Red Hat CEO Matt Hicks reportedly informed employees about the upcoming job cuts in an email to employees. In the email, Red Hat CEO Hicks called the cuts “a decision our leadership team was truly hoping we could avoid.” “This decision is now appropriate to ensure Red Hat’s ability to compete in a new environment,” he said.
Hicks said that the cuts “will focus on general and administrative” positions, and not affect positions “directing selling to customers or building out products.” He added further that employees in some countries would be notified of layoffs Monday (April 24), while others would be told over the course of the current fiscal quarter.
One of the IBM‘s largest software acquisitions in history
IBM acquired Red Hat in the year 2019 for nearly $34 billion in one of the largest software acquisitions in history. As part of the deal, IBM pledged to respect Red Hat’s neutrality.
Earlier this year, IBM announced its plans to lay off around 3,900 employees from its global 260,000 workforce. The IBM layoffs are a result of the spinoff of IT infrastructure services provider Kyndryl business and part of the AI unit called ‘Watson Health‘.
IBM misses revenue estimates
Recently, IBM missed Wall Street expectations for first-quarter revenue, hurt by shrinking corporate spending on IT services and a strong dollar. The company cut its full-year consulting revenue growth forecast to 6%-8% from earlier expectations of high single-digit percentage growth.
“We are seeing softness in certain components of our discretionary based offerings in consulting,” Chief Financial Officer James Kavanaugh told Reuters about the U.S. market.
IBM, which receives over 75% of its revenue from its software and consulting business units, said its consulting revenue rose 8.2% at constant currency to $4.96 billion in the quarter ended March 31. Software revenue rose about 6%.
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