IBM offering employees buyouts

IBM is offering a voluntary buyout plan to most of its 241,000 employees worldwide in a cost-cutting move that could eliminate several thousand jobs.

2 min read
In a cost-cutting move that could eliminate several thousand jobs,
IBM (IBM) has begun offering employees a voluntary job buyout plan, a spokesman for the company confirmed Friday.

The move comes just as IBM announced earlier this week that it was reorganizing poorly performing divisions, such as its software and consumer PC divisions, while trying to expand the company's growing businesses, such as computer services.

This is IBM's first major job-reduction plan since the company's painful downsizing that brought IBM's total employment to 220,000 in 1994 from a peak of 406,000 in 1985.

In the past two years the company's workforce has been expanding, and IBM has indicated plans to add up to 15,000 jobs this year. Even with the recent buyout offer, the company expects to end 1997 with more employees than it had at the start of the year, a spokesman said.

Struggling to meet growth and profit objectives, IBM needs the savings from the job cuts even as it tries to move the whole company into more high-growth areas, such as the Internet.

"The voluntary job buyout program will be determined division by division," said Glenn Rossman, a spokesman for IBM. "Each business unit will decide how many employees it will offer the package to depending on their needs and performance."

The buyout plan includes between eight and 26 weeks of pay, based on seniority. The company also will offer a $2,500 career transition and retraining allowance and up to six months of transitional health insurance benefits.

The IBM spokesman would not comment on the number of employees the company expects will accept the package, nor whether IBM will ultimately resort to layoffs in order to meet cost-cutting expectations. "This is part of an ongoing process," Rossman said.

The company, which will post third-quarter earnings on Monday, had indicated to Wall Street last year that it expects to spend up to $800 million in restructuring projects, including workforce reductions. IBM will not set a special charge against earnings for the program, the spokesman said.

According to First Call, analysts' profit projection for the third quarter is $1.37 a share, up from $1.22 in the year-earlier period. In composite trading yesterday on the New York Stock Exchange, IBM shares closed at $99.875, down 1.8 percent in a broad stock market sell-off. Early Friday morning, shares were trading at $97.062.

Reuters contributed to this report.