10 May 2002 IBM is preparing swingeing job cuts in the face of slowing sales and continued customer deferrals. According to widespread reports, the world’s largest seller of computer services and hardware will axe around 8,000 workers worldwide.
Speculation about a new round of lay-offs emerged when IBM’s newly appointed CEO Sam Palmisano warned of lower sales and profits in the first quarter.
Profits, unveiled a few days later in April 2002, plunged 32% to $1.2 billion (€1.3bn) on sales down 12% to $18.6 billion (€20.4bn). The systems giant’s first profits warning since 1991 also dashed hopes of an imminent recovery in the technology sector.
The new wave of job cuts are expected to be the widest since the early 1990s. IBM Global Services, which powered IBM’s revenue growth during the 1990s and which employs 150,000 people, is expected to bear the brunt of the cuts.
In November 2001, IBM cut 1,000 jobs in its microelectronics business. It is also in negotiations to transfer its hard disk drive unit with its 17,000 workers to electronics giant Hitachi. Although dubbed a “joint venture”, Hitachi will own 70% of the new company and will make a payment to IBM for its hard disc drive assets.
The London-listed IT services and software group Logica also said it was cutting 700 jobs as it warned that business at its mobile networks division had “worsened significantly” in the second half.