Tech layoffs: IBM’s latest company to cut workforce by cutting 3,900 jobs – National
IBM Corporation on Wednesday announced 3,900 staff layoffs as part of a divestment of some assets and a failure to meet its annual cash target, denting the cheer around beating revenue expectations in fourth quarter.
Chief Financial Officer James Kavanaugh told Reuters the company remained “committed to hiring for customer-driven research and development.”
IBM said the layoffs — related to Kyndryl’s side business and part of its AI unit Watson Health — would result in a $300 million charge between January and March.
Shares of the company fell two percent in extended trading, erasing earlier gains on the upbeat results. Analysts said news of job cuts and missed free cash flow were to blame for the drop.
Tech layoffs: Seek legal advice, negotiate terms if you lose your job, experts say
Major banks raise prime lending rate to 6.7% after Bank of Canada hikes interest rates
Jesse Cohen, senior analyst at Investing.com, said: “It looks like the market is getting frustrated by the size of the job cuts announced, which represent just 1.5% of their workforce.
“Investors were hoping for deeper cost-cutting measures.”
From Big Tech to Wall Street banking, US companies have seriously downsized and cut costs to better cope with the global recession.
IBM’s 2022 cash flow is $9.3 billion, below its $10 billion target due to higher-than-expected working capital needs.
The company also forecasts single-digit annual revenue growth in constant currency terms, lower than the 12% it reported last year, driven by the need to digitize the business. The pandemic has given way to cautious consumer spending amid growing recession fears.
With fears of a recession in Canada, is an economic ‘soft landing’ in place?
In October, IBM flagged weakness in new bookings in Western Europe while peer company Accenture Plc noted weakness in its consulting business. Cognizant Technology Solutions Corp in November cut its 2022 forecast due to contract withdrawals.
IBM’s software and consulting business growth slowed steadily in the fourth quarter, but cloud spending was a bright spot, with contract signings doubling in 2022 to set up services with partners like Amazon.com’s AWS and Microsoft’s Azure.
Its hybrid cloud revenue grew two percent in the quarter ended December 31.
Best Buy lays off about 700 employees as sales drop after pandemic outbreak
Urban versus rural: Food prices are up everywhere, but even worse in some areas
Total revenue was flat at $16.69 billion for the period, compared with analyst estimates of $16.40 billion, according to Refinitiv.
In 2022, IBM recorded revenue growth of 5.5%, the highest growth in a decade.
(Reporting by Chavi Mehta in Bengaluru; Editing by Devika Syamnath)