IBM's 'Transformation': More Layoffs, Despite Earnings Surge

IBM layoffs follow earnings surge

When a company reports strong end-of-the-year earnings, workers might expect some positive news -- maybe a bonus, even. But that's not what happened at IBM. On Wednesday, the same day the Armonk, N.Y.-based technology corporation announced its net income "surge" of 6 percent for the fourth quarter, reports came out that IBM was planning layoffs.

Why would workers be laid off when total net income was $5.8 billion, better than what most analysts expected?

"Transformation is a permanent feature of our business model," IBM spokesman Doug Shelton explained via email. "Technology evolves -- requiring new skills. Client needs shift -- requiring new capability. Consequently, some level of workforce remix is an ongoing part of our business model."

Shelton passed on confirming the lay-off rumors, saying the company was preparing its annual "remixing." No specifics about what divisions will be targeted, or how many workers, have been released.

Restructuring of IBM included layoffs in March of last year. In that round, some 1,100 workers were laid off in both the U.S. and Canada. The cuts came largely from business divisions. As of the end of 2012, IBM reported a staff of 433,362 workers.

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In a conference call with analysts and investors Wednesday, IBM's senior vice president Mark Loughridge said a leaner workforce, along with selling businesses and research and development investments, would be part of the company's "2013 transformation," according to The Times Herald Record Online.

"We're going to rebalance resources, align them to opportunities," Loughridge said. In recent years, IBM has been moving away from hardware toward software and services, according to Time magazine.

Shelton credited the strong financial performance to a host of initiatives at IBM, like cloud computing, that require new staffing as the company continues to remake its business model.

Founded in 1911 as the Computing Tabulating Recording Company, IBM ushered in its first round of layoffs in 1993.

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