IBM To Slash Up To 13,000 Workers
IBM to slash up to 13,000 workers
Most job cutbacks to take place in Europe, company says
The Associated Press
Updated: 5:29 p.m. ET May 4, 2005
NEW YORK - International Business Machines Corp. said Wednesday it would cut between 10,000 and 13,000 jobs and record a pretax charge between $1.3 billion and $1.7 billion in the second quarter.
The majority of the cuts are planned for Europe, where the company began slashing jobs even before it announced its disappointing first-quarter earnings last month. In March, IBM laid off 500 Swedish workers, 9 percent of its work force there, and shut down most operations in five cities.
The cuts were expected and are in line with analysts’ estimates.
IBM surprised investors in April when it missed first quarter earnings estimates by 5 cents a share. Chief financial officer Mark Loughridge said during the earnings conference call that the company planned a “sizable restructuring.”
“European sales seemed particularly disrupted as rumors flared in the final weeks of the quarter,” Goldman Sachs Group Inc. analyst Laura Conigliaro wrote in a report last month.
IBM said it will run fewer services offices worldwide and it will reduce European managers.
“As a result, IBM will create a number of smaller, more flexible local operating units in Europe to increase direct client contact,” a company press release stated.
IBM said it will realign operations in Europe to reduce bureaucracy in lower-growth countries. Sales in France, Germany, Italy and Japan, which account for one-quarter of the company’s revenue, were down 5 percent in the first quarter.
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