IBM cuts 3,900 jobs
IBM announced today that it will lay off about 3900 workers, which is less than 2% of the global workforce. The company is the last technology company to lay off workers. IBM's workforce reduction is not as large as that of other major technology companies. Google-parent Alphabet announced 12000 job cuts, Microsoft 10000 and Amazon 18000.
The layoffs are mostly the results of earlier asset sales and less a result of the current market climate, according to IBM. IBM sold or restructured several assets in the last two years. The company's legacy technology services business was spun off in 2021 and its health care data analytics business was sold in 2022.
The layoffs will cost IBM about $300 million to pay for employee severance costs. The layoffs were announced during an investor conference call for the financial results of the fourth quarter of 2022. IBM is still committed to hiring "for client-facing research and development" according to the company's CFO.
The company's revenue and operating profits matched the predictions of analysts. IBM managed to earn $16.7 billion in revenue in the quarter, which was $0.3 billion higher than what Wall Street hat estimated. Earnings per share was $3.60, which beat analyst estimates by $0.02 per share. The operating pre-tax income was $3.8 billion.
CEO Arvind Krishna attributed the success to IBM's hybrid cloud and artificial intelligence strategy. Software revenue was up 8%, consulting 9% and infrastructure 7% according to Jim Kavanaugh, IBM's Chief Financial Officer.
Revenue by division for the fourth quarter of 2022 according to the published earnings report.
- Software: $7.3 billion
- Consulting: $4.8 billion
- Infrastructure: $4.5 billion
The company's shares fell more than 4% today and are trading at $134 at the time of writing.
IBM expects that its revenue will grow in the mid-single digits and that its free cash flow will grow to $10.5 billion in fiscal 2023. The free cash flow would increase by more than $1 billion if the prediction holds.
Chief Financial Officer James Kavanaugh revealed on Wednesday that the weak Dollar was helping IBM but that the currency effect would be neutral in 2023 overall. IBM plans to expand its strategic partnerships and increase investments in specific growth markets in 2023.
A full transcript of the earnings call is available here.Advertisement