After Profits Grow, IBM Quietly Lays Off Workers

Workers at IBM say the technology company launched a round of layoffs Wednesday, a day after announcing a boost in profits. A union official estimated the cuts at 2,900, but said an exact count isn't available.

On Tuesday, IBM reported a 12 percent increase in earnings in the fourth quarter of 2008 over the same period in 2007.

The next day, Alliance@IBM, an affiliate of the Communications Workers of America, posted news that job cuts had begun. Laid-off workers began leaving comments about their own statuses on the Alliance@IBM Web site. "I was whacked yesterday," wrote one, who signed the comment as Lexington. "29 years 10 months."

Doug Shelton, an IBM spokesman, declined to say how many people were being let go. "We are not communicating that information," he said.

Lee Conrad, national coordinator for Alliance@IBM, said the union is working to gather an exact count of laid-off workers. He estimated about 2,900 people were let go and said he expects more layoffs over the next few days.

So far, he said, the reported layoffs have been in the United States and Canada, but some workers have been told their jobs are being moved to other countries, in one case to Ireland.

"A lot of people are upset after seeing that glowing earnings report and then being asked to walk the plank the very next day," Conrad said.

IBM employs about 400,000 people worldwide, including 130,000 in North America.

The news at IBM comes amid a wave of layoffs at other major corporations. Microsoft announced plans to reduce its ranks by 5,000 over the next 18 months. Intel revealed its intention to close five plants and cut as many as 6,000 jobs.

By comparison, IBM moved quietly. "Why haven't the major news outlets picked up on this story yet?" wrote one employee, with the pen name JustWaiting. "I haven't heard a word from CNBC, CNN, MSNBC, etc."

In November, IBM CEO Sam Palmisano called for an economic stimulus plan that would include major spending initiatives on technology. Palmisano also advised President Barack Obama's transition team.

On Thursday, IBM's Shelton confirmed a companywide letter sent by Palmisano as the earnings were announced. The executive trumpeted the earnings report and made no mention of the layoffs to come. Palmisano acknowledged some struggles within the company, especially in the systems and technology unit. But he also promised that raises and bonuses would continue as planned this year. Palmisano wrote:

"I am pleased to announce that we will not only be paying bonuses to IBMers worldwide, based on individual performance, but that they'll be funded from a pool of money nearly the same size as last year's. That's significant in this economy — and especially so, given the size of the 2007 pool. Further, our salary increase plan will continue, covering about 60 percent of our workforce. As always, increases will go to our highest performers and contributors. We should all feel good about the company's ability to invest in people in these very concrete ways."

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