Will IBM Layoff 15,000 Americans?

By Douglas A. McIntyre Published Mar 1, 9:49AM EST

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The rumors around the tech world and Wall Street are that IBM (NYSE: IBM) will cut as many as 15,000 jobs in the U.S. as part of a restructuring. The actual number is hard to pin down. IBM has been silent on the matter.

When IBM announced lackluster earnings for the final quarter of 2013, its management said the company would continue to “rebalance’ its workforce. This is apparently code for firing people. Analysts and the media have started to dig for what IBM will not disclose–how many workers and where?

CNET believes it has one piece of the puzzle:

The company wouldn’t comment on the number of people being laid off or what divisions would be most affected. However, one source familiar with the plans told CNET that the layoffs entailed up to 25 percent in the Systems and Technology group. This is the group that makes IBM servers and is often referred to as the “hardware” division.

The FT believes it has another:

Toni Sacconaghi, an analyst at Bernstein Research, has estimated that the number will be “at least 13,000”, while a group claiming to represent IBM employees has warned that as many as 15,000 jobs will go.

IBM had more than 431,000 workers worldwide at the end of 2013. So, the layoffs would not be a large portion of the workforce, except in the eyes of those people who are leaving.

If IBM is in the midst of a large number of layoffs, its Systems and Technology division would be the logical place to do it. In its annual earnings report, referring to the fourth quarter, IBM disclosed:

Revenues from the Systems and Technology segment totaled $4.3 billion for the quarter, down 26 percent from the fourth quarter of 2012. Systems and Technology pre-tax income was $0.2 billion, a decrease of $768 million.

IBM’s revenue in the fourth quarter was $27.7 billion

So, the mystery about IBM’s layoffs may be no mystery at all. It has a division which is falling apart. It has to cut costs radically. And, as is true with almost any company, those cuts have to include people

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.