Mark Loughridge, chief financial officer at IBM who also is responsible for “enterprise transformation,” plans a $1 billion transformation of Big Blue’s work force in the coming weeks.

“Now remember, last year we had about $800 million in workforce rebalancing charges spread across the year,” Loughridge said. “This year we expect the workforce rebalancing charges to be closer to $1 billion and concentrated in the second quarter.”

Plans are evolving, he added.

“So we really haven’t finished the work for a specific action yet,” Loughridge said. 

“Like last year, we expect the bulk of that charge to be outside the U.S., and with that on an all in basis including all gains and charges, we’re confident we can achieve at least $16.70 of operating EPS for the year just as we said in January.”

Earnings for the first quarter were $3 per share.

So, in other words, big layoffs could be coming if IBM is to meet that earnings target.

Source: Rebalancing Doesn’t Mean Only Job Cuts

But a person familiar with IBM operations noted the $1 billion figure won’t apply strictly to personnel cuts. “It could be restructuring, such as shifting one business from location to another,” he said on the condition of not being identified. Noting the move of a business group in one country last year, he noted “some people moved and some didn’t.”

The rebalancing news, especially for IBMers in North Carolina where the company employs an estimated 10,000 people. Most of those are in the Triangle.

Repeatedly – more than a dozen times – in a conference call with analysts on Thursday evening, Loughridge used the word “workforce” repeatedly along with “balancing” and “rebalancing.”

In IBM (NYSE: IBM) speak, that means restructuring and layoffs, or what IBM also calls “resource actions.”

“Though we certainly don’t have a specific approved action, this [rebalancing] will result in a charge that will additionally impact the operating EPS we report,” Loughridge explained. “Like all years, we have a number of actions planned to improve the business for the long-term, acquiring and divesting businesses and rebalancing our resources. This results in charges in the second quarter and gains in the second half, which we expect will roughly offset for the year.”

However, even if RAs take place, the person who spoke with WRALTechWire, stressed: “The number [in the RA document] is never the number. A RA might affect five people in the Triangle, but four of them find jobs within the company.” Standard operating procedure is to allow affected IBM workers pursue open positions.

2,000 Cuts in 2012

Based on RA documents and other information, IBM laid off an estimated 2,000 U.S. employees alone last year – at least.

“In 2012 the Alliance verified at least 2000 employees lost their jobs in resource actions, but we believe that number is much higher when you include small cuts over the year; force outs and resignations,” Lee Conrad, National Coordinator for Alliance@IBM which is seeking to unionize IBM employees, told WRALTechWire.

IBM issued an earnings report that fell short of analysts’ expectations for the first time since 2005, and investment reaction was swift.

The bad news broke shortly after a report surfaced that IBM might sell off a big server business unit – possibly to Lenovo – and as a union in France said IBM planned to cut 1,400 workers there (14 percent of the work force).

IBM shares closed Thursday at $207.15 but opened Friday down more than $10 at $197.49. Shares fell as low as $191.04 before rallying a bit around noon.

However, IBM also points out that when such “RAs” or other reorganizations occur, affected employees are not necessarily let go. They can, and sometimes do, find other jobs as the company reallocates resources.

Conrad said job cuts won’t come as a surprise, noting that an announced restructuring plan workers call “Roadkill 2015” and IBM labels as “Roadmap 2015” makes clear Big Blue will cut employees.

Striving for Better Earnings

IBM has set a goal of reaching $20 in earnings per share (see graphic with thos post), and Loughridge cited earnings targets several times during the call. 

“IBM workers have been expecting further job cuts since the beginning of 2013,” Conrad told WRALTechWire. “Roadmap/Roadkill 2015 continues at the expense of the workers who make this company great.”

IBM workers also have expressed a lot of angst about changes in Big Blue’s 401(k) plan, which took effect this year. If a worker isn’t on the payroll by year’s end, IBM doesn’t pay its 401(k) match.

IBM has stuck to the plan despite criticism from two U.S. Senators.

“To add insult to injury, as we reported last year, thousands will lose out on the 401(k) matching grant that is paid out in December IF you are still employed by that time,” Conrad pointed out.

[IBM ARCHIVE: Check out more than a decade of IBM stories as reported in WRAL Tech Wire.]