USA: The IBM Corporation has announced it will reduce some of its global workforce as it joins the wave of layoffs by tech giants. The company claimed that earlier asset sales were the primary cause of the change.
The company made the announcement on Wednesday during a conference call, saying it will lay off 3,900 people, or roughly 1.5% of its workforce globally.
The layoffs, according to IBM, will cost the company about $300 million and are related to the previously announced spinoff and sale of its Kyndryl business and a portion of its Watson Health artificial intelligence unit.
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The tech company claimed that the job cuts were solely related to the business unit reorganisation, adding that this was "not an action based on 2022 performance or 2023 expectations." James Kavanaugh, the company's chief financial officer, told Reuters that the organisation was "committed to hiring for client-facing research and development."
Following the news, IBM stock fell 2% in after-hours trading.
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The company also released mixed financial results on Wednesday, with revenue coming in slightly higher than anticipated but operating profit and free cash flow coming in lower than anticipated. Due to higher-than-anticipated working capital requirements, fourth-quarter revenue was $16.7 billion, exceeding the estimated $16.4 billion, while cash flow in 2022 was $9.3 billion, falling short of the target of $10 billion.
According to IBM's forecast, free cash flow is anticipated to be $10.5 billion in fiscal 2023, while revenue growth will be in the mid-single digits.
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The announcement coincides with other significant tech companies cutting jobs globally due to growing concerns about a global slowdown. Alphabet, the parent company of Google, and Microsoft, which followed similar actions by Amazon, Meta Platforms, and Twitter, both announced last week that they would be laying off 12,000 and 10,000 employees, respectively.