IBM lays off 1,000 in software, services units; signs AXA deal

Friday, February 28, 2003

(02-28) 07:44 PST (AP) --

ARMONK, N.Y. (Dow Jones/AP) -- International Business Machines Corp. has sent layoff notices to nearly 1,000 people in its global services and software groups in the United States.

The world's leading provider of computer hardware said Thursday the layoffs reflected "skills rebalancing."

The job cuts represent about 0.5 percent of IBM's combined software and technology services work forces, the company said. About 215,000 people work in the two units. IBM's total work force is around 320,000.

Last year, Armonk, N.Y.-based IBM laid off more than 15,000 employees, though it has since added back thousands with the acquisitions of the consulting arm of PriceWaterhouseCoopers LP and Rational Software.

Many of last year's job cuts came in IBM's Global Services unit, which the company chalked up to tighter spending on technology services by corporate clients.

Separately, IBM said it received a six-year computer-services contract valued at about $1 billion from AXA SA, a financial-services company based in Paris.

Under the contract, IBM will take over and own AXA's computer systems around the world.

AXA's information-technology workers, however, will remain AXA employees and will manage the systems, unlike many outsourcing agreements in which IBM hires the employees.

Frank Kern, IBM's global-services general manager in Paris, said the decision was made to leave the workers with AXA because "negotiations with work councils would take a long time."

AXA will pay IBM only for the processing power or storage capacity it uses.

IBM said it will cut costs by consolidating about 4,500 servers into just 900 larger servers.

In morning trading, shares of IBM rose 70 cents, or less than 1 percent, to $77.98, on the New York Stock Exchange.

The American depositary shares of AXA climbed 55 cents, or 4.7 percent, to $12.15, also on the Big Board.

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