IBM will cut up to 3,900 jobs, or 1.5% of its global workforce, because it missed its annual cash target. Other technology companies, like Microsoft, have done the same thing, cutting jobs suddenly because of weak growth.
According to IBM Chief Financial Officer James Kavanaugh, the mass layoffs, which are connected to IBM’s healthcare and IT services spinoff Kyndryl Holdings, will cost approximately $300 million.
James Kavanaugh stated that IBM still anticipates hiring in areas with higher growth. IBM predicts that revenue will rise by the mid-single digits and free cash flow will reach $10.5 billion in fiscal 2023.
According to James Kavanaugh, the anticipated weakening of the US dollar in 2023 is helping IBM, and the currency fluctuations should have no effect overall in 2023. They will be a drag on results but will become a tailwind in the second.
IBM’s Chairman and Chief Executive Officer Arvind Krishna stated that they invested in hybrid cloud and AI capabilities to enhance the software portfolio.
They will increase investment in particular growth markets, expand our strategic partnerships, and unlock additional productivity this year. Arvind Krishna added that they anticipate revenue growth in the range of our mid-single digit model for 2023 and approximately $10.5 billion in free cash flow.
Meanwhile, the strong US dollar reduced IBM’s reported revenue by more than $1 billion, resulting in flat sales in the fourth quarter. IBM Corp.’s hybrid cloud revenue increased by 11% to $22.4 billion in 2022.
In the face of challenges to the global economy, IBM joins a slew of tech companies, including Meta, Alphabet, and others, in cutting thousands of jobs.