IBM merges business, consumer PC units

IBM has folded its consumer PC division into its Personal Systems Group for corporate computers, a move that will result in layoffs of as many as 1000 employees.

Employees in the US were told on Wednesday that IBM was restructuring its PC groups by integrating the consumer division into the Personal Systems Group, said Trink Guarino, an IBM spokeswoman.

The company plans to lay off between 5 per cent and 10 per cent of the group, or 500 to 1000 of the 10,000 people employed in the group worldwide, Guarino said. Most of the cuts will occur in the US.

The move will allow IBM to respond to market conditions in which falling PC prices are cutting into revenues, Guarino said.

"We are under the same pressures as everyone else, and that affects our profitability," she said. "One reason to take this restructuring action is to be more profitable."

The company is also revamping its marketing strategy in response to changing buying patterns, she said. "We are seeing a blurring of the lines between home and work. This is a recognition that people are buying PCs differently."

The consumer division, which is presently in charge of the Aptiva line, will be known as the "individual segment," Guarino said. "We are creating an individual segment to sell multiple types of systems to vendors, including ThinkPads and Aptivas," she said.

In light of IBM's PC group posting a loss of nearly US$1 billion last year, the elimination of a separate consumer PC division didn't come as a surprise to analysts.

"IBM's strengths lie in its corporate divisions. It has never been that successful in the PC consumer market," said Andy Brown, a research analyst with IDC in London. "Any time there is a rationalisation in business operations, layoffs are usually an inevitability."

IBM's shares on the Nasdaq stock market closed on Friday at $US113.50, down $2.88, or 2.5 per cent, from the previous day's close.

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