Saturday, October 09, 1999

IBM cuts up to 10% of computer workers

Division lost nearly $1B last year

The Associated Press

        NEW YORK — IBM is reducing up to 10 percent of its personal computer work force, or up to 1,000 workers, in a cost-cutting effort to turn around the division, which lost nearly $1 billion last year.

        The 5 to 10 percent reduction in the 10,000-person staff will mostly hit marketing employees as the company consolidates its staff for different brands — including Aptiva PCs, ThinkPad laptops and Netfinity computer servers — under one marketing umbrella.

        IBM notified employees Wednesday of the cuts, which will be completed by the end of the year. The company, which employs 291,000 people overall, said an undetermined number of people will be laid off, though some affected employees will be offered jobs in other divisions.

        IBM, which pioneered the per- sonal-computer industry in the early 1980s, lost about $150 million in the second quarter in the unit, which sells PCs to both consumers and business es. Fierce price wars have sharply reduced profits at major computer makers.

        IBM has been struggling to repair its so-called Personal Systems Group for several years, and some analysts have even suggested that IBM should stop selling personal computers.

        Last summer, IBM replaced the head of its consumer PC division with Michael Braun, but Mr. Braun's role is unclear now that IBM has folded the unit with the operation that sells PCs to businesses.

        “We need to do better, and we know it. That's the reason behind these actions,” IBM spokeswoman Trink Guarino said Friday.

        IBM plans to release its third-quarter financial results Oct. 20. The company is making an aggressive effort to emphasize its faster-growing businesses, which include selling computer services to large corporations and selling software.


        Shares of IBM slid 2.5 percent Friday, falling $2.871/2 to $113.50 on the New York Stock Exchange.


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- IBM cuts up to 10% of computer workers