IBM Calls Massive Layoff Report 'Ridiculous' And 'Baseless'

IBM called reports that layoffs were imminent for 26 percent of its workforce "ridiculous" and "baseless."

IBM was responding to articles published late last week that claimed Big Blue was expected to cut 110,000 jobs in what would be the company's biggest wave of layoffs ever.

IBM, which recently reported its eleventh consecutive quarterly decline in revenues, rebuffed the reports, telling CRN it did expect job cuts but they would number in the "several thousand" with no specific target date.

[Related: IBM Combines Hardware-Software Channels Into New Global Partner Group]

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 234 on the CRN Solution Provider 500, said he sees deep IBM cuts as inevitable given the company's sale of its server business and strategic refocusing. "IBM is trying to figure out who they want to be," he said.

Venero said his IBM business is down considerably in the last several years even as his other top vendor sales have grown significantly. "IBM is trying to do it alone," he said, referring to IBM's partnership to resell iPhones and iPads without the participation of IBM partners. "Look at the deal with Apple that partners were cut out of. I call IBM, 'The Land of One.'"

IBM has recently undergone massive changes, divesting its x86 server business and its chip manufacturing business, and doubling down on investments in cloud, analytics, mobile, security and social. To accelerate that transformation, while some layoffs couldn't be avoided, IBM said, it hired 45,000 people in 2014 and currently has some 15,000 job openings around the world for high-growth areas of its business.

"This is evidence that IBM continues to remix its skills to match where we see the best opportunities in the marketplace," IBM said.

Reports of massive layoffs originated from Forbes, which published a story under the pseudonym Robert X. Cringely. The report said IBM is on the eve of undergoing a massive restructuring of the company that will disproportionately impact IBM's US mainframe and storage workers.

"IBM does not comment on rumors, even ridiculous or baseless ones," IBM's statement read. "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.’

In its statement, IBM countered that last year it hired 45,000 people as the company transitions its workforce to one with different sets of skills that more closely matched its strategic objectives.

"I find it extremely hard to believe IBM would be laying off anything close to 100,000 employees," said Lee Conrad, national co-ordinator for Alliance(at)IBM, an organization run by the Communications Workers of America union that has long tried to organize IBM employees.

"The numbers I'm hearing are closer to 10,000 to 12,000 taking place this January and February," Conrad said. "Axing 26 percent of its workforce would be extremely disruptive to IBM's business and its workforce."

"Under [IBM Chairwoman and CEO] Ginni's [Rometty] watch, the past 11 quarters have not been very good," Conrad said. "IBM is reducing head count as it tries to reorganize for a cloud-focused business strategy and make money. Financial engineering didn't work for IBM. I don't think laying people off is the answer either. It's too early to tell if IBM is either rearranging the deck chairs on the Titanic or is moving closer to profitability."

PUBLISHED JAN. 26, 2015