Wall Street Journal: Google To Lay Off Contractors

Google may still be the Internet’s 400-lb. gorilla but the global economic crisis has given the company an ass-beating that it and its employees won’t soon forget.

Despite its ability to hold up quite well thus far in a tough environment, the company isn’t nearly as recession-proof as top executives believed: after hitting a high of $714.87 in December 2007, shares of Google stock closed yesterday at $257.44. The rally that has seen the Dow swing up 1,000 points in two days hasn’t done much for the company that was once was of Wall Street’s favorites – GOOG actually lost $5 while the rest of the market was rallying.

A significant number of Google’s employees now have stock options that are underwater and it’s even apparently cutting back on food and free snacks.

But the one thing it hasn’t yet cut: staff. The Wall Street Journal, however, is reporting that this is about the change; Google contractors are on the chopping block.

According to the Wall Street Journal, Google will be “significantly” cutting back on the number of contractors it uses. As per Reuters, Google maintained approximately 10,000 contractors at the end of the third quarter. “Significant” cuts would therefore equate to a significant number of laid off contractors.

Google, of course, is a bellwether for Silicon Valley and if the Wall Street Journal’s report is accurate, this should leave little doubt that the fun and games are coming to an end.

While I certainly won’t fault Google for taking steps to deal with the economic environment, the company’s hubris in so many aspects of its business over the years certainly has certainly made the drop in the company’s stock price somewhat amusing to watch.

From its arrogant stance vis-à-vis copyright owners and ad agencies to the odd behavior of its bourgeois liberal founders, Google is one of those overachieving companies that one just has to kick while it’s down (disclosure: I’ve taken some of Howard Lindzon’s money on the way down).

But there are areas where I think Google is deserving of real criticism. Its hodgepodge portfolio of failed products has always been curious to me. Some have believed that Google has an as-yet-unknown master plan for expanding its search dominance to the rest of the Internet but one need only look at Google Apps or even Chrome to see that Google has struggled to do anything substantive outside of search, relatively speaking.

And those are two of its more successful non-search products.

Most of the time, Google’s new product strategy amounts to “pray and spray,” although in the case of products like Lively, it seems as if Google has an enlarged prostate and can’t even get the spray part going properly.

Yet Google continues to stick its nose where it doesn’t belong. Like energy. Now one might argue that Google has a vested interest in energy because it’s paying for a lot of it.

But let’s get real. Google’s involvement and investments in energy go beyond this and make about as much sense as Burger King getting into auto manufacturing because its customers have to drive to get to its restaurants.

When one looks at all of Google’s distractions and the half-assed job it’s done launching products in its disparate portfolio of “experiments,” it’s kind of hard not to feel bad for the soon-to-be former Google contractors (and foolish Google shareholders like Howard Lindzon).

Maybe if Eric Schmidt and the two space cadets at Google had stayed on top of their game, those contracts would still have their jobs (and those investors their cash).

Some humble advice to the Google trio from someone still working his way up to a jumbo jet: handle your business or it’ll handle you.