One Bad Day: IBM Stumbles Over Accenture and These Layoffs
IBM’s (NYSE:IBM) week ended in a hail of bad news. After reports surfaced Thursday detailing thousands of job cuts at the company, things got worse when Accenture (NYSE:ACN) delivered a sales forecast that fell short of analysts’ estimates, sending the company stock to double-digit losses. As a result, IBM was burdened during Friday trading in New York, losing over 2 percent.
Alliance@IBM, a group trying to organize company employees, reported IBM had shed over 3,000 jobs in its last round of cuts. Computer World reported the Systems and Technology Group, along with software team members, fared the worst in the company’s layoffs. The numbers were compiled by Alliance@IBM, as the company typically does not make information on job cuts public.
While more U.S. employees lost their jobs at IBM, the layoffs included the company’s global workforce as well. IBM has been growing its staff around the world, yet employees in Brazil and China were among those not making it through the latest downsizing. Meanwhile, IBM felt the pressure from rival Accenture, after the second-largest company in the industry reported a weak sales forecast. Accenture lost over 10 percent on Friday.
The company’s sales forecast did not match analysts’ expectations, missing consensus estimates by hundreds of millions of dollars. Accenture stock abruptly dropped from over $80 to a close of $71.96 on Friday after the news was reported. A change in the buying habits of Accenture’s clients accounted for the short revenue take, according to Bloomberg.
Whatever was behind the bad news for Accenture, it managed to take IBM with it. Shares fell over 2 percent ($4.54) to close at $191.11 on Friday. While IBM’s stock price has remained largely unmoved for the year, Accenture had gained over 21 percent in 2013 before Friday’s slide.
Accenture’s bad news doesn’t bode well or the rest of the industry, of which IBM is the main player. Due to the timing of earnings reports, Accenture is the first of the group to announce revenues. IBM and the rest of the competition report one month later. More bad news might be on the way.
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