IBM denies that it is planning to lay off a huge chunk of its workforce and tells Forbes magazine that it got its numbers wrong when it reported that the company was preparing for the biggest restructuring in its entire hundred-year history.
The report, published last week on Forbes, was made by the pseudonymous blogger Robert X. Cringely, who follows IBM. According to Cringely, IBM is working on Project Chrome, the codename for Big Blue's plan to lay off 26 percent of its worldwide workforce, amounting to more than 112,000 workers getting the pink slip in order to accelerate IBM's "transformation."
Big Blue, however, calls Cringely's report "ridiculous and baseless." Although IBM stopped short of issuing a categorical denial that the "bloodbath" Cringely reports will not happen, the company strongly suggests that it is not cutting off a quarter of its workforce. Instead, IBM suggests that it is laying off closer to 10,000 people.
"As can be seen from our public earnings statements, IBM has already announced the company has taken a $600 million charge for workforce rebalancing," said IBM on its Hong Kong blog. "This equates to several thousand people, a mere fraction of what's been reported."
IBM also notes that it hired 45,000 new workers last year and is looking to bring onboard another 15,000 people to work on its new business units, such as cloud, analytics, security, and social and mobile technologies.
Analysts see the Forbes report as "puzzling." In a note sent to clients on Monday, analyst Toni Sacconaghi of Bernstein said the $600 million charge IBM has taken for the cost of restructuring is in line with the number of layoffs that IBM claims.
"For each of the last seven years, IBM has taken annual restructuring charges of between $450 million and $1.5 billion, which we estimated have resulted in workforce reductions of between 6,500 and 21,500 per year," said Sacconaghi.
Even Alliance@IBM, a union that represents IBM employees, says it has "no information that this is true," although the union's national coordinator Lee Conrad says "anything can happen at IBM."
Cringely remains steadfast in his claim that IBM will be cutting off more than a hundred thousand employees, saying that "there are many ways to spin a workforce reduction." He cites one of his insider sources who says that IBM will officially lay off only several thousand employees, but the rest will be pushed out by being given poor performance ratings despite their good performance.
"There is a loophole that says they can be dismissed for 'performance' reasons, which is exactly why many of my long-time, devoted, hardworking peers are suddenly getting the worst rating, a 3," Cringely's source said. "It's so they can be dismissed without any separation package and no hit to the RA or workforce rebalancing fund."
The source also says IBM is "stuffing" some of its workers into the x86 acquisition by Lenovo, even though they have never worked on the IBM's x86 servers before. Apparently, Lenovo is "taking it up quietly with IBM" and has offered better salaries and benefits to these workers.
