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IBM job cuts concentrated in Europe; details in July
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  • NEW YORK (AFP) May 05, 2005
    IBM said Thursday its restructuring plan announced this week aims mainly to streamline its European operations while shifting resources to higher-growth markets.

    The computer giant, which on Wednesday announced the plan to cut 10,000 to 13,000 jobs, said the majority would occur in Britain, Germany, France and Italy.

    Europe accounts for about one-third of IBM's global work force of around

    In a conference call, IBM chief financial officer Mark Loughridge said details of the job reduction would be announced in July.

    He said the moves would create smaller, more-flexible local units to improve direct contacts with clients, eliminate corporate bureaucracy in lower-growth countries and shift resources to higher-growth markets.

    Most of the reductions would involve voluntary buyouts, though some workers in Europe and the US would be laid off, Loughridge said.

    He added that the latest overhaul had been in the works for months and was not a direct response to weak results for the first three months of 2005.

    The company nicknamed "Big Blue", having shocked Wall Street with disappointing earnings figures last month, signalled that the job cuts were part of efforts to reinvent itself after it ditched its personal computer unit.

    The restructuring will incur a pre-tax charge of 1.3 billion-1.7 billion dollars in the second quarter of the fiscal year, before the plan starts to pay off financially in the second half of 2005, IBM said.

    Markets expected some kind of restructuring from IBM after the first-quarter earnings figures jolted the company to hasten a review of its strategic direction.

    Sunday, IBM wrapped up a 1.75-billion-dollar deal to sell its PC division to Chinese computer maker Lenovo, in a startling sign of both IBM's transformation and of China's emergence onto the global stage.

    Earlier Thursday, Amicus, one of Britain's largest unions, warned the plan could hit British workers the heaviest.

    "We fear the worst, given that it is quicker, cheaper and easier to get rid of workers in the UK than elsewhere in Europe," Amicus' National officer Peter Skyte said.

    In France, union leaders said they expected more than 1,000 jobs affected out of a total of 11,000 in the country. Several union leaders said they were planning on a protest calling for no layoffs in France, with cuts made only on the basis of voluntary buyouts.

    IBM-France executives had told union leaders in early April that some 769 jobs may be eliminated. But some union officials said there were signs that the total may be 1,075.

    German labor leaders said as many as 2,500 jobs in that country may be affected by the move, or about 10 percent of the German IBM workforce.

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