The secret layoffs at IBM


IBM (NYSE: IBM) turned in a remarkable fourth quarter earnings report and forecast 2009 would be even better. The market pushed its stock up on the assumption that the big tech company would be one of the few to dodge the recession. It made some sense. IBM has large hardware, software, service, and consulting businesses. It also does business in almost every country in the world. All of that makes for a large and unshakable foundation.

So, why is IBM laying people off and keeping the news a "secret"?

According to The Wall Street Journal, "International Business Machines Corp. employees have informed Alliance-at-IBM, an affiliate of the Communication Workers of America, that workers at a number of locations have been told their jobs are being eliminated."

The news may be unsettling because IBM is doing so well, but the actions by the company are a sign of why the company does so well. IBM is a brutal cost cutter. It is part of the culture of the current management to keep expenses as low as possible. Even when times are fairly good, executives at IBM think nothing of moving facilities and jobs to countries where labor is inexpensive and the populations are well-educated.

IBM may not want to talk about letting people go, but in many ways, it is why investors have had such a good ride in the stock.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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