff doesn't mean the work disappears. It gets distributed, often unevenly, among existing workforce. I've seen it first hand and the aftereffects are just terrible.
- Gareth321 5y ago
  I finally have a use for my MBA. The theory on this one is not good. You're right: people will leave of their own volition. Problem is, it's usually the people with the highest marketability. In laymen's terms, the most skilled and productive employees. In any given organisation you'll find 20% doing 80% of the heavy lifting. Losing half of the most productive employees results in a real world 40% reduction in output. Of course, much of this output is intangible and easy to hide, so investors don't see the damage for years. Soon enough, lack of productivity bites cash flows, and another round of layoffs is announced. Wouldn't you know it, the most productive leave this time too.
  - 01100011 5y ago
    A couple of coworkers with experience in the defense industry related a story about a company, Cubic I think, which started offering buyouts in order to reduce headcount and boost profits. The best engineers took the offer because they could just get another job somewhere else. The worst employees stayed behind and proceeded to do the same buyout approach next time the company needed to save money. It was a natural selection feedback loop that took the company's engineering talent into the gutter.
    - mprovost 5y ago
      Bruce Webster named this the "Dead Sea Effect". [0] Imagine your talent evaporating, leaving an increasingly salty residue. [0] http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-dead-sea-effect/ http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-d...
    - onlyrealcuzzo 5y ago
      I think the practice is old, and /might/ have once made more sense. If you offer a buyout to a bunch of people in a factory with no real alternative, you're selecting for the people who want to do nothing - which is probably the people who are doing (close to) nothing. If you offer a buyout to a bunch of people with real alternatives, you're going to mostly buyout the people with the best alternatives (the most marketable employee / the most productive). This is amplified by the fact that factory workers really have a minimum amount they must be productive. Whereas software engineers can LITERALLY do nothing. Further, factory workers have a pretty low limit on how productive they can be. The limit is much higher for software engineers. It's an old practice that might have made sense, but definitely does not make sense in software.
- mattkevan 5y ago
  That’s happening where I work. There was a shock round of layoffs a few months ago, triggering a mass exodus. They’ve now had to start hiring again to make up numbers. The amount of team disruption, lost domain knowledge and hiring expenses, especially as new people will want to be paid more, must have cost the business far more than they saved from the layoffs. So short sighted.
  - ThrowawayIP 5y ago
    I'm sure your CEO got their bonus though, if not a premium on the bonus because they lead the company through such hard times.
- hn_throwaway_99 5y ago
  Just to be slightly contrarian, I've also seen in tech companies that layoffs are often the only way to get rid of "mediocre-ly poor" but not egregiously bad performers. That is, I've worked with people that didn't completely suck, but to quote Office Space, they always did the absolute bare minimum. Few companies have the Netflix mindset of letting people go with a large severance if they aren't top performers, so these mediocre folks can just be allowed to fester. TBH, I've been glad as an engineer to see the company (belatedly) handle these sub-par performers, and to these folks benefit they get a fair severance and can usually find other jobs quickly. Of course not all layoffs are like this, and often times layoffs at a large company are done "unevenly" as others have pointed out, but I have been in a company before where layoffs allowed the company to focus and perform better.
  - kradeelav 5y ago
    I understand the annoyance at underperformers (I really do), but that feels a little, mm, unkind on some level. Some people just want a steady paycheck without having to be a rockstar, and I can't blame them for that.
    - hiptobecubic 5y ago
      There's a difference between "I don't want to be a rockstar" and "I am doing the bare minimum to make it not worth it to fire me." I think the post is talking about the latter.
      - dan-robertson 5y ago
        How does “I’m doing the bare minimum to make it not worth it to fire me” compare to “I’m being paid a larger proportion for the value I create” for you? To clarify, the former happens by decreasing output and the latter by getting paid more for existing output and obviously can be harder to achieve in practice. In both cases the company could be getting (or feeling they’re getting) lower value for money from the worker.
        5y ago
- jollybean 5y ago
  Layoffs happen all the time. Most people are not 20-something people who can move across the country on a dime. Far from worrisome, the talent may be fine with losing what they view (rightly or wrongly) as the extra weight. A company in a bad downwards spiral is one thing, but this doesn't seem to be that. If there is a second layoff, maybe some fear would hit, but I don't think Arm is in a terrible spot. I wouldn't suggest that many people are thinking in dire terms.
- ge96 5y ago
  Corp I worked at would not raise their pay and a huge number of people just left. People with 20 years at the company. It was funny on LinkedIn you'd see people with a photo of their badge and one of the buildings in the background ex-employees "celebrates" this. The corp is in talks of getting acquired now.
socialdemocrat 5y ago
Idiotic strategy which is about as smart as pissing in your pants to stay warm. Big firings like this create bad blood, undermines loyalty to company and get many talented people to look at alternative companies to work. A talented organization takes time to build up but is relatively quick to tear down. Skill in this industry is not exactly easy to get hold of. Talent which leaves may prove very hard to get back.
- ggreg84 5y ago
  Their goal - and only option - is to sell the company for as much $$$ as possible, and this strategy helps them towards their goal. This is the simplest and most effective way to make Arm books look good, which is what regulators all around the world - including the UK - have decided is what's best for the world. So this is not idiotic, this is effective, and is finance 101. For Arm's long term success this is a very stupid decision. But that's not what any of the parties involved need or care about. What they care about is $$$ right now. I won't be buying and holding Arm stock, particularly not as a long term investment, cause it looks like its going to be a poor one.
  - robert_foss 5y ago
    Pumping perceived share owner value is only in the interest of the owner of ARM, Softbank. This is the kind of pump and dump scheme that American investors are famous for. If indeed ARM needed to cut down on people, having a hiring freeze is the way to go.
- blippage 5y ago
  I think Jordan Peterson had a comment about that. You get rid of people you think are rubbish, but then the top people begin to wonder if they're next. So they leave, because they have options, whilst the whole company slowly slides into mediocrity. It's not like Arm are facing long-term financial difficulties, their market share is presumably as good as ever, so getting rid of staff seems a bad idea.
  - KerrAvon 5y ago
justsaying12 5y ago
Arm has been hemmoraghing talent to direct competitors for the last year. Do a search on GraphCore, SiFive, Imagination Technologies etc. Not sure what went wrong, but people who have a clue have been bailing out left and right. Reminds me of Amazon also - Something similar happening at AWS. When Bezos left, lot of people streaming out the door. Steady talent exodus, and they are not the dumb people leaving. The great ones leave instantly. The trapped or mediocre (can’t leave…for some reason), too lazy, unmotivated etc stay and pay compounding interest and poison the company.
- ggreg84 5y ago
  What went wrong is that people learned how much NVIDIA pays, figured out they were significantly underpayed, Arm is not a very profitable business so couldn't compete, and the moment it started looking like the NVIDIA deal was not going to fly, top talent started jumping ship.
  - pyb 5y ago
    It may well be that ARM could pay better if they wanted to. But the culture in Cambridge, and the UK, has been to pay engineers pretty poorly. So perhaps they don't yet understand that they need to. Also, salary inversion within the company would be a huge problem.
    - PaulKeeble 5y ago
      The UK seriously underpays software engineers, if US companies want to tap into the talent pool its relatively easy to do so especially with remote work. The UK has a serious lack of management talent and a trickle up economy that is damaging everything and the economic situation is not great. Its primed for a big brain drain.
      - bencollier49 5y ago
        Can you elaborate on the Trickle-up Economy point. What do you mean by that? Why is it damaging?
swamp40 5y ago
You always see 10-15% cuts leading up to an IPO. Investors love it for some reason. It wouldn't surprise me if they intentionally overhired in anticipation of this. It's mostly not the technical talent.
- belval 5y ago
  > Investors love it for some reason. "Some reason" is a reduction of operating expenses which boost profit margins. From an investor perspective it makes sense, ARM is an established brand that has limited headroom to grow, you can't expect hyper growth from them so they need to make a case that the ROI is worth it, especially now that a buyout is off the table.
  - marcosdumay 5y ago
    > "Some reason" is a reduction of operating expenses which boost profit margins. Well, that "profit" comes at the expensive of some difficult to measure forms of capital. It is very likely a net-negative for the company, but it does look good on the books.
- avrionov 5y ago
  I don't think that we always see 10-15% cuts before IPOs. Most companies continue to hire after successful IPO.
- drexlspivey 5y ago
  They overhired because it was part of the deal to sell to softbank > As part of SoftBank’s deal to acquire Arm for £24bn in 2016, the UK Takeover Panel stipulated that it would have to double its UK headcount over a five-year period, which stood at 1,600 at the time. The requirement to do so expired last year.
  - ksec 5y ago
    Really wish this was the top comment, It would save at least 90% of the comments in this thread.
- 5y ago
armheadcount 5y ago
https://www.telegraph.co.uk/technology/2020/10/11/arm-racing-double-uk-staff-headcount/ https://www.telegraph.co.uk/technology/2020/10/11/arm-racing... I wonder if it's related to this?
toss1 5y ago
>> "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done." Sounds good, but it is extremely likely a strong sign that the executive suite does not know what they are doing. A company cannot achieve greatness by cost-cutting. This is especially so in these times where it is so hard to find talent. Even if there are some redundancies, your key asset is an existing talent pool that has already been recruited and is up to speed on your products, technology, and internal processes. Strategically redeploying them to greater effect is a sign of knowledge & strength. Merely cutting and hacking is a sign of either incompetence, or that they DGAF and are trying to temporarily make the numbers look better for some near-term result (e.g., the likely pending new China IPO mentioned in the article), and leaving the resulting problems for their successors to deal with. It is really rather obscene.
michelb 5y ago
About the same amount that would have had to leave if the takeover went through?
acomjean 5y ago
Kinda Galling when Arm walked away with over 1.25 billion dollars after the Nvidia deal collapsed. that pays a lot of salaries. https://www.theregister.com/2022/02/08/arm_cancels_sale_to_nvidia/ https://www.theregister.com/2022/02/08/arm_cancels_sale_to_n... "Under the terms and conditions agreed by the companies, SoftBank Group will retain the fee of $1.25bn paid by Nvidia (this will be recorded as a profit in its fourth quarter) and Nvidia will keep hold of its 20-year Arm licence."
- PeterisP 5y ago
  Well, Arm did not walk away with that fee, Softbank did - that money was never going to enter the company even if the deal went through.
  - hackernewds 5y ago
    Great outcome for SoftBank
    - perfopt 5y ago
      Better outcome would have been the deal went through
  - acomjean 5y ago
    Good point. Though if I own an asset that made me over a billion dollars for basically doing nothing, I might consider reinvesting at least some of it...
    - twblalock 5y ago
      Softbank doesn't want to invest in ARM. That's why they are trying to sell it.
      - marricks 5y ago
        There's always a lot of disconnect between folks talking about how the world should work and how it does work. Seldom does switching between those modes leading to productive conversations.
cultofmetatron 5y ago
this is great, 1k people to now start working on riscV
smk_ 5y ago
While speaking from limited expertise, it is my general understanding these layoffs are a vital part in keeping a company lean and reducing bloat. Over time, in any company, some roles will be made redundant and is the reason for these occasional layoffs. If I was an investor, I would see this as a good sign of vision and a clear direction. They say so themselves: > "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done."
- phendrenad2 5y ago
  Exactly. When faced with a slowdown in demand you can either be IBM and cut aggressively, or you can be DEC and keep people employed working on inane doomed projects until the company falls flat.
999900000999 5y ago
Any chance of seeing these talented folks start new Chip design shops. The person who can create a fab for less than a few million, while offering competing performance will be very rich. Every bigger country will want some capacity to build chips.
- phendrenad2 5y ago
  Everything competitive is locked up in patents, but maybe with the chip shortage there's room for more competition for existing chips. Question is: can they get seed funding?
  - 999900000999 5y ago
    https://www.wired.com/story/22-year-old-builds-chips-parents-garage/ https://www.wired.com/story/22-year-old-builds-chips-parents... It's possible to build something with next to no money, and I can't imagine it impractical to see some senior engineers gathering together and making a good funding pitch
bogomipz 5y ago
From the article: >"Arm China, meanwhile, is contemplating a float of its own. The rogue Arm outpost, which is led by CEO Allen Wu and majority owned by Chinese entities, has become something of a problem for Arm because Wu was fired but has managed to retain his position." Is this not a huge meatball that ARM has hanging out here? Further from a link in the linked article[1][2] >"Following the investigation of Wu by Arm and Hopu, the Arm China board voted 7-1 to dismiss Wu. Given Wu’s refusal to vacate his role, Arm is growing anxious over the security of Arm China’s intellectual property, assets and finances, according to the people with knowledge of the matter." How would any investor ever feel confident in investing in ARM unless this is resolved? Even if it is resolved what are the assurances that the IP is actually safe? This sounds like a debacle. Is this something that happened on Softbank's watch? [1] https://www.scmp.com/tech/big-tech/article/3168443/arm-china-ceo-asserts-semiconductor-joint-ventures-right-pursue-ipo https://www.scmp.com/tech/big-tech/article/3168443/arm-china... [2] https://www.scmp.com/tech/big-tech/article/3089901/softbank-chip-company-arm-fired-its-china-ceo-starting-competing-fund https://www.scmp.com/tech/big-tech/article/3089901/softbank-...
- Gareth321 5y ago
  >Is this not a huge meatball that ARM has hanging out here? Further from a link in the linked article Yes, but mostly no. Most of ARM's market cap is tied up in IP; much of which is publicly available knowledge anyway. Wu stole said IP, but he has very few markets in which he's legally allowed to sell. It would be like someone setting up another Disney in China. Okay, so you can sell Mickey Mouse branded clothing in China, but you're definitely not going to be able to sell in any modern market. ARM got off light. Millions of Western businesses have been destroyed this way. It should be a stark warning for companies setting up shop in China: they will steal your technology, your IP, your facilities and assets, your trade secrets, your branding and trademarks, and all your equity. The government permits and encourages this. It's only a matter of time.
  - bogomipz 5y ago
    Couldn't he sell ARM designs to Chinese companies who produce products with those chips in them and then those companies sell products with ARM IP in them both inside and outside of China? That would seem to be global market no? Or would WTO step in and put a stop to it? >"Wu stole said IP, but he has very few markets in which he's legally allowed to sell." Is this the consensus pretty much then?
Traster 5y ago
To be honest, Arm doubled head count of the last 5 years, and really haven't delivered. So it wouldn't be surprising to me that their costs are way too high compared to comparable companies. Having said that successfully getting back down to the correct head count is probably impossible. You just can't figure out who is essential, and you can't re-assure the people you want to stay, so the people who can leave, do leave, and you're left with the people you wanted to get rid of, but know you can't get rid of them because they're the only ones you have left. Then the good people who didn't leave take a look around and realize they're no longer working with the smart people they thought they were working with and start looking to leave too. And it's easier for them to leave because they've suddenly got a load of contacts at competitor companies.
dclaw 5y ago
Thanks IPO
amelius 5y ago
> "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done." In other words: we have no clue how to make use of a large force of capable workers.
roflulz 5y ago
Makes sense. Back in the day, AMD did massive layoffs and then started to go up.
- perfopt 5y ago
  They did massive layoffs because they were almost out of money thanks to inept management. They bounced back thanks to much better management
  - rasz 5y ago
    When you say inept management do you mean Intel abusive monopolistic anti-competitive behavior or Bulldozer? :)
hndamien 5y ago
Nvidia should hire them.
pipeline_peak 5y ago
> "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done." That sounds like a company losing its grip. In this case to the likes of Apple and all the other companies designing closed off Arm derivatives.

250 points by analyst_9 5y ago

This is just pre-IPO behavior for the road show. They're going to make the books look good for a fiscal year

> The planet is not exactly flush with such folk at present, and much of Arm's appeal to investors lies in its deep technical expertise. It is therefore likely that most of the redundancies will be staff not directly involved in Arm's core activities. This "cost-cutting exercise" (lovely euphemism) may not directly target technical people, but for some of them it may be a wake-up call nevertheless: "if they start lay-offs now, who says this will be the last round? And who says that I won't be next?". So they start looking around for alternatives, which I hear are plentiful at the moment, and hey presto, you got rid of the people you didn't actually want to get rid of...

Clubber 5y ago
I agree. To add, usually when this happens seemingly at random, it's to make the company look more attractive for a sale, in my experience.
- noir_lord 5y ago
  Given the outcry after the last attempt at a sale and the fact that nVidia got blocked (a US company) who would risk buying arm at the moment given that multiple competition watchdogs are currently paying attention.
  - rossdavidh 5y ago
    You could sell to private capital, or a company not currently in the semi industry that wanted to enter. [edit] Oh it says it right in the article: "SoftBank, Arm's owner, responded to that setback with a plan to float the chip design firm by March 2023."
  - cinntaile 5y ago
    They're preparing to IPO in 2023. It's a shame the Nvidia sale didn't go through, now they'll likely die a slow death because they don't have enough R&D resources to compete with the big boys who are just going to design their own CPUs instead of buying the design.
    - Kon-Peki 5y ago
      That's an interesting idea. The Apple M1 lineup, for example. The M1 standard, pro, max, and ultra are not differentiated by their ARM cores other than the quantity of them. It's really the GPU cores and media encoding components. And that Neural Engine thing is really important for many apps and OS features. At what point do the general purpose CPU cores on a modern chip become minor players that have very little impact on overall chip performance? I don't think we're there yet, but it certainly could happen. EDIT - I'm saying M1 vs M1 Pro vs M1 Max vs M1 Ultra. Not M1 vs Intel i7
      - yywwbbn 5y ago
        That not really true though. M1 had considerable better single core performance at the time of release than anything else with a comparable TDP. And the Neural Engine is only useful is fairly narrow use cases.
      - kcb 5y ago
        Apples ARM cores have been significantly ahead of off the shelf ARM designs for years now.
      - mkr-hn 5y ago
        I wonder if there were similar conversations about math coprocessors when they joined the CPU. What did people say about increasing specialization of cores then? The closest recent analogue is GPUs joining the CPU on mobile devices, but it was only recently that those weren't complete garbage.
    - swamp40 5y ago
      Small ARM Cortex's have taken over the microcontroller market. Billions made each year from every large microcontroller manufacturer. They aren't going anywhere. It's hard to believe ARM wouldn't make enough from licensing fees and from each one sold to make an easy profit. Maybe the license doesn't account for individual sales, IDK? New secure ARM Cortex's are launching everywhere too, so they are very much alive and well, for the next 20 years minimum.
  - hnlmorg 5y ago
    Would either of those things genuinely put other companies off? If I were looking to expand into that market then it wouldn't put me off. They're manageable hurdles to purchasing rather than reasons that buying ARM would be bad business.
- redleader9345 5y ago
  I've seen companies go on hiring sprees just prior to being acquired, which I don't fully understand. I guess the company tries to puff itself up to fetch a larger asking price? Guessing base cost factors in to sale price. It's shitty, cuz their playing with people's lives. As soon as the acquiring company takes over, their like "what's with all these unnecessary people?"
  - guiriduro 5y ago
    Maybe it is to create the 'inefficiencies' which the merger can then 'synergize' away, so that the acquiring execs can get bigger bonuses. Because I've yet to see one instance where real (non-stupid/contrived) synergies actually occurred as foreseen, but plenty of cynical M&A. Also plenty of absolutely atrocious dysynergies in corp history of course.
    - scarface74 5y ago
      Off the top of my head: - Instagram/Facebook - Next/Apple - Beats/Apple - LucasArts/Pixar/Fox/Marvel (maybe)/Disney - MetroPCS/Sprint/T-Mobile
pfortuny 5y ago
It is also a great way to make technical people do non-technical work and end up wasting a ton of time. Overall, cost-cutting in the short term. Just that.
m463 5y ago
There's also culture death during layoffs. People get nervous, start focusing on their own tasks and don't altruistically help others.
- pjbeam 5y ago
  Which then in turn puts pressure on the spiral of talent loss in the departments management wasn't targeting.
- ethbr0 5y ago
  Counter-take: There's also cultural improvement during layoffs, when you no longer have to interface with someone who doesn't want to do their job and/or is bad at it.
  - mschuster91 5y ago
    The "bad" people will hold on as long as they can - partially because they won't have it as easy to find a new job, partially because they gamble on enough "high performers" leaving that they cannot be fired because otherwise everything would collapse.
  - gedy 5y ago
    That should really be taken care of as it comes up in a case by case basis, not mass layoff.
    - ethbr0 5y ago
      I'm not pro-stack ranking, but I also can't argue that sweeping layoffs don't also have some benefits.
      - herval 5y ago
        Can you cite a couple of examples where it _did_ improve things?
      - caoilte 5y ago
hgomersall 5y ago
I've heard it suggested that the best way to stimulate a bunch of startups is to collapse a big tech firm. I know of at least two clusters that can be traced back to big companies going under.
- mikepurvis 5y ago
  The Toronto-Waterloo tech corridor can be pretty heavily tied back to the slow implosion of RIM/BlackBerry over the course of the early 2010s. Even the companies that predate those events still benefited a lot from the glut of qualified personnel coming available, and there are others which had been funded or bootstrapped by early RIM employees.
  - bregma 5y ago
    Where I work at BlackBerry it seems to be all ex-Nortel people. So it goes.
- petercooper 5y ago
  Or even half an industry. I don't think it's a coincidence a lot of significant technical developments or companies came out of the post dot-com "fallow" period of 2002-2006 (like the spread of Ajax, Rails, Django, .NET and Mono, Skype, WordPress, much of Web 2.0's innovation with Flickr, Twitter, and Facebook all founded in this period, AWS).
- navaati 5y ago
  Sun
- mattkevan 5y ago
  Pretty sure that most of Silicon Valley, including Intel, was founded by people exiting Fairchild Semiconductor when things got rough there in the ‘70s. https://computerhistory.org/blog/fairchild-and-the-fairchildren/ https://computerhistory.org/blog/fairchild-and-the-fairchild...
Yoric 5y ago
Yep. I've been exactly there ~15 months ago (not at Arm, but in another fairly big tech company). I haven't checked the actual numbers but it is my understanding by some former colleagues that the number of tech people who decided to leave was comparable to the number of people who were laid off.
Calamitous 5y ago
Yep. As soon as the layoffs start (or even reliable rumors), I’m polishing my resume.
tlogan 5y ago
Large layoffs is always a politic game and in many cases very smart people working of cool projects ended up being laid off. I was in one large corporation (not large anymore) which did something like that. And sure, cafeteria was still full of marketing and sales people even after layoffs.
gadders 5y ago
https://steveblank.com/2009/12/21/the-elves-leave-middle-earth-%E2%80%93-soda%E2%80%99s-are-no-longer-free/ https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...
Johnny555 5y ago
So they start looking around for alternatives, which I hear are plentiful at the moment On the other hand, if you think the layoffs are due to an impending economic downturn, you could end up moving to a new job and being the new guy, so if they need to make cuts, you're first to go. I was working for a small (~500 people) but well established startup around the time of the original dot-com bust. I have some friends that tried the same thing -- saw the writing on the wall and tried hopping to a bigger more established company for job protection, but they were the first to lose jobs when layoffs hit the industry. We had relatively layoffs in some areas of the company, but not in the core engineering team.
vishnugupta 5y ago
> you got rid of the people you didn't actually want to get rid of And to add salt to the wound you will end up retaining those who are good at surviving such layoffs by doing some optical work. It's the worst of all the worlds. It should also be pointed out that people are not plug-and-play parts of a machinery. They carry domain knowledge, context (Chesterton's fence), intra-company network they have painstakingly built and such intangible value. Besides, layoff doesn't mean the work disappears. It gets distributed, often unevenly, among existing workforce. I've seen it first hand and the aftereffects are just terrible.
Gareth321 5y ago
I finally have a use for my MBA. The theory on this one is not good. You're right: people will leave of their own volition. Problem is, it's usually the people with the highest marketability. In laymen's terms, the most skilled and productive employees. In any given organisation you'll find 20% doing 80% of the heavy lifting. Losing half of the most productive employees results in a real world 40% reduction in output. Of course, much of this output is intangible and easy to hide, so investors don't see the damage for years. Soon enough, lack of productivity bites cash flows, and another round of layoffs is announced. Wouldn't you know it, the most productive leave this time too.
- 01100011 5y ago
  A couple of coworkers with experience in the defense industry related a story about a company, Cubic I think, which started offering buyouts in order to reduce headcount and boost profits. The best engineers took the offer because they could just get another job somewhere else. The worst employees stayed behind and proceeded to do the same buyout approach next time the company needed to save money. It was a natural selection feedback loop that took the company's engineering talent into the gutter.
  - mprovost 5y ago
    Bruce Webster named this the "Dead Sea Effect". [0] Imagine your talent evaporating, leaving an increasingly salty residue. [0] http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-dead-sea-effect/ http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-d...
  - onlyrealcuzzo 5y ago
    I think the practice is old, and /might/ have once made more sense. If you offer a buyout to a bunch of people in a factory with no real alternative, you're selecting for the people who want to do nothing - which is probably the people who are doing (close to) nothing. If you offer a buyout to a bunch of people with real alternatives, you're going to mostly buyout the people with the best alternatives (the most marketable employee / the most productive). This is amplified by the fact that factory workers really have a minimum amount they must be productive. Whereas software engineers can LITERALLY do nothing. Further, factory workers have a pretty low limit on how productive they can be. The limit is much higher for software engineers. It's an old practice that might have made sense, but definitely does not make sense in software.
mattkevan 5y ago
That’s happening where I work. There was a shock round of layoffs a few months ago, triggering a mass exodus. They’ve now had to start hiring again to make up numbers. The amount of team disruption, lost domain knowledge and hiring expenses, especially as new people will want to be paid more, must have cost the business far more than they saved from the layoffs. So short sighted.
- ThrowawayIP 5y ago
  I'm sure your CEO got their bonus though, if not a premium on the bonus because they lead the company through such hard times.
hn_throwaway_99 5y ago
Just to be slightly contrarian, I've also seen in tech companies that layoffs are often the only way to get rid of "mediocre-ly poor" but not egregiously bad performers. That is, I've worked with people that didn't completely suck, but to quote Office Space, they always did the absolute bare minimum. Few companies have the Netflix mindset of letting people go with a large severance if they aren't top performers, so these mediocre folks can just be allowed to fester. TBH, I've been glad as an engineer to see the company (belatedly) handle these sub-par performers, and to these folks benefit they get a fair severance and can usually find other jobs quickly. Of course not all layoffs are like this, and often times layoffs at a large company are done "unevenly" as others have pointed out, but I have been in a company before where layoffs allowed the company to focus and perform better.
- kradeelav 5y ago
  I understand the annoyance at underperformers (I really do), but that feels a little, mm, unkind on some level. Some people just want a steady paycheck without having to be a rockstar, and I can't blame them for that.
  - hiptobecubic 5y ago
    There's a difference between "I don't want to be a rockstar" and "I am doing the bare minimum to make it not worth it to fire me." I think the post is talking about the latter.
    - dan-robertson 5y ago
      How does “I’m doing the bare minimum to make it not worth it to fire me” compare to “I’m being paid a larger proportion for the value I create” for you? To clarify, the former happens by decreasing output and the latter by getting paid more for existing output and obviously can be harder to achieve in practice. In both cases the company could be getting (or feeling they’re getting) lower value for money from the worker.
      - 5y ago
jollybean 5y ago
Layoffs happen all the time. Most people are not 20-something people who can move across the country on a dime. Far from worrisome, the talent may be fine with losing what they view (rightly or wrongly) as the extra weight. A company in a bad downwards spiral is one thing, but this doesn't seem to be that. If there is a second layoff, maybe some fear would hit, but I don't think Arm is in a terrible spot. I wouldn't suggest that many people are thinking in dire terms.
ge96 5y ago
Corp I worked at would not raise their pay and a huge number of people just left. People with 20 years at the company. It was funny on LinkedIn you'd see people with a photo of their badge and one of the buildings in the background ex-employees "celebrates" this. The corp is in talks of getting acquired now.

socialdemocrat 5y ago

Idiotic strategy which is about as smart as pissing in your pants to stay warm. Big firings like this create bad blood, undermines loyalty to company and get many talented people to look at alternative companies to work. A talented organization takes time to build up but is relatively quick to tear down. Skill in this industry is not exactly easy to get hold of. Talent which leaves may prove very hard to get back.

ggreg84 5y ago
Their goal - and only option - is to sell the company for as much $$$ as possible, and this strategy helps them towards their goal. This is the simplest and most effective way to make Arm books look good, which is what regulators all around the world - including the UK - have decided is what's best for the world. So this is not idiotic, this is effective, and is finance 101. For Arm's long term success this is a very stupid decision. But that's not what any of the parties involved need or care about. What they care about is $$$ right now. I won't be buying and holding Arm stock, particularly not as a long term investment, cause it looks like its going to be a poor one.
- robert_foss 5y ago
  Pumping perceived share owner value is only in the interest of the owner of ARM, Softbank. This is the kind of pump and dump scheme that American investors are famous for. If indeed ARM needed to cut down on people, having a hiring freeze is the way to go.
blippage 5y ago
I think Jordan Peterson had a comment about that. You get rid of people you think are rubbish, but then the top people begin to wonder if they're next. So they leave, because they have options, whilst the whole company slowly slides into mediocrity. It's not like Arm are facing long-term financial difficulties, their market share is presumably as good as ever, so getting rid of staff seems a bad idea.
- KerrAvon 5y ago

justsaying12 5y ago

Arm has been hemmoraghing talent to direct competitors for the last year. Do a search on GraphCore, SiFive, Imagination Technologies etc. Not sure what went wrong, but people who have a clue have been bailing out left and right. Reminds me of Amazon also - Something similar happening at AWS. When Bezos left, lot of people streaming out the door. Steady talent exodus, and they are not the dumb people leaving. The great ones leave instantly. The trapped or mediocre (can’t leave…for some reason), too lazy, unmotivated etc stay and pay compounding interest and poison the company.

ggreg84 5y ago
What went wrong is that people learned how much NVIDIA pays, figured out they were significantly underpayed, Arm is not a very profitable business so couldn't compete, and the moment it started looking like the NVIDIA deal was not going to fly, top talent started jumping ship.
- pyb 5y ago
  It may well be that ARM could pay better if they wanted to. But the culture in Cambridge, and the UK, has been to pay engineers pretty poorly. So perhaps they don't yet understand that they need to. Also, salary inversion within the company would be a huge problem.
  - PaulKeeble 5y ago
    The UK seriously underpays software engineers, if US companies want to tap into the talent pool its relatively easy to do so especially with remote work. The UK has a serious lack of management talent and a trickle up economy that is damaging everything and the economic situation is not great. Its primed for a big brain drain.
    - bencollier49 5y ago
      Can you elaborate on the Trickle-up Economy point. What do you mean by that? Why is it damaging?

swamp40 5y ago

You always see 10-15% cuts leading up to an IPO. Investors love it for some reason. It wouldn't surprise me if they intentionally overhired in anticipation of this. It's mostly not the technical talent.

belval 5y ago
> Investors love it for some reason. "Some reason" is a reduction of operating expenses which boost profit margins. From an investor perspective it makes sense, ARM is an established brand that has limited headroom to grow, you can't expect hyper growth from them so they need to make a case that the ROI is worth it, especially now that a buyout is off the table.
- marcosdumay 5y ago
  > "Some reason" is a reduction of operating expenses which boost profit margins. Well, that "profit" comes at the expensive of some difficult to measure forms of capital. It is very likely a net-negative for the company, but it does look good on the books.
avrionov 5y ago
I don't think that we always see 10-15% cuts before IPOs. Most companies continue to hire after successful IPO.
drexlspivey 5y ago
They overhired because it was part of the deal to sell to softbank > As part of SoftBank’s deal to acquire Arm for £24bn in 2016, the UK Takeover Panel stipulated that it would have to double its UK headcount over a five-year period, which stood at 1,600 at the time. The requirement to do so expired last year.
- ksec 5y ago
  Really wish this was the top comment, It would save at least 90% of the comments in this thread.
5y ago

armheadcount 5y ago

https://www.telegraph.co.uk/technology/2020/10/11/arm-racing-double-uk-staff-headcount/ https://www.telegraph.co.uk/technology/2020/10/11/arm-racing... I wonder if it's related to this?

toss1 5y ago

>> "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done." Sounds good, but it is extremely likely a strong sign that the executive suite does not know what they are doing. A company cannot achieve greatness by cost-cutting. This is especially so in these times where it is so hard to find talent. Even if there are some redundancies, your key asset is an existing talent pool that has already been recruited and is up to speed on your products, technology, and internal processes. Strategically redeploying them to greater effect is a sign of knowledge & strength. Merely cutting and hacking is a sign of either incompetence, or that they DGAF and are trying to temporarily make the numbers look better for some near-term result (e.g., the likely pending new China IPO mentioned in the article), and leaving the resulting problems for their successors to deal with. It is really rather obscene.

michelb 5y ago

About the same amount that would have had to leave if the takeover went through?

acomjean 5y ago

Kinda Galling when Arm walked away with over 1.25 billion dollars after the Nvidia deal collapsed. that pays a lot of salaries. https://www.theregister.com/2022/02/08/arm_cancels_sale_to_nvidia/ https://www.theregister.com/2022/02/08/arm_cancels_sale_to_n... "Under the terms and conditions agreed by the companies, SoftBank Group will retain the fee of $1.25bn paid by Nvidia (this will be recorded as a profit in its fourth quarter) and Nvidia will keep hold of its 20-year Arm licence."

PeterisP 5y ago
Well, Arm did not walk away with that fee, Softbank did - that money was never going to enter the company even if the deal went through.
- hackernewds 5y ago
  Great outcome for SoftBank
  - perfopt 5y ago
    Better outcome would have been the deal went through
- acomjean 5y ago
  Good point. Though if I own an asset that made me over a billion dollars for basically doing nothing, I might consider reinvesting at least some of it...
  - twblalock 5y ago
    Softbank doesn't want to invest in ARM. That's why they are trying to sell it.
    - marricks 5y ago
      There's always a lot of disconnect between folks talking about how the world should work and how it does work. Seldom does switching between those modes leading to productive conversations.

cultofmetatron 5y ago

this is great, 1k people to now start working on riscV

smk_ 5y ago

While speaking from limited expertise, it is my general understanding these layoffs are a vital part in keeping a company lean and reducing bloat. Over time, in any company, some roles will be made redundant and is the reason for these occasional layoffs. If I was an investor, I would see this as a good sign of vision and a clear direction. They say so themselves: > "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done."

phendrenad2 5y ago
Exactly. When faced with a slowdown in demand you can either be IBM and cut aggressively, or you can be DEC and keep people employed working on inane doomed projects until the company falls flat.

999900000999 5y ago

Any chance of seeing these talented folks start new Chip design shops. The person who can create a fab for less than a few million, while offering competing performance will be very rich. Every bigger country will want some capacity to build chips.

phendrenad2 5y ago
Everything competitive is locked up in patents, but maybe with the chip shortage there's room for more competition for existing chips. Question is: can they get seed funding?
- 999900000999 5y ago
  https://www.wired.com/story/22-year-old-builds-chips-parents-garage/ https://www.wired.com/story/22-year-old-builds-chips-parents... It's possible to build something with next to no money, and I can't imagine it impractical to see some senior engineers gathering together and making a good funding pitch

bogomipz 5y ago

From the article: >"Arm China, meanwhile, is contemplating a float of its own. The rogue Arm outpost, which is led by CEO Allen Wu and majority owned by Chinese entities, has become something of a problem for Arm because Wu was fired but has managed to retain his position." Is this not a huge meatball that ARM has hanging out here? Further from a link in the linked article[1][2] >"Following the investigation of Wu by Arm and Hopu, the Arm China board voted 7-1 to dismiss Wu. Given Wu’s refusal to vacate his role, Arm is growing anxious over the security of Arm China’s intellectual property, assets and finances, according to the people with knowledge of the matter." How would any investor ever feel confident in investing in ARM unless this is resolved? Even if it is resolved what are the assurances that the IP is actually safe? This sounds like a debacle. Is this something that happened on Softbank's watch? [1] https://www.scmp.com/tech/big-tech/article/3168443/arm-china-ceo-asserts-semiconductor-joint-ventures-right-pursue-ipo https://www.scmp.com/tech/big-tech/article/3168443/arm-china... [2] https://www.scmp.com/tech/big-tech/article/3089901/softbank-chip-company-arm-fired-its-china-ceo-starting-competing-fund https://www.scmp.com/tech/big-tech/article/3089901/softbank-...

Gareth321 5y ago
>Is this not a huge meatball that ARM has hanging out here? Further from a link in the linked article Yes, but mostly no. Most of ARM's market cap is tied up in IP; much of which is publicly available knowledge anyway. Wu stole said IP, but he has very few markets in which he's legally allowed to sell. It would be like someone setting up another Disney in China. Okay, so you can sell Mickey Mouse branded clothing in China, but you're definitely not going to be able to sell in any modern market. ARM got off light. Millions of Western businesses have been destroyed this way. It should be a stark warning for companies setting up shop in China: they will steal your technology, your IP, your facilities and assets, your trade secrets, your branding and trademarks, and all your equity. The government permits and encourages this. It's only a matter of time.
- bogomipz 5y ago
  Couldn't he sell ARM designs to Chinese companies who produce products with those chips in them and then those companies sell products with ARM IP in them both inside and outside of China? That would seem to be global market no? Or would WTO step in and put a stop to it? >"Wu stole said IP, but he has very few markets in which he's legally allowed to sell." Is this the consensus pretty much then?

Traster 5y ago

To be honest, Arm doubled head count of the last 5 years, and really haven't delivered. So it wouldn't be surprising to me that their costs are way too high compared to comparable companies. Having said that successfully getting back down to the correct head count is probably impossible. You just can't figure out who is essential, and you can't re-assure the people you want to stay, so the people who can leave, do leave, and you're left with the people you wanted to get rid of, but know you can't get rid of them because they're the only ones you have left. Then the good people who didn't leave take a look around and realize they're no longer working with the smart people they thought they were working with and start looking to leave too. And it's easier for them to leave because they've suddenly got a load of contacts at competitor companies.

dclaw 5y ago

Thanks IPO

amelius 5y ago

> "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done." In other words: we have no clue how to make use of a large force of capable workers.

roflulz 5y ago

Makes sense. Back in the day, AMD did massive layoffs and then started to go up.

perfopt 5y ago
They did massive layoffs because they were almost out of money thanks to inept management. They bounced back thanks to much better management
- rasz 5y ago
  When you say inept management do you mean Intel abusive monopolistic anti-competitive behavior or Bulldozer? :)

hndamien 5y ago

Nvidia should hire them.

pipeline_peak 5y ago

> "To stay competitive, we need to remove duplication of work now that we are one Arm; stop work that is no longer critical to our future success; and think about how we get work done." That sounds like a company losing its grip. In this case to the likes of Apple and all the other companies designing closed off Arm derivatives.