IBM has announced 3,900 job cuts following similar moves by other tech giants.
The number is around 1.5 percent of its global workforce.
The move will cost the firm around $300 million and the layoffs will focus on staff who remained following the spinoff of the Watson Health and Kyndryl operations, according to Chief Financial Officer James Kavanaugh.
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Despite the cuts, Kavanaugh said IBM continues to anticipate hiring in the “higher-growth areas.”
IBM said in its forecast that free cash flow this fiscal year is expected to be US$10.5 billion, while revenue should increase in the mid-single digits.
Analysts predicted $9.18 billion in free cash flow and 1.2 percent annual sales growth.
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According to Kavanaugh, IBM is benefiting from expectations that the US dollar will weaken this year.
Currency fluctuations should have a neutral impact on results this year, dragging them down in the first half before becoming a tailwind in the second, he said.
Arvind Krishna, CEO of IBM, has been attempting to shift the company’s traditional infrastructure and information-technology services business to the rapidly growing cloud computing market.
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After nearly a decade of no growth or declining sales, the company’s revenue increased for the second consecutive year last year.
Fourth-quarter revenue was unchanged at US$16.7 billion, IBM said in a statement, while analysts estimated US$16.4 billion.
Earnings, excluding some items, were US$3.60 a share in the period ending Dec. 31, while analysts projected US$3.58 a share.
After the results, Bloomberg analyst Anurag Rana said The outlook “signals steady demand for its consulting and software products.”
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“Another key metric that stood out to us was the free cash-flow outlook of US$10.5 billion for the full year, which we believe now gives it some flexibility to pursue a software acquisition, especially given the recent decline in valuations.”
Last year, hybrid cloud revenue was $22.4 billion, an increase of 11 percent from the previous year.
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Software sales increased 2.8 percent to $7.29 billion, while infrastructure sales increased 1.6 percent to $4.48 billion. Both categories were expected to decline, according to analysts.
Consulting increased by 0.5 percent to $4.77 billion USD.
Red Hat, the acquired division that has been a key part of Krishna’s strategy, increased revenue by 10 percent, another comparatively slow quarter for a unit that has consistently posted growth of more than 20 percent.
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IBM’s workforce is 260,000, Kavanaugh said, about 22,000 lower than the figure reported in December 2021.
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