200 Layoffs at Google

Hey, it finally happened. Yesterday, Google announced that it would be laying off 200 people, joining the rest of the world in acknowledging the hard times. The news spread far and wide, with bloggy tech observers wondering what it portends for the company. Here's what: not much. Remember, Google has more than 20,000 employees, so these layoffs amount to fewer than 1 percent of the company's roster. In addition, as New York Times reporter Miguel Helft points out, this isn't the first time Google has dropped employees, despite what many people assume. Google axed 300 jobs from its display ad arm DoubleClick last year, let go about 100 people who headhunted engineering talent earlier this year, and eliminated 40 positions when its radio programming project went bust. Meanwhile, the company's stock has climbed out of the crater it found itself in earlier this month, when it dipped below $300. Google is currently hovering around $350 a share. So it's not the biggest tremor to hit Silicon Valley.

But this is Google, the company that had the potential to do well in recessions as well as in the boom times; it's its own little hedge fund, or so people thought. So folks are intrigued nonetheless. Omid Kordestani, Google's head of global sales, wrote in a blog post that the cuts would take place in the company's sales and marketing division, adding that the company just grew a little too fast. "It's almost impossible to get everything right—and we certainly didn't," he wrote. "In some areas we've created overlapping organizations which not only duplicate effort but also complicate the decision-making process. ... In addition, we over-invested in some areas in preparation for the growth trends we were experiencing at the time."

Interestingly, the layoff memo was penned by departing veep Tim Armstrong, who ran the company's American sales operation and has just jumped over to run AOL. Silicon Alley Insider has the memo. "Please offer whatever help you can to your colleagues in their search for new opportunities both inside and outside the company," he wrote. "These changes represent a challenge for our entire organization, but most profoundly to those who have been affected by them directly." Maybe Armstrong knows of a few openings over at AOL? Somehow, we doubt it.

Analysts praised Google's decision, with Jeffries & Co. Googlewatcher Youssef Squali telling Bloomberg that the company has finally found "religion" on financial discipline. But Henry Blodget's not so sure. "Google's slowdown will likely be far from disastrous," he wrote. "But most estimates for the company's growth over the next couple of years, in our opinion, are still too high."