International Business Machines Corp. plans to cut its worldwide work force by more than 10,000 people this year, a reduction of about 2.7 percent.
Four thousand jobs left the company Wednesday with the completed sale of its laser-printer operations, typewriter and office-products business.IBM employed about 373,000 worldwide at the end of 1990.
The work force cuts, coming the week after IBM announced it expected disappointing 1991 earnings, offers another example of the ferocity of competition in the computer industry, which has seen demand fall off as the economy slumped.
However, company spokesman Peter Thonis said there was no connection between the job reductions and the drop in its earnings forecast.
The company said 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
The announcement was well-received on Wall Street, where investors bid up the price of IBM stock $1.121/2 a share to $114 in early New York Stock Exchange trading.
The computer giant, based in Armonk, N.Y., said the 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.
At the same time, the company 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 material impact on IBM's operating results for the year.
Only last week, IBM announced that its first-quarter earnings would be half of what analysts were expecting. Price competition has been fierce in the computer industry in the face of the recession and the Persian Gulf crisis.
Reductions will be voluntary
A local IBM official said the job cuts will be achieved through voluntary incentive programs, retirements and attrition.
"It's purely on a volunteer basis. We will will open it to all IBM employees in Utah. If anyone wants to retire, if they're eligible, or if they want to quit the company we will consider it," said Bob Egan, IBM's general manager for the Intermountain region.
IBM employs about 300 Utahns, most who work at its Salt Lake City office. "We don't expect it to be a major hit to the state of Utah," Egan said.