IBM lays off thousands of workers

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Despite earlier protestations to the contrary, IBM has been quietly laying off thousands of workers over the past few weeks. Some 6,800 jobs have gone in total, including a tranche of 1,500 earlier this week. The job cuts will cost the company up to $2.5 billion in restructuring charges.

Most of the layoffs affect IBM's older lines of chip manufacturing -- especially its plant Vermont., where almost 1,000 jobs were cut on Tuesday, Some chip production is being closed down. IBM also intends to sell off its hard disk drive business, forming a manufacturing joint venture with Japan's Hitachi, which will control the new company after three years.

More positively, IBM is planning two new outsourcing businesses. As part of the first venture, IBM will make cutting-edge chips to order at its new $2.5 billion plant in New York, The other initiative will create an outsourced electronic device design business staffed by 500 IBM engineers who will be available for hire by outside electronics manufacturers.

The paring back of IBM's work force comes after the company's worst earnings quarter in more than a decade. "These actions we've announced today put us in a better, more competitive financial position for the second half, as well as 2003," said chief financial officer John Joyce in a conference call with analysts Tuesday.

IBM said the lay offs were now complete. "The vast majority of our colleagues who are affected by job actions have now been notified," IBM chief executive Samuel Palmisano wrote in a memo to IBM employees.

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