IBM to lay off 3,900 employees as it misses annual cash target

The wave of tech layoffs is continuing into 2023 . After we have heard the news of combined layoff of 28,000 Employees from Microsoft and Amazon . Now it is the turn of Tech major IBM to payoff its 3,900 employees as it misses its sales target.

An uncertain economic climate is one reason behind the string of layoffs. As per IBM: The layoffs - related to the spinoff of its Kyndryl business and a part of AI unit Watson Health - will cause a $300 million charge in the January-March period.

Chief Financial Officer James Kavanaugh told Reuters that the company was still "committed to hiring for client-facing research and development". The layoffs - related to the spinoff of its Kyndryl business and a part of AI unit Watson Health - will cause a $300 million charge in the January-March period, IBM said.

Shares of the company fell 2% in extended trading, erasing earlier gains on the largely upbeat results. Analysts said news of the job cuts and free cash flow miss was behind the drop.

A report states, in the year 2022, IBM recorded revenue growth of 5.5%, its highest in a decade. Its hybrid cloud revenue rose 2% in the quarter ended Dec. 31. The total revenue was flat at $16.69 billion in the period, compared with analysts' estimates of $16.40 billion, according to Refinitiv.

All it seems as if the market is disappointed by the size of its announced job cuts, which only amounted to 1.5% of its workforce. Investors were hoping for deeper cost-cutting measures.