Mass layoffs have been plaguing the tech industry since 2022 and the situation is quite grim. Amidst all of this, IBM is the latest company that has announced layoffs after it failed to meet its cash targets. The company's shares also dropped by 2% in extended trading, leading to the positive results from earlier gains being whittled away.
As per a Reuters report, the company's Chief Financial Officer, James Kavanaugh, says that the company was still "committed to hiring for client-facing research and development". IBM also said that 'the layoffs - related to the spinoff of its Kyndryl business and a part of AI unit Watson Health - will cause a $300 million charge in the January-March period.'
It is unclear as to what departments will be affected or when the first round of layoffs will begin.
Further, the layoffs at IBM will mean that 1.5 per cent of its workforce will be shown the exit door. However, as per Jesse Cohen, a senior analyst at Investing.com, investors are not satisfied with this measure as they were hoping for 'deeper cost-cutting measures'.
"It seems as if the market is disappointed by the size of its announced job cuts, which only amounted to 1.5% of its workforce," says Cohen.
The layoffs were announced after IBM failed to meet its annual cash target for 2022. As per a Reuters report, the cash flow of the company was USD 9.3 billion in 2022. However, the target was set at USD 10 billion because of higher working capital needs.
The company's software and consulting business also slowed down in Q4 with cloud spending being the only silver lining. The hybrid cloud revenue of the company rose by 2 per cent in the quarter ended December 31. IBM also recorded revenue growth of 5.5 per cent, which is its highest in the last ten years.
A number of companies, including Spotify, Wipro, Microsoft, Google, Amazon, and Dunzo, to name a few, have announced layoffs in the past couple of days. LinkedIn is full of people telling their side of the story and seeking new employment opportunities in desperate times. Reports of some companies handling the layoffs in an insensitive manner have also surfaced in recent times and the same has been criticised by netizens. The companies are laying off major chunks of their work force in order to cut costs.
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