IBM announces 3,900 job cuts after missing annual cash target
IBM Corp announced 3,900 layoffs as part of some asset divestments and missed its annual cash target, dampening cheer around beating revenue expectations in the fourth quarter.
The IBM Corp on Wednesday announced 3,900 layoffs as part of some asset divestments and missed its annual cash target, dampening cheer around beating revenue expectations in the fourth quarter. According to James Kavanaugh, the chief financial officer, the business is "dedicated to recruiting for client-facing research and development."
The layoffs, which are connected to the separation of IBM's Kyndryl business and a portion of Watson Health's AI division, would result in a $300 million charge between January and March, the company said.
In extended trade, the company's shares decreased 2%, wiping off previous gains on the generally positive report. Analysts said that the decline was caused by news of the layoffs and a negative free cash flow.
U.S. businesses have been actively cutting expenses and shrinking their workforces to better adapt to the global economic crisis, from Big Tech to the main Wall Street banks. Due to higher-than-anticipated working capital requirements, IBM's 2022 cash flow was $9.3 billion, falling short of its forecast of $10 billion.
The company also predicted yearly revenue growth in the mid-single digits in constant currency terms, which is less than the 12% it recorded last year as customer caution has replaced pandemic-driven demand for corporate digitization due to growing recession worries.
For 2022, IBM recorded revenue growth of 5.5%, its highest in a decade.