Just four scientists are left working in Bell's fundamental physics department in Murray Hill, New Jersey, Nature has learned. Others have either left or been reassigned to other parts of the company, and a major materials-fabrication facility has been shut down.
"Four people can't be called a basic research group," says Ronen Rapaport, who left the laboratory last summer for a position at the Hebrew University of Jerusalem. "It's a single project."
It is sad to see what has become of Bell Labs, where at one time, it was THE place to go to do some of the most basic and fundamental work in physics, including material science/solid state physics. This is one example of what happens when a company changes its philosophy and has to put short-term profits as its main goal. Basic research, which may or many not yield such tangible profits and certainly not in the short term time scale, is seldom compatible with that scenario.
It is why the US National Labs are so crucial. Not only do they have to take up the slack due to the gradual pull-back of Bell Labs, but also for the fact that they are the last few remaining centers (other than universities) that can devote sufficient energy and resources towards such fundamental research that for-profit companies simply cannot devote to. Only when people and politicians recognize this would they care on why it is so important to fund these labs.
Edit: Here's Wired article on the same topic.