Newspaper article THE JOURNAL RECORD

IBM Schedules Meeting to Discuss Restructuring Rumors

Newspaper article THE JOURNAL RECORD

IBM Schedules Meeting to Discuss Restructuring Rumors

Article excerpt

NEW YORK (AP) _ International Business Machines Corp. on Wednesday scheduled a special meeting of its board of directors as rumors swirled that the troubled computer maker would take additional steps to cure its financial problems.

The directors will meet next week, according to an industry executive who spoke on condition of anonymity. The board normally does not meet in December.

Among the actions the board may consider are the elimination of tens of thousands of jobs and plant consolidations, industry analysts believe. In addition, the board may speed up plans to give some of IBM's businesses more autonomy from the parent company.

IBM already is on its way toward cutting at least 40,000 jobs this year, leaving the company with some 300,000 employees by Dec. 31, and trimming its manufacturing capacity. But its earnings have not rebounded. Presumably, the board will set the stage for a continuation of the cost-cutting drive into next year.

The board also may approve a charge against earnings to pay for cost-cutting steps such as severance programs. Already, IBM plans to take a $5.4 billion charge against this year's profit for such actions.

Speculation about the board meeting is heightened due to recent moves by boards at several other large, struggling companies, such as General Motors Corp. and American Express Co.

Robert Stempel was forced out as GM chairman by the automaker's board. American Express' board said 15-year Chairman James Robinson III would lead a search for his own successor as the company attempts to rebound.

However, the computer industry executive cautioned that some of the speculation about the IBM board meeting is off base. For example, IBM's chairman, John F. Akers, does not appear to be in danger of losing his job, the executive said.

IBM's shares fell $2.75 each to $62.62 by the 4 p.m. close of trading on the New York Stock Exchange.

Analyst John Jones of Salomon Brothers Inc. believes IBM will consider 30,000 or so additional job cuts. To pay for the cost of severance packages, it could reduce its earnings by a substantial amount, he said. …

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