New Apple partner IBM prepares for another round of layoffs

By

Tim Cook announcing Apple's partnership with IBM CEO Ginni Rometty last summer. Photo: Apple
Tim Cook announcing Apple's partnership with IBM CEO Ginni Rometty last summer. Photo: Apple

Update: Downplaying reports about the size of its impending layoffs, IBM says it will let go of only “several thousand people,” not the much-larger number reported by Forbes. We’ve updated this story and its headline to reflect IBM’s statements.

Things aren’t going well for IBM. Six months into its partnership with Apple, Big Blue is reportedly preparing for the largest corporate layoff in history.

After nearly three years of quarterly revenue decline, IBM is preparing to ax a staggering 111,800 employees, according to Forbes. Saying it does not respond to “ridiculous” rumors, IBM says the layoffs will be much smaller than that. How the layoffs will affect the company’s business with Apple remains unclear.

The looming layoffs, code-named “Project Chrome,” would reportedly mean about 26 percent of IBM’s workforce would be let go this week, according Forbes. All 111,800 employees would be gone by the end of next month. Most of the layoffs would happen in the United States, but some international operations would be affected as well.

If the numbers are accurate, IBM would be topping the previous corporate layoff record of 60,000 in 1993 — a record also set by Big Blue.

“People let go will be excluded from consideration for the new business units,” according to Forbes’ damning report. “In a few months those new business units will start to work calling on IBM customers to sell them on the new CAMSS (Cloud, Analytics, Mobile, Social and Security) stuff. They will walk into a hornet’s nest.”

Apple and IBM rolled out the first wave of its MobileFirst enterprise apps last month. Enterprise is a sector Apple has had a lot of trouble gaining significant market share in, which makes its relationship with IBM all the more important.

IBM has at least 6,000 people dedicated to its MobileFirst partnership with Apple, and it’s unclear if that specific work force will be reduced by the layoffs.

We’ve reached out to IBM for comment.

Update: IBM released the following statement to The Wall Street Journal dismissing the Forbes report:

“IBM does not comment on rumors, even ridiculous or baseless ones,” the spokesman said. “If anyone had checked information readily available from our public earnings statements, or had simply asked us, they would know that IBM has already announced the company has just taken a $600 million charge for workforce rebalancing. This equates to several thousand people, a small fraction of what’s been reported.”

Update 2: On its Hong Kong blog, IBM commented further on what it called an “unfounded rumor“:

IBM does not comment on rumors or speculation. However, we’ll make an exception when the speculation is stupid. That’s the case here, where an industry gadfly is trying to make noise about how IBM is about to lay off 26 percent of its workforce. That’s over 100,000 people, which is totally ludicrous.

The fact is that IBM already announced, after 3Q earnings report, that the company would take a $600 million charge for restructuring. That’s several thousand people. Not 10,000, or 100,000. Moreover, IBM currently has job postings for more than 10,000 professionals worldwide, with more than half of them in growth areas such as cloud, analytics, security and mobile technologies. IBM’s new cloud leader, Senior Vice President Robert LeBlanc, told Fortune this week that IBM has plans to hire 1,000 cloud professionals.

A little perspective on IBM’s earnings is in order. The company still makes huge profit… $21 billion in operating pre-tax profit last year. And IBM’s “strategic imperatives” represent 27% ( and growing ) of the company’s total revenue… $25 billion in revenues, up 16 percent. We have high growth in a substantial portion of the portfolio, and those areas (CAMSS) have better-than-normal margins in areas that matter most to clients today — that’s the heart of the IBM transformation.

Source: Forbes

Via: ITWorld