IBM's New CEO Sets His First Job Cuts -- WSJ
22 Mayo 2020 - 2:02AM
Noticias Dow Jones
By Asa Fitch
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 22, 2020).
International Business Machines Corp. is cutting an unspecified
number of jobs in the first major workforce reduction under new
Chief Executive Officer Arvind Krishna, who is trying to revive
growth at the tech company.
Armonk, N.Y.-based IBM said the cuts are aimed at making it more
agile, but they come against the backdrop of a major economic
slowdown triggered by a coronavirus pandemic that has caused many
of its customers to dial back investments and hold off on big
software deals.
"IBM's work in a highly competitive marketplace requires
flexibility to constantly remix high-value skills, and our
workforce decisions are made in the long-term interests of our
business," the company said in a statement late Thursday.
The company didn't disclose the scale of the job losses. A
person familiar with the company's plans said they are thought to
affect several thousand people. IBM had around 352,600 employees as
of the end of last year, according to a January regulatory
filing.
The cuts add to job losses across the tech industry as firms
contend with the effects of the novel coronavirus outbreak. Hewlett
Packard Enterprise Co. on Thursday announced a far-reaching
cost-cutting program, including salary cuts, unpaid leave and
hiring freezes.
But IBM's growth problems predate the Covid-19 pandemic. Its
share price is little changed from 10 years ago, a period that has
seen tech-company stocks surge. Big Blue's stock is down more than
20% during the past three months.
Mr. Krishna took over at IBM last month, facing the twin
challenges of coping with the pandemic and reorienting a company
that has suffered through several years of declining revenue and an
anemic share price. He withdrew full-year guidance less than a
month into the CEO role, calling the move "a tough decision."
In an interview with The Wall Street Journal earlier this month,
Mr. Krishna said he didn't know how long the economic downturn
would last and declined to predict whether the company would
furlough employees or cut jobs.
The layoffs, which were earlier reported by Bloomberg News,
affect several units of IBM, including its Global Technology
Services division, which offers IT outsourcing. The company last
month said it took a $900 million charge against earnings, largely
to cover restructuring costs linked to GTS.
IBM in January signaled it was planning changes at GTS to
bolster its competitiveness. Those moves should deliver gross
savings of almost $2 billion a year, Chief Financial Officer James
Kavanaugh told analysts, adding that more restructuring was likely
in the current quarter.
Other parts of IBM were affected by Thursday's announcement,
according to employee posts in an online forum, including its
Watson artificial-intelligence unit. It was a priority for Mr.
Krishna's predecessor, Ginni Rometty, but delivered lackluster
results. The employees who said in the posts that they have been
laid off worked at a variety of locations and divisions, suggesting
that the cuts were broad-based. The claims couldn't immediately be
verified, and IBM declined to comment on them.
The company was offering subsidized medical coverage to all
laid-off U.S. employees through June 2021, IBM said.
IBM said last month that earnings per share fell 18% on an
adjusted basis to $1.84, with sales over the first three months
down 3.4% to $17.57 billion.
The layoffs come after Mr. Krishna last month signaled that IBM
was ready to make acquisitions to underpin its long-running push to
grow in the booming field of cloud computing and bolster its
artificial-intelligence activities. He said, then, that he was also
ready to divest the company of parts of its business that don't
line up with that focus.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
May 22, 2020 02:47 ET (06:47 GMT)
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