Some IBM workers are facing a very bleak weekend as Big Blue starts handing out pink slips
IBM has begun laying off staff in its US offices as part of its $1bn (£598m) global restructuring plan to restore its finances.
Last month Big Blue once again missed its earnings targets, after revealing that during the fourth quarter of 2013, its revenue had dipped 5 percent. In response, it is shifting its focus away from hardware towards software and the cloud.
IBM’s fourth-quarter net income was up 6 percent at $6.2 billion (£3.8bn). But revenues were down 5 percent to $27.7 billion (£16.8bn) and full-year 2013 revenues were also down 5 percent to $99.8 billion (£60.5bn).
“As we enter 2014, we will continue to to transform our business and invest aggressively in the areas that will drive growth and higher value,” said Ginni Rometty, IBM chairman, president and chief executive officer.
She left it up to Martin Schroeter, IBM’s senior vice president and chief financial officer to explain that IBM would take a $1 billion “workplace rebalancing” or restructuring charge, “plus or minus $100 million (£61m),” in the first quarter of 2014. IBM took a similar charge in 2013 as the company cut headcount.
And now the job cuts are underway in the United States, namely in New York, Vermont, Minnesota and Iowa. IBM began handing staff their cards on Thursday according to staff pressure group Alliance@IBM. At the end of 2013, IBM’s total headcount had fallen 0.7 percent from the previous year to 431,212. This was IBM’s first headcount decline in a decade.
And IBM has already begun terminating staff this year in Europe, Asia and South America. It is thought that IBM is looking to trim 13,000 staff worldwide. Between 4,000 to 6,000 positions are to go inside the United States.
Rebalancing, not restructuring
“IBM continues to rebalance its workforce to meet the changing requirements of its clients and to pioneer new, high-value segments of the IT industry,” said an IBM statement. The company said that at any given time, it has more than 3,000 job openings in its growth units, including its cloud business and nanotechnology.
IBM is keen to move away from its traditional hardware roots and expand its software capabilities in areas such as data analytics and cloud services. In 2005 IBM sold off its PC business to Lenovo, and then nine year later also opted to sell its low-end server division for $2.3 billion (£1.4bn) to Lenovo.
Earlier this month it was reported that IBM is considering selling its semiconductor business. Big Blue is also thought to be exploring a possible joint venture partnership for its semiconductor operations, with Samsung, Intel and TSMC among possible buyers.
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