Global tech giant IBM will cut around 3,900 jobs, which is slightly more than one percent of its workforce, as a result of a recent divestment and missing its annual cash targets.
In statement shared with international media, Chief Financial Officer James Kavanaugh said that the company was still “committed to hiring for client-facing research and development”.
The stock of the company dropped 2 percent during after-hours trading, reversing earlier gains from the mostly positive results. Experts stated that the reason for the decline was the announcement of the layoffs and the failure to meet expectations for free cash flow.
IBM has noted that the job cuts, which are associated with the separation of its Kyndryl business and a part of its AI unit Watson Health, will result in a $300 million charge in the first quarter of the year.
The company’s 2022 cash flow was $9.3 billion, below its target of $10 billion, due to higher-than-expected working capital needs.
The company has also predicted that the annual revenue growth in the mid-single digits in constant currency terms, which is weaker than the 12% it reported last year, as the pandemic-driven demand for digitisation of businesses has been replaced by cautious spending by clients due to increasing concerns of recession.
IBM joins a slew of tech companies including Meta, Alphabet, Microsoft and others in laying off thousands of employees amid the global economic headwinds.
