IBM plans to cut between 10,000 and 13,000 jobs, or about 3 percent to 4 percent of its global workforce, and a company official said as much as three-quarters of the job cuts will fall in Europe, with Germany, Britain, Italy and France. IBM will take a charge of $1.3 billion to $1.7 billion in the current quarter to pay for severance packages and other payments to the laid-off workers.
IBM announced the widely expected cuts, late on Wednesday, and on Thursday it said it could save $300 million to $500 million this year and still meet earnings targets for the second half thanks to the cost cuts. IBM signaled cutbacks last month when it released its earnings announcement that first-quarter profits and sales would fall well short of expectations.
"We expect to realize from $300 million from $500 million," IBM Chief Financial Officer Mark Loughridge said of savings expected in the second half of 2005. He later added: "We expect there will be two-to-two-and-a-half times this savings" in 2006. That would translate into savings of anywhere from $600 million to more than $1 billion by 2006.
"Wall Street is looking for full year net profits, on average, of $4.96 per share, with revenue of around $98.9 billion, according to a survey of brokers by Reuters Estimates. Analysts expect sales to grow 2.5 percent over 2004.
IBM shares fell $1.58 to $75.50 on the New York Stock Exchange and are down 23 percent so far this year reports Reuters.
IBM, based in Armonk, New York, employed 329,000 staff worldwide in December, the last time the company disclosed its total work-force figures. About 100,000 of those jobs were located in Europe.
