IBM laying off up to 25 percent of 'hardware' division

 The week of customer, all big vendors are cutting jobs as growth slows and Cloud takes over. Aivars Lode avantce

IBM laying off up to 25 percent of 'hardware' division

Big Blue confirms it's commencing workforce cuts, but declines to put a number on the job losses. A source tells CNET the layoffs entail up to 25 percent in the Systems and Technology group.

by Dara Kerr

February 27, 2014 3:45 PM PST

IBM chief Ginni Rometty addresses attendees at Mobile World Congress 2014 in Barcelona.

(Credit: IBM)

IBM has confirmed that it's laying off a portion of its workforce in order to focus on new priority areas, like the cloud, analytics, and cognitive computing. This means certain divisions of the company must see cuts.

"As reported in our recent earnings briefing, IBM continues to rebalance its workforce to meet the changing requirements of its clients, and to pioneer new, high value segments of the IT industry," IBM spokesman Doug Shelton told CNET in a statement. "To that end, IBM is positioning itself to lead in areas such as cloud, analytics and cognitive computing, and investing in these priority areas."

The company wouldn't comment on the number of people being laid off or what divisions would be most affected. However, one source familiar with the plans told CNET that the layoffs entailed up to 25 percent in the Systems and Technology group -- this is the group that makes IBM servers and is often referred to as the "hardware" division.

IBM announced last month that it sold its x86 server business to Lenovo for $2.3 billion, so layoffs within the hardware division seem to make sense. With the sale, about 7,500 IBM employees were expected to be offered jobs at Lenovo. In 2005, IBM sold its PC business to Lenovo, too.

IBM currently employs more than 400,000 people worldwide and says that its total workforce has remained stable over the past three years. Additionally, the company is investing in cutting edge projects like Watson, which was first developed by IBM researchers to show what was possible in combining cognitive computing and natural language processing.

"Already this year we have committed $1 billion to our new Watson unit and $1.2 billion to expand our Cloud footprint around the world," Shelton said. "In addition, just this week IBM announced a $1 billion investment in platform-as-a-service Cloud capabilities, as well as investments in areas such as nanotechnology which will bring hundreds of new jobs to New York state."

"This also creates new job opportunities at IBM," Shelton continued. "At any given time, IBM has more than 3,000 job openings in these and other growth areas in the US."

IBM employs tens of thousands of people across the US. According to Alliance@IBM, a union seeking to represent IBM employees, workers in New York, Minnesota, and Vermont will be among those hit hard by the layoffs, along with workers in other countries.

Vermont's Burlington Free Press newspaper reports that more than 100 employees will be lad off from IBM's plant in Essex Junction, Vt. And, New York'sPoughkeepsie Journal writes that IBM agreed to keep at least 3,100 high-tech workers in upstate New York through 2016 -- however, the last official head count of the state's workers was estimated around 7,000.