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Analysts Call IBM Layoff Estimates "Hogwash"
jbrodkin writes "Rumors have been floating around saying IBM will cut 150,000 U.S. jobs, but a Network World story attempts to set the record straight by quoting analysts who say this news, if true, would wipe out the company's entire U.S. operations and would make no sense since IBM is actually doing pretty well."
Our offices here in Winnipeg (Canada) are going to be decimated down to a skeleton staff of people to maintain our managed servers (for places like MTS, etc.) I've been hunting for another job for 2 weeks now, since a relative of mine high up at IBM told me about my office situation.
I believe what they're saying is there are only 350,000 people in IBM worldwide, and not much more than 150,000 in the US. Hence, wiping out 150,000 jobs in the US would effectively mean offshoring the entire company, including the headquarters division.
The question that comes to my mind is how are they defining "employee" for the 350,000 people in the company figure?
Are they talking just full-time people or contractors? My guess is that they're only counting full-timers.
If they include contractors in the number of people IBM employs, I have no problem believing this "hogwash" figure.
Everything I need to know I learned by killing smart people and eating their brains.
Since when have the decisions of upper management or CEO's ever made sense to begin with?
Maybe there was a time long ago, but recently the only way to make sense out of half of the actions we see out of big company CEO's is if there actions will somehow justify giving themselves another $10 Million or so in salary or other bonuses.
IBM's silence on the issue is deafening.
Well, Haliburton is in the process of doing that for other reasons. It's apparently possible.
I don't respond to AC's.
http://www.investorvillage.com/smbd.asp?mb=4326&pt =m
The IBM message board over at InvestorVillage seems to be ignoring this story ever since it broke last week. Usually the message boards are the first to jump on every unfounded rumor. It just seems that this story has zero credibility.
I begin to wonder if it was made up by a guy called Darl.
It's all about short-term stock price manipulation (which I call the "dark side" since it ultimately winds up being a loss but brings instant gratification).
If the CEO is retiring soon, then he has little incentive to do right by the company in the long run, and plenty of incentive to play games to increase the stock price in the short term (so he can sell off his shares after the price goes up). A massive layoff like this would be entirely consistent with that scenario. And it's not like the company's "investors" would give a damn about the long-term outlook of the company anyway. After all, it's all about the growth rate of the stock, and fast growth for a short time is still fast growth that "investors" can take advantage of. They just have to dump the stock before it crashes.
So not only is a massive layoff of this scale plausible, I think it's highly likely. It's just the ultimate manifestation of the short-term thinking that American "businessmen" are so infatuated with.
About the only thing that might prevent it is a huge backlash against IBM by "investors", which is possible but doubtful IMO.
Use 'slashdot stuff' in the subject line in any email you send me if you want to get past the spam filter.
Who says that laying off all your employees is impossible?
http://www.satirewire.com/news/att.shtml
At first, I remembered this as being an onion article, but actually it wasn't. Although the onion did have:
http://www.theonion.com/content/node/28984
So there you go!
Hopefully I didn't put any [] around my words.
It's a historical fact. Don't sweat it, it's not gonna be 150,000 people or even 100,000 people...that is absurd.
Blar.
>If the CEO is retiring soon, then he has little incentive to do right by the company in the long
>run
The CEO in a corporation like IBM is never a dictator, never has sole authority on executive decisions, and is held accountable to a Board of Directors, all of whom also have a vested interest in the corporation (and contrary to popular belief, do generally consider performance beyond the next quarterly report.)
A company with as diverse stakeholders and as much volume as IBM has, will have quite strict controls on governance and management.
-fb Everything not expressly forbidden is now mandatory.
and we KNOW he has never been wrong before, he's almost as accurate as Dvorak!
Monstar L
>You clearly were not an Eisner-era Disney shareholder...
I *wish*. OMFG are you serious?
Category 1984 2004 Percent change
Disney's Revenues $1.5 billion $30.8 billion +2,000
Disney's Income $294 million $4.49 billion +1,600
Disney's Tax-Free Cash Flow $100 million $2.9 billion +2,900
Stock Price (adjusted for splits) $1.33 $28.40 +2,100
Market Value $1.9 billion $57.4 billion +3,000
Disney's Enterprise Value
(market value plus debt minus cash)
$2.8 billion $69 billion +3,200
-fb Everything not expressly forbidden is now mandatory.
Why is it that people have such a hard time reading simple words and numbers? IBM doesn't have 350,000 people in the US. IBM has about 330,000 people total, IN THE WORLD. IBM has some 130,000 or so people in the US. Total. Less than half of that is IGS. But just for fun, let's say half of IBM is in the US and half of IBM is IGS (that is not the case). We end up with IGS being at most 80,000 people in the US.
IBM is, according to Cringely laying off half of IGS, which according to his drug-induced maths, turns into 150,000 people. Now, using too high numbers, we find that IGS in the US is about 80K. So, what is IBM going to do? Hire 220,000 people, lay off 150,000 people, all in 2007? Well, if they do, that means that IGS would grow from 80,000 to 150,000. Is that a bad thing?
Well, perhaps they won't do that. Perhaps they just want to lay off 150,000 people so that they can cut their current staff down to half of what it is now. That still means that IBM will have to get to 190,000 people before they can start their lay offs. So, how do you propose that IBM hire 110,000 people and then lay off 150,000 people to get down to 40,000 people in IGS? Why would they want to lay off people in such an insane way?
The fact of the matter is that Cringely was at a nasty party the other day. At that party he scored some heavy hallucinogenic drugs, and for some reason he decided to write this nonsense after taking those drugs for about a week.
Slightly OT: In Senate bill 1092, Sen. Chuck Hagel wants to triple the number of H-1B's granted next year to 'help' the high-tech industry.
[Insert pithy quote here]
IBM will lay off and hire people here and there always. Some times they will lay off or hire a lot of people. IBM has acquired a lot of companies the past couple of years, layoffs are inevitable. These numbers are insane though. Insane for a simple reason: IGS doesn't have 150,000 people in the US to lay off. IGS doesn't have 150,000 people in the US period. So, will IBM hire all of these people before they fire them?
Cringely needs to lay off his mothers medication before he writes his nonsense.
there are plenty of IBM types weighing in that they can easily see this happening - some have already left or been informed they will be terminated - and they know the company is having serious trouble with its Global Services division.
So I suspect it's all true - although the actual count of employees to be outsourced might be speculative at this point since it appears IBM is keeping that number close to its vest.
Richard Steven Hack - This sig is TOO GODDAMN SHORT TO DO ANYTHING USEFUL WITH! MORONS!
IBM has a program going evidenced at activities underway in its Boulder, Colorado location for its (botched) implementation of LEAN. (similar to LEAN manufacturing, reference wikipedia)
However, IBM is using staff cutting and IBM India augmentation to achieve the efficiencies that are documented in LEAN-M, whereas IBM's implementation of LEAN is really just a pony show that is masquerading as an internal offshoring program.
The number of decimated IGS units in total will probably be something closer to 30K-40K employees.
For the record, IBM has also made a settlement in a class-action in respect to its Cash Balance pension changes which were instituted after Y2K. Many people at Alliance@IBM (the organization which is trying to unionize existing IBM employees) fear that IBM is trying to put the pension fund itself into default so that those obligations can be wiped off the balance sheet, which would also be an instant win on IBM's stock EPS.
IBM is not only ditching employees, it is also ditching customers. IGS was known for signing a lot of non-profitable contracts in anticipation that future work would be coming from those same clients (in addition to ancillary project-related purchases by clients for things such as networking and hardware and all the labor that goes with that).
That apparently didn't come to fruition. IBM will be giving some sad news in the next few years to come of its accounts as it lets those go, and those resources who were working on them.
Neither. Shouldn't it be obvious? American Express workers are definitely the hardest workers. They are (clearly) American, and the Express in the name, well, no need to say more...
When it's all said and done, they'll layoff several thousand, and everyone will say "whew, we dodged the bullet there" since it didn't turn out to be 150K.
And IBM will look like the good guys, or at least not-so-bad guys.
The Tao that can be spoken is not the one eternal Tao
Hey, it just says 150,000 IBM jobs. There are contractors that are part of that number. This article (http://www.wral.com/business/local_tech_wire/opin ion/blogpost/1374664/) says what I've been thinking. 1,315 IBM employees and an unknown number of contractors. Since contractors get 2 days notice, by the time the article came out in the paper, the contractors were already gone. Note it does say that employees got 30 days notice. Contractors don't get that, at least not in my experience.
I know of 10 contractors that were let go and 2 regulars. I know of another team that lost 15 of their 23 member team but don't know the breakdown.
[John]
Shit better not happen!
Disclosure, I do work for IBM
The numbers are plausible, but not at the 150,000 mark being bandied about here today. Last week, the number being quoted was 100,000, and in the USA that would be feasible, especially given the plan would be to actually hire almost 1 for 1 outside of the US where labor is much cheaper for the same skillset.
My department lost ~33% of it's staff last week, with more cuts coming in the next month. While I don't quite expect a full 100,000 Americans will be out of work, a lot of us surely will be.
According to Marketwatch last week, there are a few global US corporations with US operations that are bleeding money. They continue to make their quarterly numbers because operations outside of the US are doing really well. I would not be surprised if we see more than one company pull out from the US entirely. The whole ruckus over importing cheap labor can be bypassed if they just move the company right to where the cheap labor actually lives. When your transportation is Bombardier Learjets and Limos, do you really care where the office is?
130,000 seems like a pretty big number, however I work for Ford we got rid of about 20,000 people over the last few months the projected final figure is going to be around 30,000 for lay-offs, buyouts and firings. My department went from eighteen people down to two; I 'm one of the lucky two to still have a job. IBM made a big push into managed services while it's still big business the market that IBM caters to ie large corporate business is getting smaller the real growth / money for managed services is in the small to medium sized companies, most large companies have figured out they can go to India on their own they don't need to have IBM act as the middleman. Managed services are becoming cheaper and can be bought ala carte. Google hosted managed exchange servers or whitebox VOIP if you want a glimpse of what future managed services are going to look like.
EGOTIST, n. A person of low taste, more interested in himself than in me.
There are about 60,000 total GS ee's in the US. Total North American (CA/US/MX) staffing is about 3x that. The 12,000 number world wide is probably low by 50% and that total number will represent FT ee's only no yellow badges. EMEA always gets hammered worse than NA. AP is already so damn thin there's nothing left to hack. LA is also thin. So the brunt will be in NA and EMEA. My guess is 24,000 total. We've just had 5.5% in one week. This will probably continue at a pace of about 5%/month this year and 10%/month in 2008. This would put the total reduction of 24,000 to end by June 08. At the same time they can hire 24,000 new heads in India and South America and save themselves 80% of the headcount cost for those 24,000 relative to US costs.
Yeah I think it will happen.
Facts:
HP has 156,000 employees, and about 90 billion in revenue.
IBM has 366,000 employees, and about 90 billion in revenue.
google has 11,000 employees, and about 12 billion in revenue.
I think that's where the 150K came from, the old $/employee ratio.