Tech giant IBM is laying off 3,900 workers or 1.5% of its global workforce as some of the company’s asset divestments missed cash targets.
The layoffs will largely impact employees that are part of its Kyndryl and Watson Health business unit and will result in a $300 million charge between January and March.
“It seems as if the market is disappointed by the size of its announced job cuts, which only amounted to 1.5% of its workforce,” said Jesse Cohen, senior analyst at Investing.com. “Investors were hoping for deeper cost-cutting measures.”
The news resulted in a 2% decline in extended trading, erasing gains the company saw as a result of an otherwise upbeat earnings report, according to Reuters.
In 2022, the company had a cash flow of $9.3 billion, $700 million shy of its target due to higher working capital needs. The company also suffered from a slowdown in business in Western Europe and demand for its software and consulting products.
That said, demand for its cloud solution was up, with the total number of deal signings doubling last year as the company reportedly set up services with Amazon and Microsoft Azure.
Looking ahead, the company is expecting annual revenue growth in the mid-single digits, which will be about 12% lower than the year before.
“Our solid fourth-quarter performance capped a year in which we grew revenue above our mid-single digit model. Clients in all geographies increasingly embraced our hybrid cloud and AI solutions as technology remains a differentiating force in today’s business environment,” Arvind Krishna, IBM chairman and CEO said. “Looking ahead to 2023, we expect full-year revenue growth consistent with our mid-single digit model.”