The next threat to your job is already looming on the horizon. It could come into play as early as the second half of 2007 -- even if the economy as a whole stays relatively strong.

That would be a huge reversal of recent good news on job losses in the U.S.

Layoffs announced in 2006 fell by 22%, according to a survey by outplacement specialist Challenger, Gray & Christmas. The number of layoffs in the Challenger survey was down 57% from the peak in the current layoff cycle that began in 2001.

The Challenger survey isn't especially comprehensive, since the company surveys only a fraction of the companies that might be announcing layoffs, but it is a good indicator of the trend in the labor market. And that trend is definitely positive. As I've argued, the flow of U.S. jobs overseas, a big part of the peak in layoffs in the past few years, is definitely slowing.

But don't get too comfortable.

If your job is less likely now to be outsourced overseas than was the case a couple of years back, that doesn't mean your job is safe. I can already see the first signs of the next big thing in layoffs. It was built on Wall Street and financed with cheap money from around the globe. I'm talking about the boom in acquisitions, both public and private deals, in 2006.

What's the first thing an acquirer does after the deal is signed?

We all know the answer to that. It fires workers to achieve the "cost savings" that were touted as a key reason for doing the deal in the first place. Wall Street demands them, and CEOs, with their compensation frequently tied to achieving these cost-cutting targets, are only too "incentivized" to comply.

So the huge boom in mergers and acquisitions in 2006 is likely to be very, very bad news for workers in 2007.

How big was this boom? Record-breaking.

The total value of deals in which one company acquired another soared to almost $4 trillion globally in 2006, according to Dealogic, up about $500 billion from the record set in 2000, the peak year of the technology stock frenzy.

The private equity market -- where investors use a pool of money raised from private investors to buy a public company, delist its shares from a public stock market and take it private -- saw an even faster rise, to a global total of $750 billion, up 103% from 2005. Private equity deals accounted for 19% of all global acquisitions, up from 12% in 2005.

Downsizing Has Already Begun

The first layoffs from the mergers-and-acquisitions boom have started. For example, VNU, the parent of Nielsen Media Research and ACNielsen, among other media properties, in December began the first of a planned 4,100 job cuts, about 10% of the company's worldwide workforce.

VNU had been acquired in a $10 billion deal last summer by the private equity company Valcon Acquisition, which represents private equity investors AlpInvest Partners, The Blackstone Group, The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co. and Thomas H. Lee Partners. But most are yet to come. Public and private acquirers are by and large saying they're not planning any layoffs. No guarantees, they're quick to add, however.

I believe them, too -- at least until the acquirers need to produce a profit to justify their investment.

Which is why the high prices being paid in many of these deals make me worry that we will see layoffs no matter what the acquirers' intentions.

So for example, Freeport-McMoRan Copper & Gold ( FCX) has said that it's not contemplating any layoffs as a result of its $26 billion acquisition of Phelps Dodge ( PD). Fair enough. On paper the deal works just fine as long as copper prices stay near the historic highs they hit in 2006.

But if copper prices fall (and they've been moving lower recently), Freeport-McMoRan will be under pressure to justify the 33% premium to the last-traded share price it paid for Phelps Dodge. (Some pretty lofty expectations were baked into the price of Phelps Dodge shares even before the deal: Wall Street was already expecting 137% earnings growth from Phelps Dodge for the March 2007 quarter. The Freeport-McMoRan premium is on top of that.) Think job cuts and other "synergies" won't be on the table if copper prices retreat?

Or look at the $17.6 billion acquisition of Freescale Semiconductor by a private equity group headed by The Blackstone Group. The $40 share price in that deal represented a 36% premium to the share price before the deal.

I think this is a pretty savvy move by Blackstone and its partners, even with that premium. If Freescale moves to a fabless model -- the company would sell off its factories and hire a foundry such as Taiwan Semiconductor Manufacturing ( TSM) to manufacture its chips -- it could reduce its need for capital, increase cash flow and improve the predictability of earnings.

If the company combined with another semiconductor company -- say, the semiconductor business that these private equity investors just bought from Koninklijke Philips Electronics ( PHG) -- it could actually produce the synergies in research, product development, manufacturing and marketing that Wall Street so eloquently talks about. (The combined semiconductor company would be one of the 10 largest in the world.)

And I'm very sure that Blackstone and friends have figured out that they could easily load some debt on the balance sheet of this company, which right now, like a lot of technology companies, is just about free of debt. That would increase the return on equity at Freescale and might give the private investors a way to finance the sale of at least part of their stake back to the company at a favorable price.

But if the chip market slows or profit margins on new products disappoint, you can bet that here, too, job cuts will be on the table. No way are the investors in any of these private equity partnerships going to quietly accept a low rate of return.

Spiff Up for the Sale

The ultimate need for a profitable exit strategy also argues for layoffs as a result of the private equity boom of 2006. Private equity investors get their money back -- and produce their profits -- when they sell the company they've purchased to another buyer. Most often that buyer is the public market.

Here's the process: Buy the company, rearrange the assets, rejigger the finances and put as much lipstick on the pig as is necessary so investors in the public market will pay a high price for the shares in an initial public offering.

It used to be that this round trip from public to private to public again would take two or more years. For example, disk-drive maker Seagate Technology ( STX) went private in 2000 and then went public again in 2002. (After shedding 40,000 jobs, I might note.) That was fast, way back then. But recently the turnaround has been much speedier. For example, FTD Group ( FTD) took just a year from its February 2004 private equity buyout to its February 2005 public offering.

Quick Profits Are Good Profits

Why is that important? First, because time is money -- an investment that produces a profit of $1 in a year shows a higher rate of return than one that produces a profit of $1 in two years -- the quicker turnaround has increased the profits of private equity investors. Which, of course, has brought more money into the private equity funds, which in turn fueled the deal boom of 2006. And which should keep the private equity market in full feeding frenzy in 2007.

And second, because the quick turnaround has led to expectations on the part of private equity investors for big, quick profits, this isn't exactly patient money. That in turn has increased the pressure for these big pools of private cash -- private equity funds raised $400 billion in 2006 and started 2007 with about $700 billion in cash to invest -- to do deals and put their investors' money to work, and then to cash out quickly by selling to buyers in the public markets.

Of course, the rules of supply and demand tell us that when there are a lot of impatient sellers looking for buyers, the sellers can expect to get lower prices for their deals. I doubt that will be acceptable to the investors in these private equity funds, who will look to impress buyers in the public market with the superior value of their deal.

How do you do that? By showing a higher profit margin, faster earnings growth or an improving cash flow. And unfortunately, the easier way to produce those, in the short run, is by cutting jobs. In the long run that may well reduce revenue and create an earnings crash, as customers flee to competitors who provide better service and superior products. But, hey, by the time that happens, private equity investors will be long gone, if they're smart.

If I'm right -- if private equity investors don't get bailed out by surprisingly strong economic growth and higher-than-expected earnings increases, or by a Federal Reserve interest rate cut that lifts all stock prices -- I'd expect to see the pressure on private equity deals and investors to increase noticeably in the second half of 2007.

How will you be able to tell? Because the number of announced layoffs will start to climb again.

I hope I'm wrong.

At the time of publication, Jim Jubak did not own or control shares of any of the equities mentioned in this column. He does not own short positions in any stock mentioned in this column.

Jim Jubak is senior markets editor for MSN Money. He is a former senior financial editor at Worth magazine and editor of Venture magazine. Jubak was a Bagehot Business Journalism Fellow at Columbia University and has written two books: "The Worth Guide to Electronic Investing" and "In the Image of the Brain: Breaking the Barrier Between the Human Mind and Intelligent Machines." As an investor, he says he believes the conventional wisdom is always wrong -- but that he will nonetheless go with the herd if he believes there's a profit to be made. He lives in New York. While Jubak cannot provide personalized investment advice or recommendations, he appreciates your feedback; click here to send him an email.

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