IBM fired 3,900 employees after missing annual cash targets

While beating revenue expectations in the fourth quarter, the company lowered its annual cash target.

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 the layoffs are related to the spinoff of its Kyndryl business and a portion of its AI unit Watson Health.

According to IBM CorporationThe layoffs will lead to a $300 million charge in the January-March period, according to a Reuters report, while its shares also fell 2% in extended trading.

Jesse Cohen, senior analyst at Investing.com, said it appeared as though the market was disappointed with the job cut announcement, which amounts to only 1.5% of its workforce.

“Investors were expecting cost-cutting measures,” the analyst said.

In 2022, IBM projects cash flow of $9.3 billion, well short of its target of $10 billion due to higher-than-expected working capital needs.

The company also forecast annual revenue growth in the mid-single digits at constant currency terms, weaker than the 12% reported last year, as the pandemic-led demand for businesses to digitize amid a growing recession has given way to cautious spending by customers. fear.

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

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

Its hybrid cloud revenue grew 2% in the quarter ended December 31. However, its total revenue for the period came in at $16.69 billion, compared with analysts’ estimates of $16.40 billion, according to Refinitiv.

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

(With Reuters inputs)