IBM Said to Start U.S. Job Cuts Today Amid Global Reduction

International Business Machines Corp. (IBM), the world’s largest computer-services provider, began cutting U.S. jobs today as part of a global restructuring plan announced in April, a person familiar with the move said.

The reduction targets employees with a range of seniority, from rank-and-file staff to executives, said the person, who asked not to be named because the information is private. Some U.S. workers began to receive notifications of the cuts last night, according to Lee Conrad, a coordinator for Alliance@IBM, an employee group. The restructuring will cost $1 billion worldwide, including severance expenses.

IBM announced the job-cutting effort after releasing disappointing first-quarter results in April. The Armonk, New York-based company posted profit of $3 a share in the period, missing the $3.05 predicted by analysts -- the first earnings shortfall since 2005, according to data compiled by Bloomberg. IBM said at the time that the job reduction would be concentrated overseas and mostly complete by the end of June.

The company is probably cutting 6,000 to 8,000 jobs globally, based on the $1 billion cost figure, said Laurence Balter, an analyst at Oracle Investment Research in Fox Island, Washington. That would represent less than 2 percent of IBM’s total workforce of 434,246 as of Dec. 31.

Photographer: Scott Eells/Bloomberg

International Business Machines Corp., the world’s largest provider of computer services, announced the job-cutting effort after releasing disappointing first-quarter results in April. Close

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Photographer: Scott Eells/Bloomberg

International Business Machines Corp., the world’s largest provider of computer services, announced the job-cutting effort after releasing disappointing first-quarter results in April.

‘Workforce Remix’

Alliance@IBM said on its website that 121 employees were cut from a unit within IBM’s Systems and Technology group, the hardware division that saw revenue drop 17 percent last quarter.

“Change is constant in the technology industry and transformation is an essential feature of our business model,” IBM said today in a statement, without giving specifics on the job cuts. “Consequently, some level of workforce remix is a constant requirement for our business. Given the competitive nature of our industry, we do not publicly discuss the details of staffing plans.”

IBM shares fell 1.4 percent to $201.20 at the close in New York. The stock has climbed 5 percent this year, rebounding from a tumble in April following its lower-than-projected earnings.

The $1 billion plan represents an increase over IBM’s job-cut efforts in recent years. The company spent $803 million on workforce restructuring in 2012, up from $440 million in 2011.

IBM also has been cutting hours of its contract employees. CDI Corp. (CDI), a Philadelphia-based provider of staffing and outsourcing services, told its staff working for IBM to limit their hours in May, according to a memo obtained by Bloomberg. IBM at the time said that the company relies on contractors to manage labor costs on information-technology projects for clients.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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