IBM Fires 1,500 Chip Workers, Starts Design Unit (Update10)
By Paul Horvitz
quote.bloomberg.com
Armonk, New York, June 4 (Bloomberg) -- International Business Machines Corp. fired 1,500 U.S. semiconductor workers and created a unit to sell more computer-system designs to try to restore profit in its group that makes chips and other parts.
The world's largest computer maker said it will have pretax expenses of $2 billion to $2.5 billion, primarily in the current quarter, reflecting the job cuts and charges to exit the hard-disk drive business, which was announced yesterday.
Chief Executive Sam Palmisano is trimming the workforce and exiting lower-margin businesses after two straight quarters in which IBM sales trailed analysts' estimates by $1 billion. The company has cut more than 5,300 jobs in recent weeks, according to the Communications Workers of America. IBM said it will sell its hard-disk drive business to Hitachi Ltd. for $2.05 billion, moving 18,000 workers off the IBM payroll.
``They've been doing what they can to offset the cost of these (chip) fabrication plants,'' said Bob Sutherland, an analyst with Technology Business Research Inc. ``They've been holding out as long as they can.''
Shares of Armonk, New York-based IBM rose $1.20 to $79.31 and have fallen 34 percent this year.
Job Cuts
The job cuts represent 7.5 percent of the chipmaking division's 20,000 employees and mostly involve professional workers at sites in Vermont and New York state, IBM spokesman Bill O'Leary said. |
