Mary Hodder, a UC Berkeley graduate student who is well connected in the Valley, first reported the rumblings last night on Twitter. "We think [Google] is quietly laying [people] off so as not to alert press. [Managers] have mandate to reduce [headcount], no matter how critical the project," she wrote.
Google hadn't responded to my requests for comment as of this writing. But imagine if Hodder is correct. The more-than-20% gain in its shares since reporting bear-busting earnings suggests that we investors think of Google as something more than your average techie. We rank the Big G above Yahoo! (Nasdaq: YHOO ) , Microsoft (Nasdaq: MSFT ) , Cisco (Nasdaq: CSCO ) , and Sun Microsystems (Nasdaq: JAVA ) , which, combined, have eliminated close to 16,000 positions since October.
So if the rumor about Google laying off engineers is true, what does that mean for shareholders? These are the guys behind the Big G. Cutting them out would be one big mistake.
Think of the timing. CEO Eric Schmidt recently told investors to expect $460 million in non-cash charges to reprice stock options and retain talent. But if Google is so desperate to cut costs that it is clearing out engineers, is it really going to be able to shed $460 million from its talent payroll? Yet cut anything less, and engineering reductions would be -- for shareholders, at least -- a net loser. I suppose I'd be quiet, too.
Hodder, meanwhile, says she's seen proof of the cuts, citing documents in a response to Seesmic.com founder Loic Le Meur, another well-connected entrepreneur. Hodder also spoke of worn-out coders working 18-hour days and, for the recently cut, meager severance plans. Not exactly the sort of news that inspires shareholders, is it?
Nope, especially when Hodder isn't the first to write of engineering layoffs at the Big G. Owen Thomas of Valleywag recently reported that executives were preparing to cut 5% of the engineering staff.
I hope they're wrong; the options repricing is evil enough. Yeah, I understand it's probably a necessary step to thrive in the Valley's options-obsessed compensation culture. Boo-freaking-hoo. Google has close to $16 billion in cash and short-term investments. What's the point of all that moola if it isn't to attract, retain, and train coding talent?
Or maybe the bigger question isn't if Google is laying off engineering talent, but rather why would it want to now, when it's better positioned than most peers? If you can answer that, Fool, you're smarter than I.
Have a different take? Are you able to comment upon or confirm the rumor? Write to me here. I'll follow up the minute there's more news to report.
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