Jan 25 (Reuters) - IBM Corp on Wednesday
announced 3,900 layoffs as part of some asset divestments and
missed its annual cash target, dampening cheer around beating
revenue expectations in the fourth quarter.Chief Financial Officer James Kavanaugh told Reuters that
the company was still "committed to hiring for client-facing
research and development".The layoffs - related to the spinoff of its Kyndryl
business and a part of AI unit Watson Health - will cause a $300
million charge in the January-March period, IBM said.Shares of the company fell 2% in extended trading, erasing
earlier gains on the largely upbeat results. Analysts said news
of the job cuts and free cash flow miss was behind the drop."It seems as if the market is disappointed by the size of
its announced job cuts, which only amounted to 1.5% of its
workforce," said Jesse Cohen, senior analyst at Investing.com."Investors were hoping for deeper cost-cutting measures."From Big Tech to Wall Street banking majors, U.S. companies
have been downsizing in earnest and slashing costs to better
cope with the global economic downturn.IBM's 2022 cash flow was $9.3 billion, below its target of
$10 billion, due to higher-than-expected working capital needs.The company also forecast annual revenue growth in the
mid-single digits on constant currency terms, weaker than the
12% it reported last year, as pandemic-led demand for digitizing
businesses has given way to cautious spending by clients amid
rising recession fears.In October, IBM flagged softness in new bookings in Western
Europe while peer Accenture Plc noted weakness in its
consulting business. Cognizant Technology Solutions Corp
in November cut its 2022 forecast due to a pullback in
contracts.IBM's software and consulting business growth slowed down
sequentially in the fourth quarter, but cloud spending was a
bright spot, with deal signings doubling in 2022 for setting up
services with partners such as Amazon.com's AWS and
Microsoft's Azure.Its hybrid cloud revenue rose 2% in the quarter ended Dec.
31.Total revenue was flat at $16.69 billion in the period,
compared with analysts' estimates of $16.40 billion, according
to Refinitiv.For 2022, IBM recorded revenue growth of 5.5%, its highest
in a decade.(Reporting by Chavi Mehta in Bengaluru; Editing by Devika
Syamnath)