Tech layoffs: IBM announces 3,900 job cuts as it misses annual cash target
As per the latest annual report of IBM, the job cuts would amount to a 1.4 per cent reduction from its headcount of 2,80,000
IBM cuts 3,900 jobs. PTI
New York: IBM has become the latest entrant in the list of technology companies’ layoff with the firm announcing that it would cut jobs of about 3,900 employees.
A report by Wall Street Journal quoted an IBM spokesman saying that the layoffs will stem from Kyndryl Holdings, the IT services business that IBM spun off last year and its healthcare divestiture Watson Health, from which the company will incur about a USD 300 million charge in the January-March period.
As per the latest annual report of IBM, the job cuts would amount to a 1.4 per cent reduction from its headcount of 2,80,000.
Why IBM has announced 3,900 layoffs?
According to a report by news agency Reuters, IBM said layoffs of about 3,900 employees are part of its asset divestments and its missed annual cash target, dampening cheer around beating its revenue expectations in the fourth quarter.
IBM was still “committed to hiring for client-facing research and development”, the report quoted Chief Financial Officer James Kavanaugh as saying.
IBM’s 2022 cash flow was USD 9.3 billion, which was lesser than its target of USD 10 billion, which prompted layoffs. The shortfall was due to the higher-than expected working capital needs.
Nicknamed Big Blue, IBM an American multinational technology company, also forecast an annual revenue growth in mid-single digit, which was also weaker than the 12 per cent it reported last year.
IBM in October had flagged softness in news bookings in Western Europe.
IBM shares fall 2%
Shares of IBM erased earlier gains and fell 2 per cent in extended trading. Analysts say the layoffs news and free cash flow miss were behind the decline in share price.
“It seems as if the market is disappointed by the size of its announced job cuts, which only amounted to 1.5 per cent of its workforce. Investors were hoping for deeper cost-cutting measures,” Jesse Cohen, senior analyst at Investing.com, said.
IBM fourth quarter result
For the fourth quarter ended 31 December, IBM posted net income of USD 2.71 billion, or USD 2.96 a share, compared with USD 2.33 billion, or USD 2.57 a share, a year ago.
Adjusted earnings were USD 3.60 a share. Meanwhile, revenue edged down to USD 16.69 billion from USD 16.70 billion a year earlier.
With inputs from agencies
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