IBM to lay off 5,000 US-based workers

AP Source: IBM to lay off 5,000 US-based workers (AP)
Posted on Wed Mar 25, 2009 7:14PM EDT

SAN FRANCISCO - IBM Corp. plans to lay off about 5,000 U.S. employees in a new round of job cuts, the Associated Press has learned. The move reflects IBM's aggressiveness in shifting labor to lower-cost regions like India and keeping its profits aloft at a time when other technology companies' earnings are tumbling.

An IBM manager knowledgeable about the plans said the cuts will come from the services division and workers will be informed Thursday. The person spoke on condition of anonymity Wednesday because he was not authorized to discuss the plan publicly.
The layoffs were reported earlier by The Wall Street Journal.

The cuts will affect about 4 percent of IBM's U.S.-based work force, which totaled 115,000 at the end of 2008. In a sign of how quickly IBM is staffing up in emerging markets, last year IBM had nearly as many workers in Brazil, China, India and Russia — 113,000 — as it did in the U.S.
IBM now has about 400,000 employees worldwide.

Unlike many other tech companies that have recently announced layoffs, IBM has managed to become more profitable despite the recession. IBM's cost-cutting, global footprint, and focus on services and software, which are often more lucrative than hardware, are key reasons why. IBM's net income was up 18 percent last year to $12.3 billion.

In January, Armonk, N.Y.-based IBM cut thousands of U.S. jobs in sales, software and hardware. IBM didn't give the precise number, saying it fell below an amount that would require disclosure.

Other tech companies are also doing big layoffs.
Hewlett-Packard Co. is slashing 24,600 positions, 8 percent of its 320,000-employee work force, in a three-year restructuring as part of its acquisition of Electronic Data Systems Corp. HP paid $13.9 billion for EDS in a bid to compete better against IBM for technology-services contracts.

Microsoft Corp. said in January it was cutting 5,000 jobs, the first mass layoffs in the company's history, after profit in the latest quarter fell 11 percent to $4.17 billion.

IBM's shares ended Wednesday down 35 cents at $97.95.