NEW YORK from CNNMoney 26th Jan 2015
Could IBM be preparing for the biggest corporate layoff in history? It depends who you ask.
Tech blogger Robert Cringely wrote last week that IBM would lay off 26% of its staff, or nearly 112,000 employees, in a massive restructuring. The cuts will be announced Wednesday, and they will predominantly be focused in IBM’s struggling storage and mainframe businesses, Cringely reported.
IBM (IBM, Tech30) fired back with one of the longest “no comments” of all time.
“IBM does not comment on rumors, even ridiculous or baseless ones,” the company said in a statement. “If anyone had checked information readily available from our public earnings statements, or had simply asked us, they would know that IBM has already announced the company has just taken a $600 million charge for workforce rebalancing. This equates to several thousand people, a mere fraction of what’s been reported.”
In other words, IBM has effectively already announced plans to cut several thousand positions.
IBM has approximately 430,000 employees worldwide. The company notes that it hired 45,000 people last year, and IBM currently has about 15,000 job openings for “growth areas,” such as cloud, analytics, security, and social and mobile technologies.
“This is evidence that IBM continues to remix its skills to match where we see the best opportunities in the marketplace,” the company said.
IBM analysts are skeptical of the report too.
“I don’t know if the report’s right or wrong, but I believe it’s very likely a gross exaggeration,” said Frank Gens, chief analyst at IDC.
But Cringely says he is confident in his reporting.
“From what I’ve seen so far IBM is mainly calling me names, which means nothing,” Cringely told CNNMoney. “There’s a huge layoff coming on Wednesday. The numbers I’ve seen are from 24% to 27%.”
Cringely, who wrote a book called “The Decline and Fall of IBM, predicted in 2012 that IBM would lay off 78% of its U.S. workforce by 2015. IBM has made giant cuts to its U.S. labor force over the past three years, but the actual number amounts to less than 10%, according to IBM’s union, Alliance@IBM.
IBM is no stranger to massive layoffs. It already owns the ignominious distinction for having the biggest layoff of all time — 60,000 employees in 1993.
The company is also in a lot of trouble. It was the worst performer in the Dow Jones industrial average last year. Sales have been in a three-year slump. The weak global economy combined with poor sales execution has led to softening demand for nearly all of IBM’s core products — corporate hardware, software and IT services.
CEO Ginni Rometty abandoned the company’s 2015 profit forecast last year, and she delivered a revised earnings prediction last week that failed to meet Wall Street analysts’ reduced expectations.
So layoffs are coming. But 112,000 pink slips on Wednesday? We’ll find out soon.
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First Published: January 26, 2015: 12:17 PM ET