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IBM Layoffs 2020: Staff Cuts In Five States, Reports Say

IBM layoffs will impact employees in at least five states -- California, Missouri, New York, North Carolina and Pennsylvania -- according to Bloomberg.

Arvind Krishna, CEO, IBM
Arvind Krishna, CEO, IBM

The layoffs come as enterprise hardware giants struggle to maintain sales amid the coronavirus pandemic and resulting economic fallout. Hewlett-Packard Enterprise also announced layoffs today, and Dell Technologies froze new hires, raises and promotions until the end of the fiscal year, Bloomberg says. Dell's move mirrors recent steps at sibling company VMware.

At IBM, the company apparently cut "thousands" of jobs, The Wall Street Journal reports -- though the company  has not disclosed how many employees were impacted. In a statement to Fox news about the cuts, a company spokesperson said:

"IBM’s work in a highly competitive marketplace requires flexibility to constantly remix to high-value skills, and our workforce decisions are made in the long-term interests of our business.  Recognizing the unique current conditions, IBM is offering subsidized medical coverage to all affected U.S. employees through June 2021" a company spokesman said in a statement."

IBM's Multi-Year Shrinkage

IBM was shrinking even before the economic challenges arrived. Revenue was $17.57 in Q1 of 2020, compared to $18.18 billion in Q1 of 2019, IBM disclosed in April of 2020. IBM’s sales have declined year-over-year in all but four of the past 32 quarters, Market Watch notes -- though some of the the decline involves IBM selling off certain assets in recent years.

Even during the economic expansion, IBM had layoffs every year since 2016, according to ChannelE2E's layoff tracker.

Still, IBM showed some signs of progress in Q1. For instance, total Q1 cloud revenue was $5.4 billion, up 19 percent from Q1 2019.

IBM: New CEO, Multi-Cloud Bet

The IBM layoffs arrive just as the company shifts to new CEO Arvind Krishna -- who has deep cloud experience at the enterprise giant.

IBM is betting heavily on the recent Red Hat acquisition and an associated multi-cloud strategy. Red Hat's Linux, middleware, storage and virtualization software runs on-premises and in third-party clouds like Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.