IBM to Slash 10,000 Jobs in Europe
IBM has revealed plans to cut around 10,000 jobs in its European operations. The cuts are expected to fall heavily on the services business that Big Blue plans to spin off next year.
In early October, International Business Machines Corp. (NYSE: IBM | IBM Price Prediction) 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.
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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%.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
