IBM will cut 3,900 jobs, linked to its strategic reorientation

IBM to cut 3900 positions, related to its strategic reorientation

UPDATE DAY

The IBM IT group will cut some 3,900 jobs, or just over 1% of its workforce, as part of a layoff plan linked to its strategic reorientation, AFP told AFP on Wednesday. a source close to the case. 

The Armonk (New York State) company did not expressly mention these job cuts either in its results press release, published on Wednesday, or during the conference call presenting its quarterly accounts.

The managers only mentioned an exceptional charge of $300 million, which corresponds, according to the source, to the cost of the redundancy plan.

This cost “is entirely linked to the split of Kyndryl and the sale of health activity,” a spokesperson told AFP. “These measures were not taken based on 2022 performance or projections for 2023,” he said.

In 2021, IBM separated from the rest of the group its information systems consulting and maintenance activities, one of the company's historical branches, but less buoyant than remote computing (cloud), in which it has invested heavily.

The new entity resulting from this split was named Kyndryl and went public in November 2021.

As for the activity relating to the collection and analysis of data in the medical field, which was part of the Watson Health division, it was sold, in early 2022, to the investment company Francisco Partners.

While the positions concerned by the social plan had indeed remained with IBM after these two separations, these are functions related to these two activities, according to the source.

IBM has published fourth quarter revenue slightly above expectations on Wednesday and net income in line with analysts' forecasts.

During the earnings conference call, Chief Financial Officer James Kavanaugh , said it was “cautious” to expect growth at the lower end of the group's usual range.

In post-close Wall Street electronic trading, IBM stock lost a little less than 2%.

Amazon, Meta, Microsoft and Alphabet (Google) have all recently launched ced far-reaching social plans, after hiring with a vengeance during the pandemic to meet the increased demand for digital services.