IBM planning more job cuts in 2014
International Business Machines Corp., a New York-based technology company that’s a top employer here, is planning another workforce reduction this year that’s expected to be “big” by one employee advocacy organization.
IBM posted higher profits in the fourth quarter of 2013, but also reported a 5 percent drop in total revenues, for the company’s seventh straight quarter of declines.
In a conference call about the company’s financial results on Tuesday, Martin Schroeter, IBM’s chief financial officer and senior vice president, said IBM is expecting to spend another $1 billion in costs, plus or minus $100 million, this year for workforce reductions.
Last year, IBM also took $1 billion in charges for a workforce reduction. That reduction meant job cuts estimated of between 4,000 to 5,000 in the United States, said Lee Conrad, national coordinator for Alliance@IBM, a group that wants union bargaining rights with the company.
However, Conrad said that of the total estimate of job cuts, the group was only able to validate around 3,300 of the reductions. He wasn’t sure how many were hired.
This year, Conrad said he expects that the reduction will be big in the United States and globally. On its website Tuesday, Alliance@IBM reported that suggested names for reductions were due to executives on Friday from the company’s systems and technology group, which is the name of its hardware business that includes servers, data storage equipment and microelectronics.
In the conference call, Schroeter said the company has a “business model issue” in its hardware business that it plans to address by making key investments and also by right-sizing for demand characteristics.
The hardware group saw revenues decline 26 percent in the fourth quarter to a total of nearly $4.3 billion. The decline was the largest of any of the company’s segments.
Comparatively, the company reported that it software segment saw revenue growth of 2.8 percent in the quarter.
Schroeter said in the call, according to a transcript provided by Seeking Alpha, that software is an area where the company is looking to invest along with cloud services and the company’s Watson computer technology. Watson was a winner on the “Jeopardy!” quiz show, and can answer questions asked in natural language.
The company has committed $1.2 billion to double its software centers, Schroeter said, and is looking to have cloud centers in every “major geography and key financial center.” He also noted the announcement of a $1 billion investment in a new Watson-focused business unit that’s dedicated to the development and commercialization of cloud-delivered cognitive innovations.
IBM was the second largest employer in Durham County in the second quarter of 2013 behind Duke University, according to the N.C. Department of Commerce Labor and Economic Analysis Division. The company employs more than 1,000 people. Globally, IBM and its wholly-owned subsidiaries employed 434,246 people in 2012 according to its annual report from the year, up from 433,362 in the prior year.