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Palmisano affirms IBM's need to cut jobs, costs

Posted: 20 May 2002 ?? ?Print Version ?Bookmark and Share

Keywords:IBM? software? semiconductor? storage systems?

IBM Corp. will improve productivity and reduce head count to cut costs, IBM president and chief executive officer Sam Palmisano told analysts last week. The company seeks to capitalize on the IT industry's shift from equipment to software and services to achieve double-digit earnings per share over the long term.

Palmisano gave no details on plans for cutting the company's staff, nor did he reveal plans for the company's semiconductor business, despite being asked several questions about those issues.

Many of the questions stemmed from recent speculation that the company would lay off thousands of employees and possibly sell its semiconductor fabrication facility in Burlington, Vermont.

Analysts have suggested a wide range of options available to IBM, from a sale of the fab to a possible joint venture with another global semiconductor maker, but IBM has declined comment on what it termed "rumors."

Responding to one question, Palmisano said that IBM "loves" its semiconductor business, as it gives the company "incredible differentiation" and serves IBM's internal needs.

Palmisano allowed that the semiconductor industry as a whole is now struggling with overcapacity, but "is not a broken business, merely one that has a short-term economic problem that will turn."

Despite the economic turmoil of the last year, Palmisano said that IBM gained market share in several sectors, including database software, transaction management software, servers and storage systems, according to third-party research firms.

"IBM Corp. performed better in the past two years than in the previous decade," Palmisano said, citing third-party data.

Palmisano said IBM would increase productivity in terms of service to its customers and internal business performance.

Asked about specific staff reductions, Palmisano said IBM would lose 15,000 employees just through attrition, but suggested that reductions would not occur through attrition alone.

? Margaret Quan

EE Times

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