IBM Corp said it would lay off 3,900 people as part of some divestment of assets | Photo credit: Reuters
IBM Corp said on Wednesday it would lay off 3,900 people as part of asset divestment and posted flat revenue in the fourth quarter due to a lack of demand for its consulting services.
Big Blue spun off its large and backward managed infrastructure business in late 2021 to focus on its hybrid-cloud, now called Kindril, where it offers customers its own data centers and leased computing infrastructure. Helps to establish a combination of resources. It also divested its healthcare data and analytics business from Watson Health, its AI business.
IBM said the resulting layoffs would lead to a $300 million charge in the January-March period.
But the company’s chief financial officer, James Kavanaugh, told Reuters on Wednesday that IBM would continue to recruit in focus areas.
“Unlike many others over the last 2 to 2-1/2 years who were hiring tens and thousands of people…we are taking advantage of digitization, AI automation, which drives efficiency, but we are client -Committed to hiring for research and development,” he said.
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The company also forecast annual revenue growth in the mid-single digits at constant currency terms, weakening from the 12% reported last year, as the pandemic-led demand for businesses to digitize increased consumer spending amid the growing recession. has given way to cautious spending. fear.
IBM showed a softening of new bookings in Western Europe in October, while peer Accenture Plc also saw weakness in its consulting business. In November Cognizant Technology Solutions Corp cut its 2022 forecast due to a pullback in contracts.
Still, Kavanaugh said the company continues to see its consulting business grow in terms of cloud spending. Its deal signings doubled in 2022 to set up services with partners such as Amazon.com’s AWS and Microsoft’s Azure.
Its hybrid cloud revenue rose 2% to $6.3 billion in the quarter ended December 31. Total revenue for the period was $16.69 billion, compared with analysts’ estimates of $16.40 billion, according to Refinitiv.
The 110-year-old company, which earns more than half its revenue outside the United States, said it expects a neutral foreign exchange impact on its business this year due to the weakening US dollar. It recorded a foreign exchange hit of over $1 billion during the fourth quarter.