IBM lays off more than 1,000 employees

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IBM is laying off about 1,700 employees as the company realigns its operations ahead of the closing of its $34 billion deal to buy Red Hat. (Pixabay)

IBM on Thursday confirmed reports that it's laying off a small number of employees after online message board TheLayoff first reported the cuts on Wednesday.

According to a story by CNBC, a person familiar with the layoffs said the cuts affect about one half of 1% of IBM's employees. According to IBM's last proxy statement, IBM has more than 340,000 employees, which means that IBM is laying off roughly 1,700 employees, according to CNBC.

"We are continuing to reposition our team to align with our focus on the high-value segments of the IT market, and we also continue to hire aggressively in critical new areas that deliver value for our clients and IBM," a company spokesman said to FierceTelecom in an email.

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IBM didn't say which sections of its business were impacted by the job cuts. The company's jobs page had 7,624 openings Friday morning, which, in theory, could be filled by some of the employees who have lost their jobs.

According to a post on TheLayoff, 150 to 200 employees were laid off from IBM Cloud in Costa Rica on Wednesday.

IBM has said that its looking for new employees with skills in analytics, cybersecurity and blockchain as the company transitions to new growth areas, such as hybrid cloud. On average, IBM employees completed more than 60 hours of learning last year across the new areas.

RELATED: IBM highlights cloud sales in mixed Q1 results

In April's first quarter earnings report, IBM's revenue was down close to 5% from the same quarter a year ago, which marked the third straight quarter of declining revenue year over year. IBM reported revenue of $18.2 billion, which missed Wall Street analysts' projections of $18.46 billion. IBM's non-GAAP earnings per share was $2.25, compared to $2.22 per share expected by analysts. 

On the earnings conference call, Jim Kavanaugh, IBM's senior vice president and chief financial officer, said that IBM had reorganized its portfolio to better help customers migrate to hybrid clouds.

IBM posted cloud sales of $19.5 billion over the last 12 months, which was an increase of 10% year over year. IBM's cloud growth in the first quarter accelerated to 12%, with its as-a-service offerings up 15%.

IBM realigned its reporting structure for the first quarter by creating "Cloud & Cognitive Software" and "Global Technology Services" segments while dropping its "Technology Services & Cloud Platforms" segment. The reorganization "better aligned our portfolio to the market and to underlying business models," according to Kavanaugh. It also better aligns IBM with Red Hat once its $34 billion deal to buy the open source vendor closes in the second half of this year.

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