|Jobs discloses plans for IPO; lays off 30|
by Clair Whitmer
Redwood City, CA: In back-to-back revelations last month, NeXT Computer announced the layoff of at least 30 employees while at the same time disclosing its intent to become a public company, possibly within 18 months.
Attributing the layoffs to changes in sales and marketing strategies that had bypassed some positions, NeXT let go of approximately five percent of its 600-employee work force. The cuts came from all areas of the company, including five people from the engineering department, usually a sacrosanct area in a start-up technology company.
A company spokeswoman said the cuts were related to third-quarter sales, which NeXT officials confirmed were disappointing (see story, page 3).
The company is "flirting with profitability," said NeXT CEO Steve Jobs, and a reduction in costs could make the bottom line more attractive. But, he added, the savings won't show up until next year because of severance expenses.
NeXT had hired approximately 300 people during the past 18 months, a period that saw the NeXT system positioned as a "PC on steroids," said Jobs. But sales analyses soon demonstrated that the machine was being purchased by medium and large corporations for "mission-critical custom apps," he added.
This meant that some of the people hired for the original strategy were no longer mission-critical for NeXT.
Though layoffs are always problematic, most analysts seemed nonplused by the announcement. "Thirty people is just about the right proportion compared with what the industry is experiencing," said Darcy Fowkes, a research manager at International Technology Group in Los Altos, California.
After the layoff decision had been made, but before it was announced, Jobs unexpectedly confirmed that the company intends to go public.
"We're definitely going to go public within 12 to 18 months. And the reason is that our customers want us to," said Jobs at a press conference at Unix Expo last month.
The spokesperson said Jobs had meant the statement as an off-the-cuff confirmation of a common assumption, but it served to soothe anxieties caused by the layoffs.
· Dan Lavin contributed to this story.