IBM has announced 3,900 layoffs on Wednesday as a part of its disinvestments and missed cash targets, after cheering for beating its revenue expectations in the fourth quarter, according to Reuters. Chief Financial Officer James Kavanaugh said that the Armonk-headquartered tech giant was still "committed to hiring for client-facing research and development". He added the layoffs will focus on related IBM spin-offs Kyndryl and Watson Health units and will cost the company a charge of around $300 million in the January-March period, IBM said.


The shares of the company fell by 2 percent in extended trading, analysts say that the job cuts and free cash flow miss were 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 percent of its workforce," said Jesse Cohen, senior analyst at Investing.com as per Reuters.


"Investors were hoping for deeper cost-cutting measures", Cohen added.


The layoffs would amount to a 1.4 per cent reduction from its headcount of 280,000, according to IBM's latest annual report.


IBM's cash flow was under its target of $10 billion standing at $9.3 billion, because of its capital needs.


The company's software and consulting business growth slowed down sequentially in the fourth quarter, however, its hybrid cloud revenue rose 2 percent in the quarter that ended December 31.


ALSO READ: Tech Layoffs: How Post-Covid Bubble Burst Impacted Firms In 2022


Total revenue was flat at $16.69 billion in the period, compared with analysts' estimates of $16.40 billion, according to Refinitiv. The company recorded revenue growth of 5.5 percent, its highest in a decade, in 2022.


IBM joins Meta, Google, Twitter and Microsoft among others in mass layoffs. The Wall Street Journal has said technology companies at large have been affected by a slowdown in spending as concerns about the economy and a potential recession linger, which has resulted in a wave of recent layoffs.


Commenting on this the White House has said that Washington understands the impact of job cuts, adding that the US economy is growing steadily. 


White House press secretary Karina Jean-Pierre, as quoted by ANI, said on Tuesday, “Our economy is continuing to grow in a steady and stable manner… And so, more broadly, when it comes to the economy, layoffs remain near record lows, according to job opening data.”