Silicon Valley journalist Robert X. Cringely, author of The Decline and Fall of IBM, says the notices could go out as soon as next week after IBM reported shrinking profits for an 11th quarter.
The tech giant, which relies on service contracts for a significant portion of its cash flow, is suffering as companies shut down their internal data centres and move services to the cloud.
IBM could lay off 26 per cent of its workforce of 430,000, which would mark the largest corporate layoff in history. Big Blue holds the previous record for huge cuts, after laying off 60,000 workers in 1993.
Cringely predicts the bulk of the layoffs will be in the U.S., and affect mainframe and storage divisions. Citing unnamed sources inside IBM, he says the company has been planning a reorganization dubbed Project Chrome to boost its earnings.
IBM recently announced the new Z13 mainframe, but that is unlikely to protect jobs in the mainframe division.
It also bought cloud services provider Softlayer and is opening cloud data centres around the world, including one in Canada, in an effort to move to a new business model. However, it is behind rivals such as Microsoft, Google and Amazon in adapting to cloud computing.
Cloud offerings at IBM are expected to bring in $3.1 billion on an annualized basis in 2014, only a fraction of IBM’s total $100 billion in revenue last year.
In his book, Cringely blames poor management and lack of vision for IBM’s decline.