Yahoo Finance IBM's Announces Company-Wide Job Cuts As New CEO Attempts Restructuring
International Business Machines Corporation (NYSE: IBM) is retrenching an undisclosed number of employees under its new Chief Executive Arvind Krishna.
Why It Matters
The job cuts come amid the ongoing coronavirus pandemic, which has led to a major economic downturn.
The new CEO is trying to return IBM to growth, and the restructuring effort is a step in that direction, according to the Wall Street Journal.
The job cuts will affect several units at IBM, including the Global Technology Services (GTS) division, which is engaged in IT outsourcing. Last month IBM took a $900 million charge against earnings to pay for the restructuring costs linked to the division.
IBM’s Watson Artificial Intelligence unit, which is not performing well, may also see job losses. The unit was a priority of Krishna’s predecessor Ginni Rometty.
Why It Matters
IBM’s revenues have been declining for several years. After Krishna took over, he withdrew guidance for 2020 and called the action “a tough decision,” reported the WSJ.
Cuts to the workforce appear to be broad-based and spanning divisions, IBM has offered subsidized medical coverage to all laid-off employees in the United States through June 2021.
Krishna said last month that IBM was ready to make acquisitions to grow in the cloud computing and artificial intelligence segments.
He also indicated his willingness to divest parts of the company not aligned with the company’s new focus.
IBM’s adjusted EPS fell 18% to $1.84. Revenue declined 3.4% over the first three months of the year to $17.6 billion.
Price Action
IBM shares traded 0.20% higher at $119.36 in the after-hours session on Thursday. The shares had closed the regular session 1.86% lower at $119.12.
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