IBM U.S. Job Cuts Reach at Least 1,300, Employee Group Says

International Business Machines Corp. (IBM), the world’s largest computer-services provider, has fired at least 1,300 workers in a round of U.S. job cuts that began yesterday, according to the employee group Alliance@IBM.

The job reduction includes at least 222 people in marketing for the software business and 165 in semiconductor research and development, according to Lee Conrad, a coordinator for Alliance@IBM, which is affiliated with the Communications Workers of America union.

The move is part of a global restructuring plan that IBM announced in April after releasing disappointing first-quarter results. The cuts target employees with a range of seniority, from executives to rank-and-file workers, said a person familiar with the effort, who asked not to be identified because the information is private. The restructuring will cost $1 billion worldwide, including severance expenses.

“Just about every division at every location is being impacted,” Conrad said, including IBM hubs near Raleigh, North Carolina; Burlington, Vermont; Austin, Texas; and New York’s Hudson Valley. “Everything’s getting hit.”

The Armonk, New York-based company posted profit of $3 a share last quarter, missing the $3.05 predicted by analysts -- the first earnings shortfall since 2005, according to data compiled by Bloomberg.

Photographer: Scott Eells/Bloomberg

Pedestrians walk past International Business Machines Corp. (IBM) offices in New York. Close

Pedestrians walk past International Business Machines Corp. (IBM) offices in New York.

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Photographer: Scott Eells/Bloomberg

Pedestrians walk past International Business Machines Corp. (IBM) offices in New York.

European Cuts

IBM said at the time that the job reduction would be concentrated overseas and mostly complete by the end of June. So far, IBM has eliminated about 128 jobs in Denmark, 250 in Italy and 700 in Germany, among other countries, Conrad said.

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.

“Change is constant in the technology industry and transformation is an essential feature of our business model,” IBM said yesterday 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 gained 1.3 percent to $203.77 at the close in New York, leaving them up 6.4 percent this year. The stock has climbed 8.5 percent from a four-month low set in April following the 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 contract workers. 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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