IBM denies rumour its shedding 100K jobs; calls report ‘baseless’
Armonk, N.Y.-based IBM "flatly" denied Forbes report that claimed it would layoff 100,000 workers globally
SAN FRANCISCO—Calling it “ridiculous” and “baseless,” International Business Machines Corp. (IBM) dismissed a report that said the technology giant plans to lay off 100,000 people.
The company “flatly denies” the Forbes report, IBM spokesperson Ian Colley said in a phone interview.
IBM previously has announced layoffs affecting “several thousand people,” only “a small fraction” of the number predicted last week by a blogger on Forbes.com, IBM said in a statement.
The Forbes report would put the number at slightly less than 25 per cent of the company’s global workforce.
Employees may be relieved, but investors appeared to have welcomed the idea of big changes at Big Blue.
Between Jan. 22, when the report was posted online, and the company’s Jan. 26 denial, IBM shares rose about four per cent to peak at US$159.46.
Investors may be looking for IBM to make some significant changes, said Morningstar stock analyst Peter Wahlstrom, although 100,000 job cuts is more than he would expect.
These kinds of rumours come up periodically, Wahlstrom said, though they get “snuffed out pretty quickly” if there’s no weight to them.
BlackBerry Ltd. investors got excited earlier this month when Reuters, citing an unnamed source, reported that Samsung Electronics Co., Ltd. was in talks to buy the Canadian smartphone maker.
Shares spiked 30 per cent but the surge stalled after both companies denied the report.
Some analysts said that rumour was plausible because a tie-up could be the boost both companies need.
However, laying off a quarter of IBM’s workforce would be “off the charts,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co., which holds about 300,000 IBM shares.
“I can’t see that. But I wouldn’t be surprised if we did hear of some more layoffs,” he said.
IBM has had three big reorganizations in previous decades, he noted.
“They do let people go,” Morgan continued. “I think that’s why this is gaining some traction.”
Such a huge layoff would be disruptive and “inconsistent” with IBM’s recent statements, Bernstein Research analyst A.M. Sacconaghi said in a note to investors.
But, “ironically, given the stock’s increase over the last couple trading days, we also see the potential for disappointment if a meaningful workforce action is not announced in the near-term.”
IBM is confronting a sales slump as it struggles to adapt to big changes in the way businesses buy software and other commercial technology.
It issued another disappointing earnings report last week, as both revenue and profit fell in the quarter ending in December 2014.
CEO Virginia Rometty said she’s working to refocus the Armonk, N.Y., company on new tech markets, including data analytics, artificial intelligence and cloud computing.
Its planned layoffs are aimed making cuts in some areas to then hire about 15,000 workers with new skills.
As of the end of 2013, IBM had 431,212 workers.