IBM posts record profits, fewer jobs - Westfair Communications

For IBM, 2010 brought record profits and thousands of fewer jobs in the United States. That was the sum of the report from Big Blue to investors last week along with indications that 2010 will bring the same formula of strong profits and more outsourcing of jobs overseas.
On Jan. 19, IBM reported for 2009 a record profit of $13.4 billion for the year, up 9 percent from 2008’s net income of $12.3 billion. The company’s revenue fell to $95.8 billion last year, down from $103.6 billion a year before. IBM was able to boost its profit despite lower sales by cutting more than $9 billion of costs and expenses.

Though IBM does not discuss job-cut figures, the group Alliance@IBM, a union supported group, said IBM cut thousands of jobs in the United States in 2009 while increasing its overseas work force. State records show about 1,000 jobs were cut in Dutchess and Orange counties, reducing IBM”™s Hudson Valley work force to below 10,000 for the first time since 1999.

“Last year IBMers remember the company also announced record profits and the very next day terminated about 5,000 employees around the country,” said Lee Conrad, national coordinator of Alliance@IBM, who worked 26 years for the company. “So when employees look at record profits, they don”™t see any connection between record profits and them keeping their job. All they see is shareholders doing well and employees finding the unemployment line.”

Doug Shelton, who was identified by an IBM spokesman as the company official who could discuss job cuts, did not return a call seeking comment.

According to Alliance, IBM had 105,000 U.S. workers at the end of 2009, down from 115,000 in 2008, continuing a trend that saw their domestic work force shrink from about 134,000 workers in 2005.

Meanwhile, IBM hired tens of thousand of workers overseas in 2009. According to Alliance, citing IBM reports as their source, Big Blue hired some 13,300 workers in the Asia-Pacific region outside Japan, where about 850 workers were hired. IBM hired 18,800 people in India in 2009, and 7,000 in Latin America. Meanwhile, the company hired some 3,500 workers in the United States and 2,900 in Europe.

“IBM is not making the company smaller, jobs are being off-shored and sent out of the United States,” said Conrad. “Worldwide the company is growing, it”™s just not growing in the U.S. They are getting record profits by cutting jobs here and paying lower wages, lower benefits overseas. They can pay Indian and Chinese workers a fraction of what they pay workers here. It”™s about cost cutting to improve shareholder profits.”

Mark Loughridge, IBM”™s chief financial officer, told brokerage analysts on a conference call Jan. 19 the company expects another year of double-digit earnings growth in 2010, with at least $11 per share in profit. IBM reported diluted earnings per share of $10.01 in 2009, up 13 percent from 2008.

Loughridge said that there will be more reduction of costs through “work-force rebalancing,” in 2010.Though the company will not realize $3.7 billion in cost savings this year, as it did in 2009, such reductions will be an “ongoing part of our overall business model,” Loughridge said.

Conrad said that he expects IBM will reduce its American work force soon, so as to maximize profits for the year. “The next couple of weeks we”™re going to see job cuts again,” said Conrad. “Last year it started right about now and continued right through till May. They like to get this done early in the year to reap the full benefits.

“It”™s pretty scary,” said Conrad. “How do you have an economic recovery if companies like IBM keep throwing employees out of work in this country and moving jobs off shore?”