In a surprising strategic move, IBM has announced significant workforce reductions despite reporting exceptional financial results and substantial stock gains for 2025. The technology giant revealed plans to eliminate thousands of positions during the fourth quarter, creating a paradoxical situation where job cuts coincide with peak corporate performance.
Financial Strength Underpins Transformation
Recent quarterly earnings released on October 22 demonstrate IBM’s robust financial position. The company substantially exceeded market expectations with earnings per share reaching $2.65 and revenue climbing to $16.33 billion. This represents a notable 9.1 percent revenue increase compared to the same quarter last year. Particularly impressive was the software division, which achieved ten percent growth.
This financial outperformance provides the foundation for IBM’s restructuring initiative. Concurrently with these organizational changes, the company continues to reward shareholders through its quarterly dividend of $1.68 per share, translating to an annualized yield of 2.2 percent.
Strategic Realignment Toward High-Growth Areas
CEO Arvind Krishna has clarified that the workforce reduction forms part of a deliberate strategic shift rather than indicating corporate weakness. The company confirmed it will trim a “low-single-digit percentage” of its global workforce during the current quarter, potentially affecting between 2,700 and 8,100 employees.
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This restructuring aims to accelerate IBM’s transition toward more profitable growth sectors, with artificial intelligence and cloud services positioned as primary focuses. The company’s Watsonx AI platform stands central to these ambitions. These cuts follow earlier reductions in marketing and communications roles, representing the latest phase in IBM’s comprehensive transformation from traditional IT services toward higher-margin software and AI solutions.
Despite the workforce reductions, IBM anticipates maintaining stable overall employment levels in the United States throughout the year, indicating simultaneous hiring in strategic growth areas.
Market Response and Performance Context
Investors responded cautiously to the announcement, with IBM shares declining approximately 1.4 percent during Wednesday’s trading session. However, this minor pullback occurs within a remarkable broader performance context, with the stock having advanced about 45 percent since the beginning of 2025, establishing IBM as one of the technology sector’s strongest performers this year.
The company’s ability to implement significant structural changes from a position of financial strength highlights its strategic commitment to positioning itself for the evolving technology landscape, particularly in artificial intelligence and enterprise cloud solutions.
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