New York: IBM Corp on . Wednesday announced 3,900 layoffs as part of some asset divestments and missed. Its annual cash target, dampening cheers for beating revenue . Expectations in the fourth quarter.
Chief Financial Officer James . Kavanaugh told Reuters the company was still “committed to hiring for client-facing . Research and development”.
The layoffs — related to the spinoff of its . Kindle business and a part of AI unit Watson Health — . Will charge $300 million in the January-March period, IBM said.
The company’s shares fell 2% in extended trading. Erasing earlier gains on upbeat results. Analysts said news of job cuts and missed free cash flow were behind the decline.
“It looks like the market is disappointed in the size of its announced job cuts, which is only 1.5% of its workforce. Said Jesse Cohen, senior analyst at Investing.com.
“Investors were hoping for deep cost-cutting measures.”
From big tech to Wall Street banking majors. U.S. companies have cut costs in earnest to better weather the global economic downturn.
IBM’s 2022 cash flow was $9.3 billion. Short of its target of $10 billion, higher than expected working capital needs.
The company forecast annual. Revenue growth in the mid-single digits in constant currency terms, weaker. Than the 12% it reported last year, as pandemic-led demand to. Digitize businesses gave way to cautious spending by . Clients amid fears of a growing recession.
In October, IBM reported softness in new . Bookings in Western Europe while peer Accenture. Plc cited weakness in its consulting business. Cognizant Technology . Solutions Corp cut its 2022 forecast in November due to contract tensions.
Growth in IBM’s software and consulting businesses slowed in . The fourth quarter. But cloud spending was a bright spot, with contract signings doubling . Through 2022 to deploy services with. Partners such as Amazon com’s AWS and Microsoft’s Azure.
Its hybrid cloud revenue rose 2% in the quarter ended Dec. 31.
Total revenue for the period was $16.69 billion. Compared to analysts’ estimates of $16.40 billion, according to Refinitiv.
For 2022, IBM recorded 5.5% revenue growth, the highest in a decade.