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Analysts Call IBM Layoff Estimates "Hogwash"
Posted by
ScuttleMonkey
on Mon May 07, 2007 06:08 PM
from the only-time-will-tell dept.
from the only-time-will-tell dept.
jbrodkin writes "Rumors have been floating around saying IBM will cut 150,000 U.S. jobs, but a Network World story attempts to set the record straight by quoting analysts who say this news, if true, would wipe out the company's entire U.S. operations and would make no sense since IBM is actually doing pretty well."
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IBM to Lay Off Half of Global Services Division 553 comments
Rolgar writes "Cringely says that IBM has begun massive layoffs in a quiet manner, starting with 1300 employees, but by the end of the year, the total will rise to at least 100,000 and probably closer to 150,000 employees, nearly 40% of their U.S. workforce. Some people will be temporarily retained as contractors at a fraction of their salary, and eventually, IBM will also dump many of the unprofitable customer contracts worked on by Global Services or outsource the work to Asia. If these people are looking for work, that could seriously drop wages for technical workers in the US since they will have to compete with these people for available jobs."
[+]
IBM Says 'Couldn't Fire 150K US Workers If We Wanted To' 219 comments
theodp writes "In an e-mail worthy of the Dilbert Hall of Fame, IBM execs responded to Robert X. Cringely's Project LEAN layoff rumors, reassuring employees by pointing out that they've already wiped out too many U.S. jobs to be able to lay off another 150,000. Big Blue's employment peaked around 1985, when it had about 405,000 workers who were acclimated to a long tradition of lifetime employment. IBM puts its current global workforce at 355,766, with a 'regular U.S. population' of less than 130,000."
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They're probably right, but... (Score:2, Informative)
...they're just analysts. They don't actually know anything. They're making educated guesses at best.
FTFA:
Analyst Frank Dzubeck, president of Communications Network Architects, says the layoff rumor "sounds kind of ludicrous since there's only [about 350,000] people] in the entire company. That means they'd be wiping out every division in the United States including the headquarters, which doesn't seem plausible."
why does it mean that? they probably have several divisions they could drop entirely becau
That's not what they mean (Score:5, Informative)
Parent
Well... (Score:3, Interesting)
Re: (Score:3, Insightful)
IBM NEVER talks about layoffs. (Score:3, Informative)
Re: (Score:3, Informative)
Why is it that people have such a hard time reading simple words and numbers? IBM doesn't have 350,000 people in the US. IBM has about 330,000 people total, IN THE WORLD. IBM has some 130,000 or so people in the US. Total. Less than half of that is IGS. But just for fun, let's say half of IBM is in the US and half of IBM is IGS (that is not the case). We end up with IGS being a
Not hogwash, not just the US (Score:4, Informative)
Our offices here in Winnipeg (Canada) are going to be decimated down to a skeleton staff of people to maintain our managed servers (for places like MTS, etc.) I've been hunting for another job for 2 weeks now, since a relative of mine high up at IBM told me about my office situation.
Re: (Score:3, Funny)
Depends on how you define it... (Score:4, Interesting)
Are they talking just full-time people or contractors? My guess is that they're only counting full-timers.
If they include contractors in the number of people IBM employs, I have no problem believing this "hogwash" figure.
Re: (Score:3, Funny)
Maybe I am not knowing the meaning of this "hogwash" word you are using...
For those that are wondering, it was a hog wrestling contest at a men's gathering. And yes I did get a Tshirt for doing it!
When have upper management decisions . . . (Score:2, Insightful)
Maybe there was a time long ago, but recently the only way to make sense out of half of the actions we see out of big company CEO's is if there actions will somehow justify giving themselves another $10 Million or so in salary or other bonuses.
Re: (Score:3, Insightful)
Never underestimate the lure of the dark side... (Score:5, Interesting)
It's all about short-term stock price manipulation (which I call the "dark side" since it ultimately winds up being a loss but brings instant gratification).
If the CEO is retiring soon, then he has little incentive to do right by the company in the long run, and plenty of incentive to play games to increase the stock price in the short term (so he can sell off his shares after the price goes up). A massive layoff like this would be entirely consistent with that scenario. And it's not like the company's "investors" would give a damn about the long-term outlook of the company anyway. After all, it's all about the growth rate of the stock, and fast growth for a short time is still fast growth that "investors" can take advantage of. They just have to dump the stock before it crashes.
So not only is a massive layoff of this scale plausible, I think it's highly likely. It's just the ultimate manifestation of the short-term thinking that American "businessmen" are so infatuated with.
About the only thing that might prevent it is a huge backlash against IBM by "investors", which is possible but doubtful IMO.
Re:Never underestimate the lure of the dark side.. (Score:4, Interesting)
>run
The CEO in a corporation like IBM is never a dictator, never has sole authority on executive decisions, and is held accountable to a Board of Directors, all of whom also have a vested interest in the corporation (and contrary to popular belief, do generally consider performance beyond the next quarterly report.)
A company with as diverse stakeholders and as much volume as IBM has, will have quite strict controls on governance and management.
Parent
Re: (Score:3, Informative)
I *wish*. OMFG are you serious?
Category 1984 2004 Percent change
Disney's Revenues $1.5 billion $30.8 billion +2,000
Disney's Income $294 million $4.49 billion +1,600
Disney's Tax-Free Cash Flow $100 million $2.9 billion +2,900
Stock Price (adjusted for splits) $1.33 $28.40 +2,100
Market Value $1.9 billion $57.4 billion +3,000
Disney's Enterprise Value
(market value plus debt minus cas
Re:Never underestimate the lure of the dark side.. (Score:5, Insightful)
IBM will lay off and hire people here and there always. Some times they will lay off or hire a lot of people. IBM has acquired a lot of companies the past couple of years, layoffs are inevitable. These numbers are insane though. Insane for a simple reason: IGS doesn't have 150,000 people in the US to lay off. IGS doesn't have 150,000 people in the US period. So, will IBM hire all of these people before they fire them?
Cringely needs to lay off his mothers medication before he writes his nonsense.
Parent
Re:Lazy Americna perception... (Score:5, Funny)
Parent
Satirewire article: (Score:3, Funny)
http://www.satirewire.com/news/att.shtml [satirewire.com]
At first, I remembered this as being an onion article, but actually it wasn't. Although the onion did have:
http://www.theonion.com/content/node/28984 [theonion.com]
So there you go!
Cringley was the one to break this story (Score:4, Funny)
Senate Bill to Triple H-1B's Next Year (Score:3, Informative)
Well, if you read Cringeley's comments section (Score:3, Interesting)
So I suspect it's all true - although the actual count of employees to be outsourced might be speculative at this point since it appears IBM is keeping that number close to its vest.
Layoffs are underway, but exact number not public (Score:4, Informative)
However, IBM is using staff cutting and IBM India augmentation to achieve the efficiencies that are documented in LEAN-M, whereas IBM's implementation of LEAN is really just a pony show that is masquerading as an internal offshoring program.
The number of decimated IGS units in total will probably be something closer to 30K-40K employees.
For the record, IBM has also made a settlement in a class-action in respect to its Cash Balance pension changes which were instituted after Y2K. Many people at Alliance@IBM (the organization which is trying to unionize existing IBM employees) fear that IBM is trying to put the pension fund itself into default so that those obligations can be wiped off the balance sheet, which would also be an instant win on IBM's stock EPS.
IBM is not only ditching employees, it is also ditching customers. IGS was known for signing a lot of non-profitable contracts in anticipation that future work would be coming from those same clients (in addition to ancillary project-related purchases by clients for things such as networking and hardware and all the labor that goes with that).
That apparently didn't come to fruition. IBM will be giving some sad news in the next few years to come of its accounts as it lets those go, and those resources who were working on them.
Bait and Switch (Score:5, Insightful)
And IBM will look like the good guys, or at least not-so-bad guys.
IBM Employees and Contractors (Score:3, Informative)
I know of 10 contractors that were let go and 2 regulars. I know of another team that lost 15 of their 23 member team but don't know the breakdown.
[John]
The number are wrong but it's going to be harsh (Score:3, Informative)
Yeah I think it will happen.