Will IBM Layoff 15,000 Americans?

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The rumors around the tech world and Wall Street are that IBM (NYSE: IBM) will cut as many as 15,000 jobs in the U.S. as part of a restructuring. The actual number is hard to pin down. IBM has been silent on the matter.

When IBM announced lackluster earnings for the final quarter of 2013, its management said the company would continue to “rebalance’ its workforce. This is apparently code for firing people. Analysts and the media have started to dig for what IBM will not disclose–how many workers and where?

CNET believes it has one piece of the puzzle:

The company wouldn’t comment on the number of people being laid off or what divisions would be most affected. However, one source familiar with the plans told CNET that the layoffs entailed up to 25 percent in the Systems and Technology group. This is the group that makes IBM servers and is often referred to as the “hardware” division.

The FT believes it has another:

Toni Sacconaghi, an analyst at Bernstein Research, has estimated that the number  will be “at least 13,000”, while a group claiming to represent IBM employees has  warned that as many as 15,000 jobs will go.

IBM had more than 431,000 workers worldwide at the end of 2013. So, the layoffs would not be a large portion of the workforce, except in the eyes of those people who are leaving.

If IBM is in the midst of a large number of layoffs, its Systems and Technology division would be the logical place to do it. In its annual earnings report, referring to the fourth quarter, IBM disclosed:

Revenues from the Systems and Technology segment totaled $4.3 billion for the quarter, down 26 percent from the fourth quarter of 2012.  Systems and Technology pre-tax income was $0.2 billion, a decrease of $768 million.

IBM’s revenue in the fourth quarter was $27.7 billion

So, the mystery about IBM’s layoffs may be no mystery at all. It has a division which is falling apart. It has to cut costs radically. And, as is true with almost any company, those cuts have to include people

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