IBM explains massive job cuts — RT Business News
The company says its move is a result of asset sales rather than a sign of weakness in its business
IBM Corporation has joined the wave of layoffs by tech giants saying it will slash some of its global workforce. The company described the move as being mainly a result of earlier asset sales.
The announcement came on Wednesday during a conference call when the company revealed it will cut 3,900 jobs or about 1.5% of its employees worldwide.
IBM explained that the layoffs were related to the previously announced spinoff and sale of its Kyndryl business and a part of AI unit Watson Health, and will cost the company about $300 million.
The tech firm said that the cuts were entirely linked to the reorganization of the business units, adding that it’s “not an action based on 2022 performance or 2023 expectations.” Chief Financial Officer James Kavanaugh told Reuters that the company was still “committed to hiring for client-facing research and development.”
IBM shares slipped 2% in after-hours trading following the announcement.
On Wednesday, the company also reported mixed earnings, with revenue coming in slightly higher than expected but operating profit and free cash flow lower than projected. Fourth-quarter revenue was at $16.7 billion, above the estimated $16.4 billion, while cash flow in 2022 stood at $9.3 billion, below the target of $10 billion, due to higher-than-expected working-capital needs.
In its forecast, IBM said free cash flow in fiscal 2023 is expected to be $10.5 billion while revenue will increase in the mid-single digits.
The news comes as other major tech companies downsize their workforces around the world amid rising concerns of a global slowdown. Last week Google’s parent company Alphabet and Microsoft each announced layoffs of 12,000 and 10,000 workers respectively, following similar moves by other big tech companies Amazon, Meta Platforms and Twitter.
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