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7 to lose jobs as part of IBM layoffs

Post-Bulletin and news services

Out of 1,570 people cut by IBM Corp. today, seven were based in Rochester.

The company announced the layoffs this morning and said they are part of an ongoing overhaul of operations in its giant technology services unit.

IBM carried out a similar level of job cuts at the beginning of the month, for a total of 3,023 in this quarter and 3,720 for the year. In the earlier layoff, IBM cut eight jobs in Rochester.

IBM Rochester employs 4,400.

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That amounts to roughly 1 percent of the company, which employed 355,000 people at the beginning of the year. But even these small numbers reflect a big project inside IBM to transform its business.

IBM executives say they expect no more layoffs this quarter. But other shifts like this — IBM calls it "rebalancing" — figure to follow from time to time.

Unlike with other recent job cuts, IBM announced this one rather than just responding to media questions.

"They decided with some inaccuracies being reported on projected numbers they decided to just report what it was," said IBM Rochester spokeswoman Lorie Luedke.

Recent speculation by PBS technology blogger Robert X. Cringely forecast 100,000 jobs being cut this year and a union group trying organize IBM predicts 8,000 to 12,000 layoffs this year.

"They wanted to beat us to the punch," says Alliance@IBM’s Lee Conard of IBM’s decision to announce the layoffs.

Services is IBM’s biggest division by revenue, but the advent of lower-cost competition overseas has forced IBM to work harder to improve the unit’s profit margins. In the first quarter, pretax income for IBM’s tech services fell 19 percent, even as revenue rose 7 percent.

Tuesday’s job cuts were largely part of the company’s response. Although IBM did not disclose where the layoffs were being made, the company had blamed the first-quarter profit shortfall on problems in its U.S. outsourcing business.

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