In early October, International Business Machines Corp. (NYSE: IBM) announced that it would spin off its managed infrastructure services business into a separate company and focus the leaner company’s attention on the hybrid cloud market. In an emailed statement Wednesday morning, the company said that it plans to trim some 10,000 jobs in Europe in the services unit ahead of the spin-off.
The announced cuts amount to about 20% of IBM’s European workforce, and Bloomberg reported that the cuts would fall most heavily on IBM offices in the United Kingdom and Germany. Operations in Poland, Slovakia, Italy and Belgium also will see job losses. According to the website Silicon UK, IBM is chopping about 2,300 jobs in Germany and 2,000 in the United Kingdom.
IBM typically does not disclose the number of job cuts it makes, but the company already has cut thousands of jobs this year. New CEO Arvind Krishna has set returning Big Blue to profitability as his primary goal. Reducing staff and spinning off low growth businesses fit right into that strategy.
On IBM’s third-quarter conference call, Chief Financial Officer James Kavanaugh said the company will take a fourth-quarter charge of about $2.3 billion due to the spin-off. IBM expects the spin-off to be tax-free to IBM shareholders and to be completed by the end of next year.
IBM stock traded down about 1.5% early Wednesday, at $122.54 in a 52-week range of $90.56 to $158.75. The consensus price target on the stock is $137.13. IBM’s dividend yield is 5.43%.