IBM says 'several thousand' layoffs on the way

IBM is dismissing a report in Forbes that it is planning a massive reorganization that could see layoffs of as many as 110,000 workers beginning next week.

Dismisses report by Silicon Valley journalist Robert Cringely of 110,000 job cuts

IBM earnings have fallen for 11 quarters and there are reports of a massive reorganization on the way. (Mark Lennihan/Associated Press)

IBM is dismissing a report in Forbes that it is planning a massive reorganization that could see layoffs of as many as 110,000 workers beginning next week.

The company said it is planning layoffs that could affect several thousand employees, but said the Forbes report is inaccurate.

"IBM does not comment on rumours, even ridiculous or baseless ones," the company said in an email to Reuters. "If anyone had checked information readily available from our public earnings statements, or had simply asked us, they would know that IBM has already announced the company has just taken a $600-million charge for workforce rebalancing. This equates to several thousand people, a small fraction of what's been reported."

Silicon Valley journalist Robert X. Cringely, author of The Decline and Fall of IBM, had reported notices could go out as soon as next week to 26 per cent of the company's workforce. IBM recently reported shrinking profits for an 11th quarter.

The tech giant, which relies on service contracts for a significant portion of its cash flow, is suffering as companies shut down their internal data centres and move services to the cloud.

Big Blue holds the previous record for the biggest corporate layoff, after chopping off 60,000 workers in 1993.

Cringely predicts the bulk of the layoffs will be in the U.S., and affect mainframe and storage divisions. Citing unnamed sources inside IBM, he says the company has been planning a reorganization dubbed Project Chrome to boost its earnings.

IBM recently announced the new Z13 mainframe, but that is unlikely to protect jobs in the mainframe division.

It also bought cloud services provider Softlayer and is opening cloud data centres around the world, including one in Canada, in an effort to move to a new business model. However, it is behind rivals such as Microsoft, Google and Amazon in adapting to cloud computing.

Cloud offerings at IBM are expected to bring in $3.1 billion on an annualized basis in 2014, only a fraction of IBM’s total $100 billion in revenue last year.

In his book, Cringely blames poor management and lack of vision for IBM’s decline.

With files from Reuters

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