Chief Financial Officer James Kavanaugh said IBM Corp is still committed to hiring for client-facing research and development.
Along with other tech giants, IBM Corp has also joined the 'layoff drive' as the company laid off 3,900 employees on Wednesday. Tech Hub said the layoff drive was a part of some asset divestment.
While beating revenue expectations in the fourth quarter, the company lowered its annual cash target.
Speaking to Reuters, chief financial officer James Kavanaugh said the company was still committed to hiring for client-facing research and development.
In an official statement, IBM said the layoffs are related to the spinoff of its Kyndryl business and a portion of its AI unit Watson Health.
According to IBM Corp, the layoffs will lead to a $300 million charge in the January-March period, while its shares also fell 2% in extended trading, according to a Reuters report.
Jesse Cohen, senior analyst at Investing.com, said it appeared as though the market was disappointed with the job cut announcement, which amounts to only 1.5% of its workforce.
"Investors were expecting cost-cutting measures," the analyst said.
In 2022, IBM projects cash flow of $9.3 billion, well short of its target of $10 billion due to higher-than-expected working capital needs.
The company also forecast annual revenue growth in the mid-single digits at constant currency terms, weaker than the 12% reported last year, as the pandemic-led demand for businesses to digitize amid a growing recession has given way to cautious spending by customers. fear.
It showed softness in new bookings in Western Europe in October, while peer Accenture Plc noted weakness in its consulting business, Reuters reported.
Growth of IBM's software and consulting business slowed sequentially in the fourth quarter, but cloud spending was a bright spot, with deals signed to double in 2022 setting up services with partners such as Amazon.com's AWS and Microsoft's Azure. Have become.
Its hybrid cloud revenue grew 2% in the quarter ended December 31. However, its total revenue during the period was flat at $16.69 billion, compared with analysts' estimates of $16.40 billion, according to Refinitiv.
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