Two weeks ago, IBM (NYSE: IBM) committed $1 billion to cost-cuts and “rebalancing” of its work force as revenues continue to decline.

Then came news of its x86 server unit with some 7,500 workers to Lenovo. Will that move mean some cost cuts are delayed?

Unfortunately for the workers, the deal won’t close for months – if at all. Government regulators must still approve the deal, so 2,000 Big Blue workers in the Triangle won’t know for a good while yet if a transfer for Lenovo is certain.

Lenovo has said it wants them, at least.

Yet IBMers elsewhere may not escape. A deadline has already passed for bosses to submit candidates for a “resource action” in the struggling hardware businesses, of which x86 (based in RTP) is part.

Now a Wall Street analyst has run the numbers and sees Big Blue cutting 13,000 jobs. A $1 billion plan a year ago cut more than 3,500 jobs in North America alone, including several hundred in North Carolina where the company has cut jobs by 30 percent in recent years.

An interesting story from Bloomberg news on Tuesday showed another way IBM is driving up earnings despite declining revenues: Manipulation of income through a Dutch tax haven to cut its tax bill in dramatic fashion. (Read the full story at WRALTechWire.) 

It also should be pointed out that Chairman/CEO Ginny Rometty as well as other executives are giving up bonuses due to IBM’s poor revenue performance in 2013.

Meanwhile, unions seeking to represent IBMers in the U.S. and around the world say they believe IBM will cut 15,000.

And employee angst is not confined to the U.S.

China Worries

Here’s an interesting post that appeared on the Alliance@Union website:

“Anyone care about things in China? Our team was brought up by US senior engineers, but on last summer, some of them, our mentors, friends were forced to leave, frustrated us. Now IBM screwed up Snowden [NSA spying] case, revenue in China declined dramatically; there are rumors that STG China will cut 60% jobs, and non-sales jobs cut to 0. -ChineseLabor”

Guess where many of the x86 workers (and manufacturing sites) are located?


“Heads” Will Roll

Here’s what analyst Toni Sacconaghi of Bernstein Research wrote about the job cuts as reprinted by Barron’s:

“We expect IBM to repurchase $15B or more of its shares this year, and rebalance its workforce by at least 13,000 heads.

“Many investors believe IBM should be investing in its future by buying new technologies and investing in building capability, rather than rightsizing the organization.

“So why is IBM steadfastly driving to its roadmap? It is hard to say. Perhaps IBM genuinely believes it can invest and do what’s right for the business while simultaneously achieving its roadmap.

“Perhaps it is worried about disappointing Wall Street (though some believe the stock might go up if IBM reduced or eliminated its 2015 target in a constructive manner).

“Another possible explanation is that the roadmap/prevailing financial model is the way executives have always run the company, and changing it is uncomfortable and/or requires a different skill set and risk appetite.

“A final theory is that IBM’s financial incentives (senior executives’ incentive programs are based 60% on operating net income near-term and 80% of operating EPS long term) make the choice simple.”

The reference to the “roadmap” is IBM’s stated intent to deliver $20 per share in earnings come hell or high water by 2015.

Roadmap vs. “Road Kill”

IBMers have called the plan “Road Kill.”

The x86 sale, the deadline to submit names for another “resource action” and another quarter of declining revenues led Alliance@IBM and its world partner UNI to call on Big Blue to stop job cuts.

The letter:

“There were times when IBMers were proud to work in one of the largest IT-companies in the world. They were respected as employees, were well paid, had secure jobs and worked in an environment conducive to innovation and collaboration.

“But things have changed in IBM since the company published its Road Maps for 2010 and 2015. Instead of focusing on the people that made the company great, IBM is now transfixed by numbers and Earnings per Share (EPS).

“In 2013, IBM spent 1 billion USD on what it called “workforce rebalancing”, which means nothing else than a giant job cut. In 2014, the company is set to spend another 1 billion USD to eliminate an estimated 15,000 jobs worldwide. This comes at a time when the company continues to make hefty profits.

“UNI Global Union and the UNI IBM Alliance denounce the company’s move to lay off its employees en masse. IBMers remain the company’s biggest asset, and should be in the forefront of any change. Alternatives to layoffs exist for companies looking to cut costs. Retraining programs can yield positive results for both employees and the company, and have been implemented successfully in numerous companies.

“Lee Conrad, from Alliance@IBM CWA and UNI IBM Alliance Coordinator said ‘The hits just keep coming. Following the news that job cuts will happen this quarter, the latest is that IBM will sell one of its server units to Chinese company Lenovo. 7500 workers worldwide will be impacted and moved out of IBM.’

“Said Alan Tate, Head of UNI ICTS: ‘IBM needs to go back to its roots and focus on what made the company successful for over 100 years. It needs to invests in its employees and ensure decent work. Innovation is what made IBM a great company not greed.'”