The International Business Machines Corporation (IBM), nicknamed Big Blue, is an American multinational technology corporation headquartered in Armonk, New York, with operations in over 175 countries.It specializes in computer hardware, middleware, and software, and provides hosting and consulting services in areas ranging from mainframe computers to nanotechnology. IBM is the largest industrial research organization in the world, with 19 research facilities across a dozen countries, and holds the record for most annual U.S. patents generated by a business at 29 consecutive years

IBM is cutting 3,900 jobs, about 1.5 per cent of its global workforce, as it reported a 16 per cent annual jump in fourth-quarter net profit driven by robust performance in the company’s software and infrastructure units.

Net income during the October-December period rose to more than $2.7 billion, from the year earlier, the company said on Wednesday. On a quarterly basis, it improved from a net loss of $3.1 billion in the July-September period.

Fourth quarter total revenue remained flat at more than $16.7 billion, exceeding analysts’ estimates of $16.4 billion.

During a conference call, IBM also announced layoffs for which it will register a $300 million charge in the first quarter of this year.

The layoffs are related to the spin-off of IBM’s Kyndryl business and a part of AI unit Watson Health.

“Unlike many others over the last two to two and a half years that were hiring in tens and thousands of people … we are leveraging digitization, AI automation, that drives efficiency, but we are committed to hiring for client-facing research and development,” IBM’s chief financial officer James Kavanaugh told Reuters.

After a frenzy of hiring during the pandemic as a result of the pivot to digitalization, many companies in the technology sector including Spotify, Meta, Amazon, Microsoft and Google’s parent Alphabet have cut thousands of jobs. Central banks have increased interest rates to curb inflation but fears of a recession in the US are growing as a result of monetary tightening.

IBM shares fell about 2 per cent in after-hours trading on Wednesday to $137.98. In the regular trading session, the company’s shares closed down 0.52 per cent, to $140.76 a share.

IBM’s infrastructure division earned $4.5 billion in sales, nearly 1.6 per cent up on a yearly basis.

The consulting arm, which included business transformation, technology consulting and application operations, contributed $4.8 billion, almost 0.5 per cent more than the prior year period.

IBM’s software business added about $7.3 billion in the fourth quarter. It was up by about 2.8 per cent year on year.

Financing, which includes clients and commercial financing, generated $200 million, down 0.4 per cent annually.

“Our solid fourth-quarter performance capped a year in which we grew revenue above our mid-single digit model,” Arvind Krishna, IBM’s chairman and chief executive, said.