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 user 2005-05-06 at 10:36:00 am Views: 67
  • #9203
    IBM to axe 13,000 jobs worldwide
    Computer giant IBM will cut 13,000 jobs worldwide, or about 4%
    of its total workforce, as part of a restructuring aimed at boosting profits.

    Most of the job losses will be at IBM’s European operations as the firm looks
    to focus on high-growth markets.

    IBM, the world’s biggest computer company, said the plans would cost between
    $1.3bn (£684m) and $1.7bn.

    The company employs 100,000 staff in Europe, with about 25,000 of those
    working in the United Kingdom.

    ‘Fear the worst’

    IBM said that the redundancies would mean cost savings of between $300m and
    $500m in the second half of this year.

    That figure should triple in 2006, the company said.

    I don’t know how they are going
    to get 10,000 people to quit

    IBM’s chief financial officer Mark Loughridge said the west European market
    was performing poorly so jobs would be lost in the UK, Germany, France and

    He gave no figures on how many jobs would be lost in each country.

    Answering questions after a conference call with analysts, he said the job
    cuts were new, and not “bundled” together parts of an ongoing restructuring.

    A spokesman for the UK workers’ union Amicus called the move a “slash and
    burn” reaction to poor results.

    “We fear the worst, given that it is quicker, cheaper and easier to get rid
    of workers in the UK than elsewhere in Europe,” the spokesman said.

    ‘Sizable restructuring

    The news comes just weeks after IBM reported worse-than-expected earnings in
    the first quarter.

    The New York-based firm blamed a failure to close business deals and slow
    economic growth in key European markets.

    The world’s biggest computer maker surprised markets when it said net profit
    for the three months to 31 March were $1.4bn (£745m) from £1.36bn a year
    earlier, while sales were $22.9bn, less than analyst forecasts of $23bn.

    IBM will create a number of
    smaller, more flexible local operating units in Europe to increase direct client


    As the results were revealed Mr Loughridge warned that a “sizable
    restructuring” would be undertaken.

    Analysts said that the threat of job losses had hit performance and according
    to Goldman Sachs analyst Laura Conigliaro, “European sales seemed particularly
    disrupted as rumours flared in the final weeks of the quarter”.

    Ending the uncertainty, IBM said it now plans to realign its operations and
    organisational structure in Europe to reduce bureaucracy in lower-growth

    That move should eliminate “the need for a traditional pan-European
    management layer to coordinate activity”, it said.

    “IBM will create a number of smaller, more flexible local operating units in
    Europe to increase direct client contact,” it added in a statement.

    Most of the redundancies in Europe will be voluntary and talks have already
    begun with unions and worker councils over the timing of the job cuts in Europe,
    company spokesman John Bukovinsky said.

    Helping hand

    Analysts questioned whether the company would be able to trim its workforce
    without resorting to forced redundancies.

    “I don’t know how they are going to get 10,000 people to quit,” said Mark
    Herskovitz, a fund manager at Dreyfus.

    Mr Herskovitz said that IBM’s problems were not linked to a wider slowdown in
    the global technology industry.

    The company already has taken steps to streamline its operations and has sold
    its personal computer division to China’s Lenovo for $1.75bn.

    IBM has been trying to find its correct staffing level for years, and its
    worker numbers have fluctuated since the late 1980s.

    Employee numbers peaked at 405,000 in 1985, before hitting a low of 219,000
    in 1994.

    IBM had 329,000 staff worldwide as of December last year.