After reporting weaker-than-expected revenue and a significant drop in net income last month, IBM is now preparing to lay off between 2 per cent and 3 per cent of its global workforce in a cost-cutting move.
An IBM spokesman declined to comment on the company's strategy, but a source close to the company confirmed that the layoffs would affect 2 per cent to 3 per cent of IBM's employees, or between 6,400 and 9,600 workers. The company has 320,000 employees worldwide.
No further details on the cuts or when they will begin were available.
However, predicting even more severe cuts is rumor site F***edCompany.com, which says IBM is preparing to lay off 10 per cent of its US workforce. (About 160,000 IBM employees are based in the US) This rumor site, which tracks layoffs among dot-com and established tech companies, suggests the layoffs will occur May 23, with IBM Global Services taking the biggest hit.
Last month, IBM announced its financial results for the first quarter of 2002, reporting net income of US$1.19 billion, a 32 per cent decrease from $1.75 billion a year earlier. IBM's first-quarter revenue totaled $18.6 billion, a decrease of 12 per cent compared with the first quarter of 2001.
At the time, Samuel Palmisano, IBM's president and CEO, called the results "disappointing" but said they were largely the result of the global business environment, which has still not pulled out of its downturn.
Layoffs have been a continuing issue for companies across the IT industry in recent months as they struggle to cut costs and stay afloat until customers begin reinvesting in their IT infrastructures.