Rumors are circulating that one of the largest layoffs in corporate history is about to hit. While some people are reporting that due to a restructuring plan IBM plans to let 112,000 workers go, about 26% of the company’s staff, others disagree. According to Robert Cringely, tech blogger, the layoff will happen this Wednesday and primarily affect mainframe and storage business, which have both been struggling.
However, IBM released a statement that the company refuses to comment on rumors, even those that are baseless or ridiculous. It added that if anyone took the time to check available information found in the public earnings statement or simply came to the company and asked, they would know that a $600 million charge for workforce rebalancing has been taken. In other words, if there are layoffs the numbers will be only a few thousand, dramatically less than what others are reporting.
Overall, this confirms that a layoff is coming but instead of 112,000 workers, it will only affect a few thousand people although the exact number remains unclear. Worldwide, IBM employs roughly 430,000 people.
IBM also pointed out that last year, 45,000 people were hired and that currently, there are close to 15,000 positions open for specific areas of the company showing growth to include security, mobile technologies, cloud, social technologies, and analytics. As such, it becomes clear that IBM will keep remixing skills to match the best marketplace opportunities. Interestingly, analysts remain highly skeptical of this report as well.
For example, Frank Gens, chief analyst with IDC said that he is not sure if the reports are right or wrong but he strongly believes they are both grossly exaggerated. When Cringely was asked about his comments regarding the mass layoff, he firmly stands by his reporting.
Cringely added that what he has seen from IBM so far, the company is calling him names, which to him means absolutely nothing. He insists a significant layoff will occur this Wednesday with an average 26% of staff losing their jobs.
In 2012, Cringely wrote “The Decline and Fall of IBM”, a book that claimed by 2015, as much as 78% of the workforce would be out of a job. In the book, Cringely states that over the past three years, the US labor force has been cut dramatically by IBM but overall, only 10% of the workforce was affected.
Massive layoffs are nothing new to IBM. In fact, in 1993 the company quickly became known for having the largest layoff in history, which involved 60,000 workers. In addition, IBM is in some big trouble according to the Dow Jones Industrial average that shows 2014 it was the worst performer. For three years, sales have been down.
Taking the weakened global economy with poor sales has softened demand for virtually all of the core products offered by IBM. Last year, Ginni Rometty, CEO of IBM abandoned the 2015 forecast, delivering an earnings prediction that had been revised last week that did not meet reduced expectations of Wall Street analysts.