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IBM Restructure Will Eliminate Up To 13,000 Jobs

David Utter
Expert Author
Published: 2005-05-05

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The computer maker will also take a charge in the second quarter as part of the restructuring process in Europe.

The cost-cutting move by the Armonk-based tech company was widely expected by analysts. IBM had been reducing jobs in Europe during the first quarter already.

A pretax charge to be taken in the second quarter of the year will be between $1.3 billion and $1.7 billion USD.

Most of the job cutting will take place in Europe, where positions had already been eliminated in Sweden and other countries. IBM hopes to make operations in Europe more efficient.

Slower growth in European markets has driven IBM's action, according to the company. The cuts will mainly eliminate management layers the company feels have hindered its ability to make client contacts.

But the cuts may backfire. "This is certainly not going to earn them many friends in Europe," said Rob Enderle of the Enderle Group . "They take layoffs very seriously there."

Investors were displeased when the company's earnings for the first quarter were 5 cents per share less than estimated. But the cost-cutting news seems to have eased that disappointment.

Shares of IBM closed at $77.08, up 61 cents from the previous close.



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