IBM issued 1,674 layoff notices to U.S. employees in its applications services business on Thursday, as part of a larger round of anticipated cuts to its Global Business Services unit, according to a national representative of Alliance@IBM, an affiliate of the Communication Workers of America, which is seeking to unionize IBM.
The applications services business is one of several areas in IBM's Global Business Services unit, a massive consulting arm that last year generated $19.6 billion in revenue for Big Blue. The Global Business Services unit also posted a 9 percent increase in its revenue.
Alliance@IBM anticipates between 4,000 to 5,000 job cuts to be issued Thursday at IBM's Global Business Services unit, noting the cuts would be on par with those layoffs taken earlier in the year.
"We saw 5,000 job cuts in January-February and with the 5,000 we're expecting today, that brings it up to 10,000 cuts for just this quarter alone," said Lee Conrad, national coordinator for Alliance@IBM. "Many of these jobs are moving offshore and it's a disturbing sign for IBM and the nation."
An IBM spokesman was not immediately available for comment.
UBS analyst Maynard Um, meanwhile, noted in a research note Thursday that he finds it unlikely IBM will transfer all of the affected U.S. positions to cheaper overseas labor markets. As as a result, he anticipates a potential benefit of 10 cents to 14 cents a share to IBM's 2009 earnings.
He also noted that the cuts could signify more aggressive action than previously anticipated from IBM, though it would not be out of line given feedback he has received from the industry suggesting greater employee restructuring.
Um stated in his research note:
In Feb., IBM reaffirmed 1Q09 & FY09 EPS guidance, noting Jan. results were consistent with its outlook, aided by a strong software pipeline & solid long term services bookings. Read-through from potential further restructuring, in our opinion, is mixed. Operational efficiencies may be beneficial to EPS, but may also reflect a more challenging rev environment than thought (perhaps more in the US).
IBM shares were up less than 1 percent to $98.47 a share in morning trading Thursday.
With the recession continuing its hold on the economy, IBM is reportedly preparing for another round of layoffs, according to a report Wednesday in The Wall Street Journal.
The cuts are expected to affect a large swath of U.S. employees in IBM's global business services unit, with a number of the jobs reassigned to workers in India, the Journal reported.
Talk of pending layoffs in IBM's services unit is making the rounds on Alliance@IBM, a Communications Workers of America affiliate attempting to organize IBM workers into a union.
On the Alliance@IBM site, two posts Wednesday referenced pending layoffs in the services unit:
Comment 3/25/09: I talked to two different Band 10s in IBM Global Business Services yesterday who have both said that tomorrow will be a big day for firing in almost all of the GBS business units. Both of them are expecting that they will be cut because the percentages are going to be higher at the higher levels. Both made reference to this could be called a black Thursday. I know that several employees have been contacted by their manager to have a short meeting that day. My manager has not said anything to me yet but I am already preparing myself for the news. -Anonymous-
Comment 3/25/09: 'there is definitely a GBS lay off coming very soon. Big lay offs across the board' Thank you, -modest mouse-. This is welcome news to those being tortured on the bench. -anonymouse-
IBM was not immediately available for comment.
In January, IBM had a round of layoffs, but declined to disclose the area of the cuts, or location. Published reports, however, referred to North America as the location of the layoffs.
Big Blue tentatively has its first-quarter earnings report scheduled for April 20.
Update at 10:45 p.m. with additional information throughout.
Responding to "business realities," Nvidia is cutting its workforce by over six percent.
Nvidia, the world's largest graphics chip supplier, on Thursday announced a workforce reduction of 6.5 percent "to allow for continued investment in strategic growth areas," the company said in a statement. "As a result, Nvidia expects to eliminate approximately 360 positions worldwide, or about 6.5 percent of the company's global workforce."
The company expects to record restructuring-related charges of approximately $7 million to $10 million in the third quarter of fiscal 2009 in connection with the reduction. These pre-tax charges are comprised of severance and related expenses and are expected to be charged primarily against NVIDIA's operating expenses, the company said.
Derek Perez, an Nvidia spokesman, said this is related to a discussion in its second quarter 2008 earnings conference call "about how the business outlook has changed dramatically from what we thought it was going to be at the beginning of the year."
"Our action today is difficult, but necessary considering current business realities. Despite our reduction, we will continue to invest in selective high-growth opportunities like our revolutionary CUDA parallel computing technology and our Tegra mobile single-chip computer," said Jen-Hsun Huang, president and CEO of Nvidia in a statement.
Nvidia has been in the throes of a minor stock meltdown. On July 2, Nvidia announced a one-time charge of $150 million to $200 million to cover warranty, repair, return, replacement costs connected to weak die/packaging material in laptop graphics chip products. Then on Thursday, July 3, shares plunged $5.54, or just over 30 percent, and closed at $12.49. And share prices have continued to fall--though how much of the post-30-percent drop can be attributed to the weak stock market is not clear.
Both Dell Computer and Hewlett-Packard have issued advisories, workarounds, and, in some cases, extended warranties to deal with potential computer breakdowns related to the Nvidia graphics glitch.
Nvidia has also faced stiffer competition from its main rival, the ATI graphics unit of Advanced Micro Devices. ATI's newest midrange and high-end graphics boards--launched in June--were well-received and typically priced at a discount, though roughly equal in performance to Nvidia boards. This forced Nvidia to cut prices on its performance graphics chips.
The workforce reduction is expected to be completed by the end of the third quarter of fiscal 2009 ending October 26, 2008. Nvidia said it will provide employees affected by this reduction with severance packages, counseling, and job placement services.
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