IBM Putting Freeze On Server Unit Staff, Says It's Lenovo Or No Go

IBM is putting the freeze on several thousand employees involved in the sale of its server business to Lenovo, with an ultimatum to either accept the transfer to Lenovo or leave IBM, sources told CRN this week.

If the employees -- who all work in IBM's Systems and Technology Group, sometimes called the "hardware" division -- decide to leave IBM instead of moving to Lenovo, they will not be able to work for either company for a two year period, sources told CRN.

Lenovo, which acquired IBM's x86 server business for $2.3 billion earlier this month, is expected to offer jobs to some 7,500 IBM STG employees as part of that deal, which is still under regulatory review. Around 2,000 of these employees work at IBM's Research Triangle Park, N.C.-based facilities, WRAL Techwire reported last month.

Lenovo referred CRN's request for comment to an IBM spokesperson. "It is standard information technology industry practice to have a non-solicitation, no-hire provision in M&A contracts," IBM spokesperson Jeff Cross said in an email, declining to discuss further specifics of the contract.

IBM is making big investments in cloud, analytics and cognitive computing, and selling off x86 servers will let it concentrate more on these areas. IBM also planning major job cuts, and on Friday began laying off an unspecified number of employees from the STG unit. Some industry watchers expect IBM to cut as many as 15,000 jobs.

IBM is still hiring in some areas, however. It recently made investments in nanotechnology that "will bring hundreds of new jobs to New York State," IBM spokesman Doug Shelton said Friday in an emailed statement.

"At any given time, IBM has more than 3,000 job openings in these and other growth areas in the U.S.," Shelton said in the statement.

IBM STG employees have been through this before. Last April, when IBM first began talking with Lenovo about buying its x86 server business, IBM's STG staff were informed that they'd be moving over to Lenovo effective June 1, a source told CRN at the time .

The 7,500 IBM employees could face an uncertain future at their new employer. When Lenovo bought IBM's PC business in 2004, at least half of the IBM employees that moved over were terminated within two years, Lee Conrad, national coordinator of Alliance@IBM CWA Local 1701, told CRN Friday.

One former IBM employee, who requested anonymity, told CRN the situation will probably turn out "nasty" for the IBM field sales and channel reps that move to Lenovo. "Lenovo runs very lean, and it will not need most of the IBM people," the source said.