Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 29, 1991 TAG: 9103290236
SECTION: BUSINESS PAGE: B-4 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
Big Blue's move marked the fourth time in recent years the computer giant has instituted major staff reduction programs.
The latest cuts, which total about 2.7 percent of IBM's work force, follow IBM's announcement last week that it expected disappointing 1991 revenue and earnings. However, company spokesman Peter Thonis said there was no connection between the job reductions and the earnings forecast.
But the move does offer another example of the growing problems of the computer industry, which has seen demand and prices slide with the weakening economy. Competition has been fierce because of the recession and the Persian Gulf crisis.
IBM, based in Armonk, N.Y., said the job cuts would come primarily through a combination of voluntary incentive programs and attrition, and are part of its long-term effort to make itself more efficient. IBM has a longstanding policy of reducing its work force without layoffs.
The news was welcomed on Wall Street, where investors bid the price of IBM's stock up $1 to $113.87 1/2 a share in New York Stock Exchange composite trading.
Analysts were also pleased by the announcement.
"It was more people than we expected, which is positive in an environment that has turned negative on IBM," said John Jones of Montgomery Securities in San Francisco.
"They're intent on reducing costs," said Martin Ressinger, an analyst with Duff & Phelps Inc. in Chicago. "They have seen that revenue growth hasn't improved too much."
Ressinger said the company, whose results are considered an indicator of overall U.S. corporate health, is "not in a serious problem" and does not need to make larger job reductions.
"It's a little hard to take major percentage-type cutbacks unless they were in some real difficulty," he said. "Right now it's mostly the shareholders who are squirming, and just because of frustration with the stock."
The firm also noted that another 4,000 jobs are leaving the company because of a sale closed Wednesday of its laser-printer operations, typewriter and office-products business. IBM is retaining a 10 percent interest in the operation, which was bought by the investment firm Clayton & Dubilier Inc.
IBM also said it plans to make a one-time accounting adjustment of $2.3 billion after taxes to recognize the company's accumulated pension obligations for current employees.
It said the combination of the job reductions and the accounting adjustment are not expected to have any significant impact on IBM's operating results for the year.
IBM said Thursday the job cuts would yield savings before taxes of about $200 million in 1991, $600 million in 1992 and $800 million annually in future years. IBM employed about 373,000 worldwide at the end of 1990.
by CNB