Active Stocks
Sat Mar 02 2024 12:29:56
  1. Tata Steel share price
  2. 155.30 3.53%
  1. HDFC Bank share price
  2. 1,430.50 -0.05%
  1. State Bank Of India share price
  2. 773.40 0.53%
  1. ICICI Bank share price
  2. 1,084.60 -0.21%
  1. Axis Bank share price
  2. 1,095.00 -0.40%
Business News/ Companies / News/  IBM fires 3,900 employees after missing annual cash target
BackBack

IBM fires 3,900 employees after missing annual cash target

Chief Financial Officer James Kavanaugh said IBM Corp was still committed to hiring for client-facing research and development.

IBM cuts 3,900 jobs, misses annual cash target. (Reuters)Premium
IBM cuts 3,900 jobs, misses annual cash target. (Reuters)

With other tech giants, IBM Corp has also joined the ‘layoff drive’ as the company fired 3,900 employees on Wednesday. The tech hub said that the layoff drive was a part of some asset divestments. 

The company has missed its annual cash target, dampening cheer around beating revenue expectations in the fourth quarter.

Speaking to Reuters, Chief Financial Officer James Kavanaugh said the company was still committed to hiring for client-facing research and development. 

In an official statement, IBM said that the layoffs are related to the spinoff of its Kyndryl business and a part of AI unit Watson Health. 

According to IBM Corp, the layoffs will cause a $300 million charge in the January-March period, while its shares also fell 2% in extended trading, as per Reuters reports.

Jesse Cohen, senior analyst at Investing.com said that it seems as if the market is disappointed by the size of its announced job cuts, which only accounted to 1.5% of its workforce. 

“Investors were hoping for deeper cost-cutting measures," the analyst added. 

In 2022, IBM's cash flow was $9.3 billion which is below its target of $10 billion due to higher-than-expected working capital needs. 

The company has also forecasted that the annual revenue growth in the mid-single digits on constant currency terms is weaker than the 12% it reported last year, as pandemic-led demand for digitizing businesses has given way to cautious spending by clients amid rising recession fears.

It also flagged softness in new bookings in October in Western Europe while peer Accenture Plc noted weakness in its consulting business, Reuters reported. 

IBM's software and consulting business growth slowed down sequentially in the fourth quarter, but cloud spending was a bright spot, with deal signings doubling in 2022 for setting up services with partners such as Amazon.com's AWS and Microsoft's Azure.

Its hybrid cloud revenue rose 2% in the quarter ended December 31. However, its total revenue was flat at $16.69 billion in the period, compared with analysts' estimates of $16.40 billion, according to Refinitiv.

For 2022, IBM recorded revenue growth of 5.5%, its highest in a decade.

 

(With Reuters inputs)

 

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 26 Jan 2023, 06:08 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie