Analysts Call IBM Layoff Estimates "Hogwash"

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."

Depends on how you define it...

[bladesjester]

The question that comes to my mind is how are they defining "employee" for the 350,000 people in the company figure?

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.

Well...

[DogDude]

Well, Haliburton is in the process of doing that for other reasons. It's apparently possible.

The investors don't seem to have heard

[Anonymous Coward]

http://www.investorvillage.com/smbd.asp?mb=4326&pt =m [investorvillage.com]

The IBM message board over at InvestorVillage seems to be ignoring this story ever since it broke last week. Usually the message boards are the first to jump on every unfounded rumor. It just seems that this story has zero credibility.

I begin to wonder if it was made up by a guy called Darl.

Never underestimate the lure of the dark side...

[kcbrown]

"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."

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..

[fishbowl]

>If the CEO is retiring soon, then he has little incentive to do right by the company in the long
>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.

Well, if you read Cringeley's comments section

[Master of Transhuman]

there are plenty of IBM types weighing in that they can easily see this happening - some have already left or been informed they will be terminated - and they know the company is having serious trouble with its Global Services division.

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.

Re:Never underestimate the lure of the dark side..

[DustyDervish]

According to Marketwatch last week, there are a few global US corporations with US operations that are bleeding money. They continue to make their quarterly numbers because operations outside of the US are doing really well. I would not be surprised if we see more than one company pull out from the US entirely. The whole ruckus over importing cheap labor can be bypassed if they just move the company right to where the cheap labor actually lives. When your transportation is Bombardier Learjets and Limos, do you really care where the office is?

I could see 50,000 of that 130,000 out the door

[Blue6]

130,000 seems like a pretty big number, however I work for Ford we got rid of about 20,000 people over the last few months the projected final figure is going to be around 30,000 for lay-offs, buyouts and firings. My department went from eighteen people down to two; I 'm one of the lucky two to still have a job. IBM made a big push into managed services while it's still big business the market that IBM caters to ie large corporate business is getting smaller the real growth / money for managed services is in the small to medium sized companies, most large companies have figured out they can go to India on their own they don't need to have IBM act as the middleman. Managed services are becoming cheaper and can be bought ala carte. Google hosted managed exchange servers or whitebox VOIP if you want a glimpse of what future managed services are going to look like.

Compared to HP, Google

[sig226]

Facts:
HP has 156,000 employees, and about 90 billion in revenue.
IBM has 366,000 employees, and about 90 billion in revenue.
google has 11,000 employees, and about 12 billion in revenue.

I think that's where the 150K came from, the old $/employee ratio.