IBM will fire 600 workers and place 3,000 on unpaid leave for a week to stem losses at its chipmaking business.
About 500 of the firings will take place at a factory near Burlington, Vermont, said Scott Sykes, a spokesman for Armonk, New York-based IBM on Monday
They will add to 1,500 workers let go last year in a division that that makes chips for IBM computers and other companies.
Chief financial officer John Joyce has said the business isn't growing as quickly as the company expected.
After losing more than US$1 billion last year, the unit had a second-quarter loss of US$111 million, about US$100 million more than analysts including Lehman Brothers Inc's Dan Niles had expected.
IBM has said it doesn't expect chip sales to recover until the fourth quarter.
About 100 people at other semiconductor facilities in cities including Austin, Texas; Raleigh, North Carolina; Rochester, Minnesota; and East Fishkill, New York, will lose their jobs, Sykes said.
He declined forecast cost savings. The unpaid leaves will be staggered.
None of the affected workers was directly involved in production, Sykes said.
"It's a step in the right direc-tion, considering it was a money-losing division," said Ryan Davies, an analyst with US Bancorp Asset Management, which manages US$113 billion and owns IBM shares.
The unit has 18,000 workers and was one of two IBM units to have a second-quarter loss. The other was IBM's Personal Systems Group, which makes IBM personal and laptop computers and lost US$8 million.
Overall, IBM's second-quarter sales rose 10 percent to US$1.7 billion, mostly because of acquisitions and the falling US dollar.
The job cuts will boost an effort to persuade IBM employees to join unions, said Ralph Montefusco, a former IBM employee and organizer for the Alliance @ IBM, which seeks to unionize IBM workers.
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