IBM Corporation has announced a wave of layoffs across its global workforce which will add its brand to the growing list of tech companies downsizing in preparation for the coming global economic slowdown. However the company was quick to add the layoffs were not a sign of weakness in IBM’s business, but rather the result of prior asset sales.
The company made the announcement on Wednesday, during a conference call, when it announced that is planned to cut 3,900 positions, or roughly 1.5% of its workers across the globe.
The company went on to explain the layoffs were a result of the previously announced spinoff and sale of its AI unit, Watson health, as well as its Kyndryl business. and would cost the company roughly $300 million.
The tech firm attributed the entirety of the cuts to the business unit reorganizations, adding that it was, “not an action based on 2022 performance or 2023 expectations.”
In an interview with Reuters, Chief Financial Officer James Kavanaugh said the company was still “committed to hiring for client-facing research and development.”
After the announcement, IBM shares dipped 2% in after-hours trading.
On Wednesday the company also issued its earnings report, which showed earnings mixed as revenue came in slightly above estimates. However operating profit and free cash flow were lower than had been forecast. Q4 revenue was $16.7 billion, which beat the $16.4 billion estimate. Cash flow for 2022 was $9.3 billion, which was lower than the company’s $10 billion target, mostly due to working capital needs being underestimated.
IBM forecast free cash flow for fiscal 2023 to be $10.5 billion with revenue increasing in the mid-single digits.
The news from IBM adds to the news of layoffs and downsizing at other major tech companies around the world as concerns mount about a global economic slowdown. A week ago Alphabet the parent company to Google announced it was laying off 12,000 workers, while Microsoft announced layoffs of 10,000 workers, all following similar announcements from companies ranging from Amazon to Meta Platforms to Twitter, to Salesforce.
