Under new CEO, IBM orders first job cuts

International Business Machines (IBM) under its new Chief Executive Officer Arvind Krishna is cutting an unspecified number of jobs in the first major workforce reduction.

IBM claimed the cuts are aimed at making it more agile, but they come against the backdrop of a major economic slowdown triggered by a coronavirus pandemic that has caused many of its customers to dial back investments and hold off on big software deals.

The company didn’t disclose the scale of the job losses. The cuts add to job losses across the tech industry as firms contend with the effects of the novel coronavirus outbreak. Hewlett Packard Enterprise Co. announced a far-reaching cost-cutting program, including salary cuts, unpaid leave and freezes hiring.

But IBM’s growth problems predate the Covid-19 pandemic. Its share price is little changed from 10 years ago, a period that has seen tech-company stocks surge. Big Blue’s stock is down more than 20% during the past three months.

Arvind Krishna took over at IBM last month, facing the twin challenges of coping with the pandemic and reorienting a company that has suffered through several years of declining revenue and an anemic share price.

The layoffs affect several units of IBM, including its Global Technology Services division, which offers IT outsourcing. The company last month said it took a $900 million charge against earnings, largely to cover restructuring costs linked to GTS. IBM said last month that earnings per share fell 18% on an adjusted basis to $1.84, with sales over the first three months down 3.4% to $17.57 billion.