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Big Tech Gets Smaller: IBM and TI Layoffs

Douglas A. McIntyre

Big tech seems to get smaller and smaller, both in terms of sales and number of employees. International Business Machines Corp. (IBM) said it would rebalance its workforce. Texas Instruments Inc. (TXN) announced it would cut 1,100 people. These announcements come shortly after Intel Corp. (INTC) said it would fire 5,000 people. While job cuts from the recession may have ended, old tech cannot afford to hold on to its workers.

IBM needs to cut staff. Revenue in the fourth quarter dropped 5% to $27.7 billion. Its old line System and Technology segment lost 26% of its revenue, down to $4.2 billion. The segment contains much of IBM's hardware sales. Some of IBM's revenue has gone to newer age companies like Oracle Corp. (ORCL). That trend appears to have continued.

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At Texas Instruments, revenue barely rose to $3.03 billion from $2.98 billion in the same quarter a year ago. The company blamed sales at its Embedded Processing business, although they grew slightly. TI has battled to get into newer consumer electronics devices. Arm Holdings PLC (ARMH) and Intel have pressured TI's sales in one of its largest segments.

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And, of course, Intel continues to look for a way out of its reliance on PCs, which plagues the company more than any other trend.

As the growth of hardware has moved elsewhere, some of America's most mature tech companies have continued to be eclipsed by ones that are only a few decades old -- if that. What has been a worry has become an inexorable erosion of prospects. Layoffs may not be a hallmark of the overall tech market -- considered one of the healthiest in the United States -- unless a company lost its way several years ago and has paid the penalty recently.

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