August 13, 2002 4:56 PM PDT
IBM cutting 15,000 jobs
The Armonk, N.Y.-based computer giant disclosed the number as part of its effort to comply with new accounting directives. Layoffs began earlier this year as a way to cut costs, but the company until now had not specified the extent of the job cuts.
The cuts come to approximately 5 percent of the approximately 300,000 people that IBM employed at the beginning of the year. The company began to cut jobs at the beginning of the year and said in its second-quarter conference call that further cuts would be coming, an IBM representative said.
The company took a $767 million pretax charge in the second quarter to cover the expense.
In total, IBM will eliminate 15,613 jobs, the representative said. About 1,400 jobs will be eliminated in the microelectronics group. The division has completed about 3 percent of those cuts, with the remainder to occur by the end of August.
The remaining 14,213 cuts will largely come from the services group. Approximately 57 percent of the employees have already left with the remainder to leave by September, the representative said.
The job cuts exceed earlier analysts estimates, which hovered around the 9,000 level.
Big Blue will also shed a number of jobs through sell-offs. Approximately 18,000 employees left IBM with the transfer of the assets of its hard-drive division to Hitachi. An additional 2,000 will leave the company in a transfer of an Endicott, N.Y., chip facility.
The computing behemoth reported an actual profit of just $56 million, or 3 cents per share, after charges for the quarter, which ended June 30. Revenue for the three-month period came in at $19.7 billion. The figure reaches $20.3 billion when including revenue from discontinued operations. But excluding a charge of 81 cents per share for costs associated with the company's exit of the hard-drive business, layoffs and other divestitures, IBM turned a profit of 84 cents per share for the quarter, beating expectations.
Last year, IBM posted a profit of $2 billion, or $1.15 per share, in the second quarter. This year's $19.7 billion in second-quarter revenue ($20 billion including $379 million in revenue from the hard-drive business) was also down from the $20.8 billion recorded in the same period a year ago.
News.com's Ian Fried contributed to this report.