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Aftermath of IBM's $3.5B Mega-Acquisition

IBM to Take $500M Charge

 Big Blue to Lay Off at Least 4,000 Additional People

TUCSON, Sep. 3 - In our last Annex Newsflash on IBM layoffs (see "IBM Layoffs Confirmed", Aug 14), we said that that the Big Blue will be taking additional charges and firing more people on account of its acquisition of PriceWaterhouseCoopers Consulting (PwCC):

At the same time (as laying off 15,600 people), however, IBM is in the process of adding some 30,000 to 35,000 employees to the IGS payroll as a result of its PwCC acquisition.  As we said in our recent report, this is certain to result in additional layoffs and hundreds of millions of dollars of related one-time charges, which will be probably taken in the fourth quarter (see "Half or Double Trouble?", Aug. 12).

Well, this morning's (Sep 3) edition of the Wall Street Journal has now confirmed and quantified both the layoffs and the charges.  At least 4,000 additional IBM jobs will be slashed as a result of this acquisition, resulting in a charge of over $500 million, the Journal said.  

The IBM cuts are in addition to some 5,000 jobs that PwC has already shed itself, as it downsized its workforce from 35,000 to 30,000 during the last year.  The IBM Business Innovation Services unit, which will absorb the acquired PwCC, currently has about 50,000 employees.

IBM and PwC expect to complete the transaction on or about September 30.  As predicted, the layoffs will be carried out in the fourth quarter.  If the economic conditions in the IT services consulting field continue to deteriorate, additional layoffs and charges can be expected.

 Happy bargain hunting!

Bob Djurdjevic

[Also check out"IBM Layoffs Confirmed" (Aug 14),  "Half or Double Trouble?" (Aug. 12), Wall Street/Main Street Chasm (June 25), “Wall Street Casino,” (June 21), Big Blue Salami (June 19),  Sam's Dull Scalpel (June 4), Looming IBM Write-offs (May 23), "No New News at IBM" (May 15),  "Looming IBM Layoffs" (May 14),  "Sam Is No 'Change Agent'," (May 6), Additional Stock Buybacks Authorized (Apr. 30, 2002),  "IBM 5-Yr Forecast: From Here to Eternity?" (Apr. 2002),  “Tough Times, Soft Deals,” (Apr. 25, 2002), "A Disastrous Quarter," (Apr. 17),  Industry Stratification Trend (Mar. 30, 1990),  “Gerstner’s Legacy: Good Manager, Poor Entrepreneur” (Jan. 2002),  "Big Blue Starting to Unravel," (Apr. 8, 2002), SEC Launches Formal Probe of Wall Street Research (Apr. 25, 2002),  “SEC to Tighten Stock Option Rules” (Apr. 5, 2002), "Sir Lou OutLayed Lay!" (Apr. 1, 2002), "IBM Pension Fund Vapors," (Mar. 23, 2002), Is IBM Cheating on Taxes, Annex Bulletin 99-17 (May 1999),  IBM 5-year Forecast 2001: An Unenviable Legacy (June 2001) "Break Up IBM!" (Mar. 1996), Fortune on IBM (June 15, 2000), “Smoke and Mirrors Galore,” July 2000), Annex Bulletin 98-14 ("Wag the Big Blue Dog"), Armonk's Fudge Factory (Apr. 9, 1999)Where Armonk Meets Wall Street, Greed Breeds Incest (November 1998)Stock Buybacks Questioned: Is IBM Mortgaging Its Future Again?, 97-18 (4/29/97),  "Some Insiders Cashed In On IBM Stock's Rise, Buybacks" 97-22, 7/27/97,  Djurdjevic’s Forbes column, "Is Big Blue Back?," 6/10/97;  “Executive Suite: How Sweet!,” (July 1997), "Gerstner: Best Years Are Behind", Aug. 10, 1999), "IBM's Best Years Are 3-4 Decades Behind Us" (July 1999), "Lou's Lair vs. Bill's Loft" (June 1999),  "Corporate Cabbage Patch Dolls," 98-39, 10/31/98; Djurdjevic’s Chronicles magazine October 1998 column, "Wall Street Boom; Main Street Doom", “Louis XIX of Armonk,” (Aug. 1996), "Mountain Shook, Mouse Was Born" (Mar. 25, 1994) etc.]

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Volume XVIII, Annex Newsflash No. 2002-14
September 3, 2002

Editor: Bob Djurdjevic
Published by Annex Research

P.O. Box 97100, Phoenix, Arizona 85060-7100
TEL/FAX: (602) 824-8111

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