IBM Corp joined other tech giants on a “layoff drive” when the company laid off 3,900 employees on Wednesday. Tech Hub said the layoff campaign was part of some asset sales.
The company has missed its annual cash target, dampening cheer around beating revenue expectations in the fourth quarter.
Chief Financial Officer James Kavanaugh told Reuters the company remains committed to hiring talent for customer-focused research and development.
In an official statement, IBM said the layoffs were related to a spin-off of its Kindril business and part of his AI arm, Watson Health.
The layoffs are expected to cost the company $300 million over the January-March period, according to a Reuters report, and the stock fell 2% in long-term trading, according to IBM Corp.
Investing.com senior analyst Jesse Cohen said the market seemed disappointed by the size of the announced job cuts.
“Investors wanted deeper cost-cutting measures,” the analyst added.
His IBM cash flow for 2022 is $9.3 billion, below his $10 billion target as working capital needs exceeded expectations.
The company also expects annual sales growth at constant exchange rates to be weaker than the 12% reported last year. .
Competitor Accenture Plc also noted weakness in its consulting business, while his October new bookings in Western Europe also showed weakness.
Growth in IBM’s software and consulting business slowed in the fourth quarter in a row, but contract signings to set up services with partners such as Amazon.com’s AWS and Microsoft’s Azure doubled in 2022. Cloud spending was a silver lining.
Hybrid cloud revenue increased by 2% for the quarter ended Dec. 31. However, his total revenue for the period remained flat at $16.69 billion, compared to analyst estimates of $16.4 billion, according to Refinitiv.