IBM's 'Transformation': More Layoffs, Despite Earnings Surge

IBM layoffs follow earnings surge

When a company reports strong end-of-the-year earnings, workers might expect some positive news -- maybe a bonus, even. But that's not what happened at IBM. On Wednesday, the same day the Armonk, N.Y.-based technology corporation announced its net income "surge" of 6 percent for the fourth quarter, reports came out that IBM was planning layoffs.

Why would workers be laid off when total net income was $5.8 billion, better than what most analysts expected?

"Transformation is a permanent feature of our business model," IBM spokesman Doug Shelton explained via email. "Technology evolves -- requiring new skills. Client needs shift -- requiring new capability. Consequently, some level of workforce remix is an ongoing part of our business model."

Shelton passed on confirming the lay-off rumors, saying the company was preparing its annual "remixing." No specifics about what divisions will be targeted, or how many workers, have been released.

Restructuring of IBM included layoffs in March of last year. In that round, some 1,100 workers were laid off in both the U.S. and Canada. The cuts came largely from business divisions. As of the end of 2012, IBM reported a staff of 433,362 workers.

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In a conference call with analysts and investors Wednesday, IBM's senior vice president Mark Loughridge said a leaner workforce, along with selling businesses and research and development investments, would be part of the company's "2013 transformation," according to The Times Herald Record Online.

"We're going to rebalance resources, align them to opportunities," Loughridge said. In recent years, IBM has been moving away from hardware toward software and services, according to Time magazine.

Shelton credited the strong financial performance to a host of initiatives at IBM, like cloud computing, that require new staffing as the company continues to remake its business model.

Founded in 1911 as the Computing Tabulating Recording Company, IBM ushered in its first round of layoffs in 1993.

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paul_kelley31

I know what Steve Thompson and others are saying. I was laid off in 2012 after 37 years of loyal service. The year before 2011 upper management asked me to do John's job since he was being laid off after 38 loyal years of service. I thought this odd since I already had a job and although I had past experience doing John's job I had a job to do. Also John was doing his job very well so why was he being laid off?? Maybe because he was the oldest guy in the department?? So I took over John's job and trained a new younger guy from Ireland to do John's job and then the next year I was laid off! The thanks I get! The funny part about it was that since I was retirement age my manager said "you know you don't have to tell anyone you were laid off you could just say you are retiring." I went ahead and send my "farewell letter" email to all of my IBM compatriots telling them that "I had wanted to work a few more years but that wasn't an option that I had. I had just 30 days to clean out my desk. Management, especially the 2nd and 3rd level were so rude too when I asked for an extension to finish what I thought were important projects. I guess because I let the cat out of the bag that I was laid off! Oh well, I was an older worker....sort of like an old machine...once you are older it's time to be booted out the back door no matter how loyal and productive you have been at IBM. Offer of retraining??? What is that??

July 03 2013 at 12:02 AM Report abuse rate up rate down Reply
Steve Thompson

IBM was not a good place to work, at all. The constant threats of PBC 3 ratings, should you not do something perfect, was used to cultivate an environment of fear. I will not go back to work at IBM. And the constant firing and removing older, US workers, to be replaced with imported Indian and Chinese labor, or farmed out to 3rd world countries, was the ultimate in unamerican behavior and disloyalty to its employees. Its all about making money for the execs at IBM, nothing trickled down to the lowly employees. And when Palmisano gave out the 7 shares of IBM stock worth about $1,000 that was the ultimate face slap. Cusotomers are leaving in droves, when IBM implodes it ought to be very intersting indeed.

January 27 2013 at 2:36 PM Report abuse +1 rate up rate down Reply
Tom

What ever happened to IBM re-training it's current workforce to acquire the skills to handle new technology and the changing needs of it's customers?

Current IBMers, buy and large, get no internal education from IBM. Nothing. None. IBM education budget is a joke. Just ask any conscientious IBMer who has been with IBM just a few years when they last went for internal training for the job they do or for the future "hot" skills they really want to learn to make a "smarter planet"?

IBM doesn''t want to teach grown ups new tricks. They just like to wean newbies on their customers whether they have the right skill mix or not.

This rebalancing and remixing is more IBM wordspeak for systematically getting rid of the older, experienced workforce skill sets.

Since IBM revenue growth has been dismal, the only way to raise the stock EPS is to cost cut, cut, cut...
until their is nothing left but total inexperienced workforce, old bloated management ,and line of businesses to sell. Then IBM will be as extinct as a dinosaur.

January 27 2013 at 1:56 PM Report abuse rate up rate down Reply
ROSSI R

"Transformation is a permanent feature of our business model," IBM spokesman Doug Shelton explained via email. "Technology evolves -- requiring new skills. Client needs shift -- requiring new capability. Consequently, some level of workforce remix is an ongoing part of our business model."
Just another way to say more jobs going overseas. IBM India, China. Brazil, Argentina, Russia continues to grow.

January 25 2013 at 8:46 PM Report abuse rate up rate down Reply
kidwill727

Machines are taking over and we can do nothing.

January 25 2013 at 1:39 PM Report abuse rate up rate down Reply
circustwo

To be one of the "Top Dogs" for a company and be super rich !
After a short while I would have a hollow victory feeling. Being able to "Buy Anything" would get boring to me.
Who was it that cried and said there were no more worlds to concore.
You lie and cheat the common people so your family will have everything, anything !
What sad people you are.

January 25 2013 at 12:22 PM Report abuse rate up rate down Reply
dwpetrich

All of this goes back to Wall street and keeping their stocks high so investers are happy.

January 25 2013 at 12:04 PM Report abuse +1 rate up rate down Reply
circustwo

If I were an employer, I would rather have a few, or many thousands of employees love me. That would be a greater feeling than all the money in the world.

January 25 2013 at 11:32 AM Report abuse +1 rate up rate down Reply
1 reply to circustwo's comment
ed

then heres a great idea..start a business and become the employer

January 25 2013 at 12:07 PM Report abuse -1 rate up rate down Reply
RAIDERRICK

DUHHHHHHHHHHHHHHH!!! Thanks Obama. More to come

January 25 2013 at 10:07 AM Report abuse +2 rate up rate down Reply
thedysongroup

Company benefts from the work and talent of it's employees and this is the thanks you get; your reward is a pink slip.

January 25 2013 at 9:23 AM Report abuse +1 rate up rate down Reply
1 reply to thedysongroup's comment
luckycur

The Feds need to stop supplying 52% of all R&D funding for private industry, until these companies get the salaries of the executives under control. It's all about making profit margins, to ensure bonus money is paid, regardless if those who pay the price are the lower income workers.

January 25 2013 at 9:35 AM Report abuse +1 rate up rate down Reply

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