Following many other technology companies, IBM also laid off thousands of its employees. There are 3,900 people affected by layoffs as part of IBM's asset divestment plan.
IBM also failed to meet its revenue target during Q4 2022. Despite the layoffs, Chief Financial Officer James Kavanaugh said IBM would still continue to recruit new employees for the consumer software research and development division.
IBM's layoffs are related to the spinoff or separation of the Kyndryl division and the Watson Health AI unit. This layoff also forced IBM to prepare funds of USD 300 million in the January - March 2023 period.
After news of the layoffs came out, IBM stock fell 2%. According to analysts, the decline was due to less large layoffs and IBM's failure to meet revenue targets.
"It seems the market is disappointed with the number of employees affected by layoffs, which is only 1.5% of the total number of employees. Investors are hoping (IBM) to take greater savings," said Jesse Cohen, senior analyst at Investing.com.
IBM's cash flow in 2022 is USD 9.3 billion, below the target of USD 10 billion, which occurs due to higher-than-expected working capital requirements. They expect annual revenue growth to be in the single digit range, weaker than the previous year's growth of 12%.
Even though IBM's business growth in the software and consulting sector slowed down in Q4 2022, their cloud business strengthened through business agreements that doubled in 2022, such as cooperation with Amazon Web services and Microsoft Azure. IBM's hybrid cloud business growth increased 2% in the quarter ending December 31.
