IBM to furlough US hardware staff in round of cost-cutting

According to reports, IBM is making staff take time off on reduced pay this summer. Is it time to bite the bullet and shift away from hardware?
Written by Charlie Osborne, Contributing Writer

IBM is extending summer vacations for the majority of its U.S.-based hardware staff -- whether they like it or not.

As reported by Bloomberg, the tech giant requires staff involved within its hardware business, including development and procurement, to take a furlough week on either August 24 or 31.

The temporary leave of absence, a common method used by companies which have financial need to do so, means that employees on the furlough will be entitled to one-third of their normal salaries. However, according to spokesperson Jay Cadmus, executives will be giving up their paycheck entirely.

In a phone interview with the publication, Cadmus said:

"We looked at a variety of things that we could do, and in lieu of other options considered this the best approach in the balance of the organization."

This is not the first time IBM has resorted to furlough time off. As hardware sales continue to decline, the only sections showing promise are the firm's System Z mainframe servers and Microelectronics OEM. System X products, storage and retail solutions, among others, all continue to dwindle. Overall sales in IBM's hardware unit declined across the board.


IBM reported second quarter earnings of $3.9 billion, or $3.34 a share, on revenue of $25.8 billion, which is down 3 percent from a year ago. In Q2, the tech giant spent approximately $1 billion in company restructuring -- which also included a number of layoffs.

According to employee group Alliance@IBM, over 3300 members of staff faced the axe as a result of restructuring efforts. Semiconductor research, storage systems development, software marketing and electronic design automaton were among the worst sections affected.

Coupling the furlough week, job cuts and declining revenue streams, IBM is not having an easy time of it this year. The company is also reportedly attempting to sell off its x86 server business, after negotiations with Lenovo failed earlier in 2013. Even as IBM touts its new system solutions -- including Pureflex -- for SAP Business Solutions and HANA to organizations, it is unlikely to be enough to offset losses suffered by the company's hardware sector.

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