Ginni Rometty, President and CEO of IBM, beg at the @Work event in New York City, on April 2, 2019.
Cindy Ord | CNBC
IBM confirmed on Thursday that it’s laying off a small part of employees, confirming reports that appeared earlier in the day on TheLayoff, an online message board.
A person familiar with the complication said the cuts affect about one half of one percent of employees. IBM has more than 340,000 employees, according to its rearmost proxy statement, which means the cuts would affect around 1,700 employees.
“We are continuing to reposition our gang to align with our focus on the high-value segments of the IT market, and we also continue to hire aggressively in critical new areas that commit value for our clients and IBM,” a company spokesperson told CNBC in an email. The company’s jobs page lists 7,705 chances.
The trim comes as IBM seeks to evolve its business through a major acquisition and meet its goal of growing profits.
IBM divisions are up 16% since the beginning of 2019. In April the company reported first-quarter revenue that was down 5% year in year and below analysts’ expectations.
IBM is in the midst of a plan to acquire open-source software giant Red Hat for $34 billion. The dole out is set to close in the second half of this year.
IBM has its own public cloud infrastructure for deploying applications, but in buying Red Hat, IBM has sought to also get business from companies adopting other public clouds, like Amazon Web Services and Microsoft Azure, both of which require more market share, according to Synergy Research Group.
IBM announced job cuts in 2016 and in 2017.
Earlier this month, Evercore ISI analysts Amit Daryanani and Irvin Liu highlighted the esteem of the Red Hat deal as they initiated coverage of IBM:
“While IBM stock will likely be range bound near-term, as investors abide on the sidelines until they have better understanding of IBM’s financial profile post close of the Red Hat acquisition, our positive position is based on our favorable view of the RHT deal which has the potential to be transformational as it significantly broadens IBM’s capabilities and customer reach,” decried Daryanani and Liu.
Red Hat had 13,360 employees as of Feb. 28, according to its annual report.
In April IBM said it’s looking for at least $13.90 in earnings per allocate, excluding certain items, for 2019. That would be up from $13.81 per share, excluding certain items, in 2018.
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