IBM to chop more than 10,000 jobs

By Martin LaMonica
Posted on ZDNet News: May 4, 2005 8:48:00 PM

The changes, which will mostly affect IBM's European operations, will result in a charge of between $1.3 billion and $1.7 billion in the second quarter this year and "yield benefits" in the second half of the year, the company said Wednesday.

The restructuring, a significant move for the company, was expected following Big Blue's disappointing first-quarter 2005 earnings. Last month, IBM Chief Financial Officer Mark Loughridge said the company would undergo a "sizable restructuring" to address weak areas, notably in Europe.

IBM said employee reductions will include both layoffs and voluntary departures. The majority of the cuts will be in Europe, where the company has initiated discussions with labor organizations.

The reorganization involves the streamlining of management in Europe. IBM said it will eliminate its pan-European management layer to reduce internal bureaucracy.

"IBM will create a number of smaller, more flexible local operating units in Europe to increase direct client contact," the company said in a statement.

The plan also calls for IBM to move some of its European personnel who work in its IBM Global Services division and consolidate them in fewer locations worldwide.

Loughridge will offer more details about the restructuring Thursday morning, the company said.