IBM to Cut 1,700 Jobs, But ‘Continues to Hire Aggressively’
IBM on Friday confirmed plans to lay off up to 1,700 employees, representing a fraction of the more than 340,000 workers at the company.
Layoffs are nothing new to IBM, especially as it continues its turnaround plan and focuses on what it calls higher value segments of the IT market. Those segments include cloud computing, security and data analytics, at the top of the list of strategic imperatives for IBM president, CEO and chairman, Ginni Rometty.
“We are continuing to reposition our team to align with our focus on high-value segments of the IT market, and we also continue to hire aggressively in critical new areas that deliver value for our clients and IBM,” the company wrote in a statement to CNBC confirming reports of a layoff, that was first posted by TheLayoff.com.
IBM reported its 2019 first-quarter results in April, with revenue of $18.2 billion, down 4.7%. However, cloud revenue growth accelerated in the quarter, at $19.5 billion year over year, up 10%.
The segment results for Q1 are as follows:
- Cloud & Cognitive Software (includes cloud and data platforms, cognitive applications and transaction processing platforms) — revenues of $5 billion, down 2 percent (up 2 percent adjusting for currency), led by cognitive applications, up 2 percent (up 4 percent adjusting for currency), and by cloud and data platforms, down 2 percent (up 2 percent adjusting for currency).
- Global Business Services (includes consulting, application management and global process services) — revenues of $4.1 billion, flat year to year (up 4 percent adjusting for currency), with growth in consulting and global process services. Gross profit margin increased 280 basis points.
- Global Technology Services (includes infrastructure and cloud services and technology support services) — revenues of $6.9 billion, down 7 percent (down 3 percent adjusting for currency), with growth in hybrid cloud revenue. Gross profit margin increased 110 basis points.
- Systems (includes systems hardware and operating systems software) — revenues of $1.3 billion, down 11 percent (down 9 percent adjusting for currency), with growth in power, offset by the impact of the IBM Z product cycle dynamics and weakness in storage.
- Global Financing (includes financing and used equipment sales) — revenues of $406 million, flat year to year (up 4 percent adjusting for currency).
“In the first quarter, our cloud revenue growth accelerated, and we again grew in key, high-value areas in cloud and cognitive software and in consulting,” said Rometty. “IBM’s investments in innovative technologies coupled with our industry expertise and our commitment to trust and security position us well to help clients move to chapter two of their digital reinvention.”
Earlier this year, at IBM Think 2019, Rometty talked about how digital transformation is moving to chapter two.
Think of chapter one of digital transformation characterized by digital, AI, experimentation and customer-facing apps. Chapter two is enterprise-driven, meaning scaling digital and AI – including hybrid cloud and mission-critical applications – all underpinned by responsible stewardship.