IBM Dismisses Report of Massive Layoffs of 26 Percent of Workforce

IBM dismissed on Monday a Forbes magazine report claiming the technology firm is preparing to cut about 26 percent of its workforce, which would represent its biggest-ever layoffs.

IBM is cutting jobs, as disclosed in its latest earnings report last week, but those reductions will affect "several thousand" employees, a "small fraction" of what Forbes reported, according to an emailed statement from IBM to Reuters. Forbes had said as many as 112,000 employees could be laid off.

The technology giant has been steadily reshaping its 400,000-plus staff for several years, laying off workers in some areas and hiring in new growth businesses.

A report last Thursday on Forbes' website by pseudonymous Silicon Valley technology gossip columnist Robert Cringely said IBM planned to break with that gradual approach and suddenly lay off 26 percent of its global workforce.

IBM did not issue a categorical denial of the report, but strongly suggested it was inaccurate.

"IBM does not comment on rumors, even ridiculous or baseless ones," the company said in the email. "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."

Last week, Chief Financial Officer Martin Schroeter told investors on IBM's fourth-quarter earnings conference call that the company was taking restructuring charges of around $580 million, but he did not specify the number of jobs affected.

"We are not going to replicate the same level of restructuring that we had last year," Schroeter said in response to a Wall Street analyst's question. "It will be a lower amount."

IBM does not disclose the amount of layoffs it makes each year, but one Wall Street analyst estimated that this year's restructuring charge suggests about 8,000 people, in line with recent years.

"For each of the last seven years, IBM has taken annual restructuring charges of between about $450 million and $1.5 billion, which we estimated have resulted in workforce reductions of between 6,500 and 21,500 per year," Bernstein analyst Toni Sacconaghi wrote in a note to clients on Monday. He said the Forbes report was "puzzling".

IBM said it had 431,212 employees at the end of 2013, slightly down from 434,246 employees in 2012. The company has not yet disclosed its overall employee headcount for the end of 2014.

IBM's shares were up about 0.5 percent at $156.66 on the New York Stock Exchange after paring earlier gains.

© Thomson Reuters 2015