IBM Corp. (IBM) is said to reduce the number of employees across the U.S., streamlining its workforce in at least five states.
The company declined to comment on the total number, but the workforce reductions appear far-reaching, according to a Bloomberg report.
“IBM’s work in a highly competitive marketplace requires flexibility to constantly add high-value skills to our workforce. While we always consider the current environment, IBM’s workforce decisions are in the interest of the long-term health of our business,” company spokesman Ed Barbini said in a statement. “Recognizing the unique and difficult situation this business decision may create for some of our employees, IBM is offering subsidized medical coverage to all affected U.S. employees through June 2021.”
Based on a review of IBM internal communications on the Slack corporate messaging service, the number of affected workers is likely to be in the thousands, said a North Carolina-based worker who lost his job along with his entire team of 12.
“This was far ranging — and historical employment ratings, age and seniority did not seem to matter,” he said. The person asked not to be identified on concern that speaking publicly may impact his severance package, according to the Bloomberg report.
IBM employees in Pennsylvania, California, Missouri and New York, are also said to be affected by the round of job cuts, according to the Bloomberg report.
Another worker who lost his job said the reductions mostly focus on IBM’s North American workforce. Half of his 70-person department were cut and told their last day with the company will be June 22.
IBM is joining a list of tech companies, who are implementing cost-cutting measures, such as widespread job cuts after the coronavirus pandemic induced a slower economic growth environment. Uber Technologies Inc. (UBER) has cut about a quarter of its workforce, while Hewlett Packard Enterprise Co. (HPE) last week said it will cut some employees to preserve cash.
In an earnings call in January, IBM discussed reducing costs through “aggressive structural actions” to improve the competitiveness of its Global Technology Services consulting unit, which represents about a third of revenue.
Shares in IBM, which have advanced 25% in the past two months, are still down 13% year-to-date.
Turning now to Wall Street, analysts are cautiously optimistic about the stock’s outlook. The Moderate Buy consensus is divided into 4 Buy ratings and 8 Hold ratings. The $132.36 average price target suggests shares have 12% upside potential in the coming 12 months. (See IBM stock analysis on TipRanks).
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