Thursday, February 12, 2009

My Layoff Fallout Clock

Layoffs take a toll, even on survivors

Those consequences are, unfortunately, long-term. The psychological fallout of surviving a layoff lasts six years, according to the study published by the Institute of Behavioral Science. And the effects of surviving multiple layoffs are cumulative.

The effects are cumulative? Wow! That sure explains a lot. This is a relatively long post but it may be worth some amusement should you wish to continue reading.

I moved to Seattle in 1988. I worked as a software programmer at a small consulting company for 18 months. It went under and I was laid off. I'm going to assume that being laid off is at least as bad as surviving it. Therefore, add six years to my fallout clock.

In 1990, I worked as a software programmer for a Japanese landscape company. 18 months later our US branch was shut down and I was laid off. Add six more years to my fallout clock. That brings me to 12 years of fallout.

In 1991, I started work at Sierra Entertainment. It is there that I hit the layoff fallout clock jackpot lottery.


Sierra Entertainment

On April 3, 1997, Sierra announced that the staff of the old company headquarters in Oakhurst would be reduced by almost 50%, relocating about 90 people to CUC Software’s facilities in Torrance.

Add six years. That's 18 total.

The irregularities were in the area of several hundred million dollars and when the news was announced and the real numbers revealed in the end of September, the Cendant stock instantly plummeted to about one fourth of its former value. As a result, the company was sued by its shareholders and the former CUC management team was terminated.

The CUC management team was terminated. Considering that I instantly lost several years pay in the form of worthless stock options, I'd like to add six more years of fallout. We're up to 24.

In March 2001, Forbes and Shelton were indicted by a federal grand jury and sued by the Securities and Exchange Commission, accused of directing the massive accounting fraud that ultimately cost the company and investors billions of dollars. Sierra and Davidson were among the many Cendant subsidiaries that had been used in the irregular bookings and Cendant had already announced its intention to sell off its entire computer entertainment division when the news of the accounting fraud came. Sierra was one of many companies that suffered great losses because of this affair even though it had been totally out of the management’s hands. Many of its employees lost their pensions, their net worth and even their jobs. The following years would be filled with aggressive endeavors to restore the profitability of the company.

I certainly felt my net worth drop. I'd sure like to add another six years, but not because of that. Instead, I'd like six years simply because we hit the front page of the Wall Street Journal for a solid month due to fraud. However, since it isn't technically a layoff, I'll keep the total years of fallout at 24. Fair is fair.

On February 22, 1999, they publicly announced a major reorganization of the company, resulting in the shutdown of several of their development studios, cutbacks on others and the relocation of key projects and employees from these studios to Bellevue. This decision was made by Sierra's own management, not by Havas. Studios that were shut down included PyroTechnix, Books That Work Inc. and Synergistic Software. Headgate was sold back to its original owner and the publishing of Sierra's InterAction Magazine was discontinued. About 250 people in total lost their jobs.

Six more! We're up to 30 years of layoff fallout now.

But the shutdown that received the most attention was that of Yosemite Entertainment.[citation needed] With the exception of the warehouse and distribution department, the entire studio was shut down.

Same layoff. We're still at 30.

40 people, critical to the development of Babylon 5 and Middle Earth (the other projects were dropped) were offered to relocate to the company headquarters in Bellevue and continue with the development, and eventually about 30 people moved from Oakhurst to Seattle.

They aren't laid off yet. I'm just warning you in advance. Some of these people will soon be walking by my office door and joking about "Dead Men Walking." Keep in mind that they survived one round of layoffs, relocated, but will get laid off anyway. We're still just at 30 years of fallout as it relates to me though.

But the bad news did not even end there.

Of course it didn't!

At the same time, legendary game designers Al Lowe and Scott Murphy were fired.

We're still 30. It's part of the same layoff. Things appear to be stabilizing. Or are they?

Layoffs continued on March 1, when Sierra fired 30 employees at the previously unaffected Dynamix, 15% of their entire workforce.

That's 36 years of fallout.

In June 1999, Ken Williams shut down TalkSpot and laid off its employees.

That one doesn't count since it didn't really enter my thoughts. Ken Williams already left Sierra.

This reorganization resulted in even more layoffs, eliminating 105 additional jobs and a number of games in production, including Desert Fighter and Pro Pilot Paradise from Dynamix, Babylon 5, the much awaited game started at Yosemite Entertainment and Orcs: Revenge, a Berkeley Systems title. This was announced on September 21, 1999.

Sweet. We made it to 42 years of fallout. What's 42? For those who have seen the Hitchhiker's Guide to the Galaxy, it is the answer for everything of course. It explains why I am writing an Illusion of Prosperity blog. It also explains why I actually quit my job. I was 35 years old and had accumulated 42 years of layoff fallout. I figured that was probably enough.

These final cuts eliminated most of Sierra’s prominent development teams and projects, and so 1999 proved to be the last year that Sierra developed any of its major titles in-house.

Ask me if I have any regrets?

On January 23, 2001, Vivendi announced the closure of its division Flipside.com’s Bellevue offices, costing 39 people their jobs.

I'm already gone. No more fallout.

In early August the same year, WorldStream Communications was one of the many victims of the dotcom crash, and the company was forced to shut down and laid off its 87 employees.

I'm gone.

On August 14, 2001 Sierra On-Line let the axe fall on Dynamix for the final time and closed the development studio for good. 97 people lost their jobs.

Seriously. I left.

148 more people, at the main offices in Bellevue, lost their jobs on August 15, 2001.

Is it just me or is this getting a bit silly? Why didn't these layoffs happen as part of the previous day's layoffs? That's 12 years of layoff fallout for the survivors, when it only needed to be 6 years.

Layoffs continued on November 9, 2001. Sierra laid off more than 39 employees at the headquarters in Bellevue, which included Bellevue’s entertainment teams.

Did you sense the trend? Did you see that layoff coming?

Even with quite a few recent successes, Sierra’s long history came to a close with a few short strokes in 2004, Sierra’s 25th year of business. Cost-cutting measures were taken, due to parent company Vivendi’s financial troubles, and due to Sierra’s lack of profitability as a working developer: Impressions Games and the Papyrus Design Group were shut down in the spring, and about 50 people lost their jobs in those cuts;...

How about that one?

...180 Sierra-related positions were eliminated at Vivendi’s Los Angeles offices; and finally in June 2004, VU Games laid off most of Sierra’s final employees at Bellevue, which cost over 100 people their jobs, and dispersed Sierra’s work to other VU Games divisions. Other titles, such as Print Artist, were discontinued totally; The Hoyle franchise was sold to an independent developer. In total, 350 people lost their jobs....

Or that one?

...The lights went out at the offices in Bellevue, creator of hundreds of memorable Sierra titles and home of so many memories for all of Sierra’s fans, for the last in time in August 2004. Vivendi announced that the Sierra brand name and logotype would still be used on VU Games products, run out of VU Games headquarters in Los Angeles.

Or finally that one?

I worked in those offices in Bellevue. Had I survived until the very end just imagine what my layoff fallout clock would have been? Better still, imagine what I would have named this blog, lol.

10 comments:

AllanF said...

Maybe you've mentioned this, but if so I missed it. My recollection was you cashed out in the dot-com bubble. Now I see you lost a ton on Cendant. So, did you have other investments in tech, or were the pay-outs at Sierra enough to overcome the Cendant options set-back?

I've got to say the similarity in our stories is a little uncanny. I am (er, was) a sw engineer at Wind River. I moved to Portland from the midwest in 2000, just catching the tail end of the dot-com. I was able to get hired, but none of my options ever amounted to more than a nice vacation. I did weather 3 lay-offs, actually 4, counting the one in 2008 which happened a few months before my "retirement" last August. So anyway, I made enough off the housing bomb (as I like to say, Woohoo Wamu!) to retire at 35. It's been nice. I thought I'd be more productive doing personal projects/hobby stuff than I am. When I'm honest with myself and look back my history even from grade school, procrastination really is my life's calling.

I did get to attend a friend's trial for resisting arrest this week. It was pretty big, had a jury and everything. It lasted two and a half days and I sat through all but two hours. It was incredibly interesting and I learned a lot. And he was found not guilty, so that's cool.

I'm not without ideas though. I've been toying with the idea of buying a big motor home and hang-out with all the oldsters on the land yacht circuit. I figure we'd be the black sheep of every campground as a 30 something couple with two pre-school age kids. Alternately, a train ride around the world: Oriental Express Singapore to Bangkok, then ride the newish Tibet to Beijing train, then catch the Trans-Siberian from Beijing to Moscow, then maybe finish up by riding the TGV into Paris. (Yeah I know there's quite a few gaps in that itinereary.)

Stagflationary Mark said...

AllanF,

It was an investment in a low-tech collectible card game company that was my lucky break. After reading the business plan and believing that the game would be addicting, I handed a check to the president in my friend's basement. I was also fortunate that it was a private company, since I was forced to buy and hold (until Hasbro bought the company).

That ended up being roughly five years of very serious nail biting. When it did finally pay off, I intended to keep working. It was 1999 and I didn't think I had enough to retire. My job was in free fall mode though so I quit.

I was 80%in the stock market (not counting my paid off home) when the dotcom bubble imploded. It hurt me pretty good but I rode it out. I'd fully recovered (and then some) by 2004. I was fairly diversified and was heavily weighted towards unpopular old school stocks thank goodness. I sold them all. It felt like it was yet another lucky break, because I sensed the bubble wasn't even remotely done handing out investment pain. I put a third of my nest egg in gold and silver only to sell all of that when they went parabolic in 2006. It's most likely TIPS and I-Bonds from here on out. If If end up being financially ruined, then at least the risk takers will be ahead of me in line.

I was very tempted to do a sailboat version of your RV dream. Nothing fancy, maybe just a 35 footer. That isn't going to happen now though. Can't see me living on a boat that small with a girlfriend, dog, cat, bird, horse, and piano while also trying to play Rockband in what looks to be a never ending global economic nightmare, lol. Sigh.

dearieme said...

jerusalem artichokes: plant a few and live through winter on the lovely soup they make. The only downside: farts. But you can blame the dog.

Stagflationary Mark said...

dearieme,

Makes sense. Congress has been blaming the dogs of the dow for stinking up the place (and begging at the table) even though we can clearly see what those dogs were "Fed".

mab said...

Stag,

You have opened up a huge lead. Very impressive. I'm going to need a serious second half of the depression (un)recovery to win or um.. lose this race.

http://finance.yahoo.com/echarts?s=COF#chart1:symbol=cof;range=5y;compare=coh;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

I've been thinking about Long Term Capital (mis)Management as it applies to our (e)CONomy. Exactly what happens when genius fails (to find more fools)?

I'm not worried about Eddie Lampert yet. As long as Cash Loan City is around, Eddie will still be a genius in my book.

Stagflationary Mark said...

mab,

"Strange" minds think alike! I can't believe you just had me look at COF. I was just looking at a chart of it that I made in Excel.

Picture the chart going back to 1995. Picture an exponential trend line titled "Expectations". Picture a third order polynomial trend line titled "Realizations".

I'm not worried about Eddie Lampert yet. As long as Cash Loan City is around, Eddie will still be a genius in my book.

No worries. He's protected by a SHieLD.

http://finance.yahoo.com/q/bc?s=SHLD&t=2y&l=on&z=m&q=l&c=cof

AllanF said...

Angel Investor? Stag Mark!?! Hahaha. Thanks for filling in the rest of the picture.

And it gets even more uncanny. I'm going to be investing in my friend and former co-worker's not-quite start-up (it's actually 4 years old) in the next few weeks. I verbally committed last fall, when the correction was going on, but before it got totally nuts. I've been nail biting ever since and haven't even cut the check yet.

As for the sailing, you may remember me mentioning I entertained that as well. What largely cured me was reading, "World Voyagers" by Amy Wood. She tells-all about the seldom mentioned downsides: sea sickness, boredom, sea sickness, so-so food, and boredom. With two pre-school aged youngin's that seemed like an environment for disaster. And I should say it was a pretty cool book. While she was certainly bored, her story was not. Go figure. I guess that's one way to measure the talent of a writer.

Stagflationary Mark said...

AllanF,

She tells-all about the seldom mentioned downsides: sea sickness, boredom, sea sickness, so-so food, and boredom.

The worst would be the lack of sleep one might get during a neverending storm. You know, kind of what I get now as I look at our economy! And let's not forget pirates. I'm talking about central bankers of course, lol.

My grand plan would have worked around these issues though.

First, I was picturing living aboard locally. I'm a homebody! I have/had no great desire to leave Puget Sound and see the world. I'm more of a grass is looking pretty green on this side of the fence kind of person.

Second, I am NOT easily bored. I grew up in a small farming community (town of just 800), both my parents worked, and we were not farmers. It therefore takes a LOT to bore me. The best part was having my summers off. What did I do? Not much!! But seriously, I enjoyed it and it very much influenced me to want to retire early.

In fact, when I got my job at Sierra I was asked what my goals were. I told them that I wanted to retire early and would do whatever it took to see that happen. They seemed to like the answer. They hired me. I meant it too. I worked very long hours to speed the process along. I was working on a burnout pace and man, did I ever burn out. I'd stock shelves in a bookstore before I'd ever even consider doing that again. Fortunately, Plan B (investing) paid off because Plan A (working at Sierra) sure didn't.

I used to live in an apartment overlooking the water in downtown Seattle. I enjoyed just sitting out on the deck watching container ships come and go. NOT easily bored. ;)

One of the highlights of living downtown was the day I woke up to see what was my normally good view of the waterfront obscured by the amazingly fast construction of a new office building. It was the weirdest thing! Well, right up until I realized that it wasn't a new office building at all. It was actually the tower of an aircraft carrier! NOT boring!

Did I mention that I am NOT easily bored? Of course, you might be if you read all of this, lol. ;)

Stagflationary Mark said...

AllanF,

Angel Investor?

Wizards of the Coast!

I was at a local game store just after the cards went on sale. There was a guy in there buying some. He paid for them with cash. He opened them up and searched through them. He didn't find what he was looking for. He then went back and got some more cards. He paid for them with a credit card. He turned to me and said, "Magic plastic!"

I will never forget that. If he only knew what I was thinking at the time. That was my first real indication that I had made a good investment. I thought, "Magic plastic? You don't know the half of it!"

Wizards sold to Hasbro Inc., will collect $325 million
http://seattlepi.nwsource.com/business/wiz10.shtml

I was not a big investor by any stretch of the imagination, but I was big enough apparently (assuming this economy doesn't quickly drain my modest nest egg that is).

I was driving a Hyundai when I invested five years previously. The car was a piece of crap (many, many problems), but I'll be darned if continuing to drive that piece of crap car didn't help retire me though.

Hindsight shows that buying a new car to replace it (very tempting) would have been extremely expensive. For example, one of my coworkers was thinking about investing. He liked the cards. Ultimately, he decided to put new tires on his truck instead. I'd estimate those tires ended up (opportunity) costing him roughly $75,000. Each! That's $300,000 total. Behold the power of painful hindsight.

Two years later I bought a Camry. The year was 1996. I'm still driving it. I'll be darned if I end up working for a full extra year someday just because I thought I needed a nicer car. That's yet another opportunity cost I'm not willing to pay.

Stagflationary Mark said...

AllanF,

Here's yet another attempt to bore you, lol.

Here's a glimpse of the very last stock I owned. I sold all the rest in 2004 but held onto this one for a little longer (still sold it in 2004 though).

http://finance.yahoo.com/q/bc?s=HANS&t=my&l=on&z=m&q=l&c=

Had I stayed in the stock market that stock would have done nearly as well for me as the investment that retired me.

I bought it in the late 1990s. I saw their products in Costco and liked that they kept trying new things. You can see my patience in the chart. 2000? Not much happened. 2001? Not much. 2002? Nope. 2003? Turning parabolic. 2004? Bingo!

I made six times my money and still missed the vast majority of the ride. 2005? More parabola. 2006? Even more parabola. 2007? Another parabola. Oh well!

Contrary to some, I don't believe that buy and hold actually died. The trick is to figure out what's worthy of buying and holding, just like it has always been. That means investing in things with strong funadamentals, being patient, and then letting nature run its course.

I wish I could have had more faith in the fundamentals of our banking system when I turned bearish.

Buying and holding puts against our entire banking system worked out pretty darned well for those who were short.

I wish I knew what had strong fundamentals right now, but I just don't see that many screaming bargains.

Gold is nearly four times more expensive than it was at the bottom. TV ads flood the airways.

Stocks are looking cheaper, but I'm not convinced they actually are cheap. I'm certainly not willing to take the risk to find out, especially since I don't need to. In fact, I hope they are cheap. I'd much prefer investor money flooding back into them instead of commodities at some point.

Bonds are looking dangerous if we print too much money, which we seem to be doing.

Bonds are also looking dangerous if we don't print enough money, and actually decide to stop paying our debts entirely.

Real estate? I'm trying to picture it in a future economy with no jobs and Japanese style population declines brought on by never ending financial insecurity. No thanks.

Cash? That's the last thing I would ever consider burying in my backyard for 30 years.

Does that mean buy and hold is dead though? I don't think so.

Oil seems like a safe long-term bet from these levels, although the short-term doesn't look that great. I'd also prefer to hoard the actual oil which is not all that easy to do clearly.

Toilet paper! Very strong fundamentals. It's good in good times and bad times. Toilet paper is free of fraud. It has no ability to cook the books. It can't be left swimming naked when the tide goes out. What about mark to market? I'll never be forced to sell it to the next guy at HIS price. And lastly, the toilet paper to gold price ratio is looking really, really good to me (or bad, depending on how you look at it).

Canned goods continue to look good. So is rice and ammunition. Sigh.

It isn't that I love TIPS and I-Bonds. I don't. They just seem better than most alternatives and have been since 2000. I tend to think that trend will continue for far longer than most expect. I say most, because I think the government realizes it. I don't think they reduced the amount of I-Bonds we can buy each year because they were trying to protect us. Let's just put it that way.

Did I mention that I'm NOT easily bored? Hahaha! ;)