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    Highlights for week ending June 8, 2002

Job cuts at IBM...

  • The Alliance@IBM Web site is the best place to get the latest news on IBM's job cuts. Check out these areas:
  • Associated Press: IBM's Layoffs Near 5,000. Excerpt: "After two weeks of stealthy layoff notices in more than a dozen plants around the United States, IBM Corp. has cut almost 5,000 jobs. The company has issued no overarching public statement on the extent of the layoffs, saying only that some plants are autonomously cutting their work forces and consolidating operations. Where IBM has been silent, a former employee at IBM's Endicott, N.Y. plant has filled the gap, fielding calls and e-mail from employees who've been sacked and piecing together a nationwide picture of the layoffs."

  • Linda Guyer comments on your legal rights if you're a victim of an IBM job cut. (The news isn't good). Excerpt: "is perfectly legal for IBM to fire anyone, for any reason or no reason at all. This is called being an 'at will' employee. Unless you have been discriminated against for certain legally protected reasons, you are toast. Your situation may be completely unfair or unethical, but the law doesn't cover those. It is also legal for employers to replace you with a temporary worker or contractor. It is also legal for employers to move your job overseas, and require you to train your replacement(s). Yes, you can quit and not train them, but the employer is not legally required to pay your severance. There are NO LAWS to protect your medical benefits, either while employed or retirement medical. IBM can fire you the day before you qualify for retirement and you can lose the entire FHA and that is LEGAL!"

  • Janet Krueger: I've been getting lots of questions relative to whether people who want to file age discrimination charges with the EEOC should go ahead and sign the covenant not to sue agreement in order to collect their severance pay... The following Q&A on the EEOC site provides some guidance: Questions And Answers: Final Regulation On "Tender Back" and Related Issues Concerning ADEA Waivers.

  • Poughkeepsie Journal: More IBM layoffs hinted. Excerpt: " As another week dawned in IBM land after two weeks and two rounds of job cuts, the question inevitably arose, who's next? The answer may well be, whoever's left is next."

  • Binghamton Press and Sun-Bulletin: You've been selected -- to be laid off. IBM memo was no prize to those who were fired. Excerpt: "Finish this sentence: 'You have been selected for...' Most people would probably fill in something like 'a dream vacation' or 'game show.' But more than 4,000 IBM Corp. employees were recently handed memos that read: 'You have been selected for permanent layoff.'"

  • iSeries Network.com: IBM Vague on Layoffs; Rochester Loses At Least 170. Excerpt: "Although as many as 5,372 IBM workers lost their jobs over the past two weeks, IBM representatives say there’s no corporate-wide action to reduce headcount. Instead, IBM spokespeople say, each division is acting independently. “Any resource actions are being done at a unit level for reasons that are specific to that unit’s business and market conditions,” says IBM corporate spokeswoman Laura Keeton. IBM refuses to release or confirm the actual numbers of employees being laid off across its divisions." ... "While IBM’s nondisclosure strategy concerning the layoffs may be okay from a financial perspective, it’s probably a mistake as far as internal relations go, Bittman says. IBM’s evasiveness “makes more employees look for other sources of information on the big picture, such as the various union-oriented Web sites,” he says. 'It also raises the question internally about when this activity is "over" and probably hits morale more negatively.”" If link is broken, view Adobe Acrobat version [PDF--157 KB].

  • An IBM Software Group employee scanned his layoff notice dated May 22, 2002. This 30-page document shows the details of the layoff package. (PDF--2002 KB).

  • IBM CEO Sam Palmisano sends IBM employees a "Dear Colleague" letter. Read it here.

  • Annex Research: Sam's Dull Scalpel. IBM to Lay Off Another 1,500 in Microelectronics Unit. Creeping Layoffs Seen as Creepy Layoffs by IBM Employees. Excerpt: "IBM's creeping layoffs are being seen more as creepy layoffs by an increasing number of Big Blue employees, according to the feedback we are getting. This became especially pronounced today as IBM slashed another 1,500 jobs in the Microelectronics division. The CBS Market Watch columnist, Mike Tarsala, also agrees. 'It makes you wonder what else IBM's executives are hiding when they can't flat-out tell shareholders how many employees they've jettisoned so far this year and how many cuts they are targeting,' he wrote in his June 5 column."
  • CBS MarketWatch: Disclosure problems still loom at IBM. Commentary: Big Blue's suspicious evasions on job cuts. Excerpt: "You would think that IBM would be more upfront with shareholders and employees, especially in the post-Enron world. Especially in the wake of last year's uproar after the company puffed up its earnings by failing to disclose an asset sale. It's just plain odd that IBM won't talk more openly about the jobs situation. Company executives have mentioned various reasons for realignment -- the "ebb and flow" of business, the need to break even in microelectronics, and tough economic conditions. But when it comes to layoff numbers, the leading source for information to date has been Lee Conrad, director of the Alliance@IBM, a pseudo-union leader in whom the company usually places little to no credence. Nonetheless, IBM has been happy to let Conrad do the talking in recent weeks."

  • TheStreet.com (Arnie Alsin): When CEOs Are No Friend to Shareholders. Excerpt: " A CEO's most important job is to allocate capital. If a CEO seems to get distracted by the potential for self-enrichment, it's difficult, if not impossible, to allocate capital in a way that's in the best interests of shareholders. At the companies mentioned here, evidence suggests that a reasonable system of controls isn't in place. It could be a clubby board of directors or simply a matter of having the right friends on the executive compensation committee. It doesn't matter. I think these companies are no friends to their shareholders." ... " Shareholders of IBM, a stock I've flagged as overvalued in several columns, should be more than a bit miffed at the incessant feeding at the trough by Chairman Lou Gerstner. He's already taken well over $600 million in capital from the company for nine years of work, with results that are less than impressive: paltry revenue growth, a weakened balance sheet and earnings achieved by a potent, but transitory combination of overvalued stock buybacks, pension income and accounting manipulation (sales, general and administrative expense reduced by gains). Shareholders take note: Lou needs more, even after he retires -- millions in pension and consulting income, plus another $10 million in stock next March. Oh, and tack on use of company aircraft, cars, an office, an apartment, financial planning, home security and country club expenses.

  • New York Times: Greed Is Bad. Excerpt: "As people, corporate leaders are no worse (and no better) than they've always been. What changed were the incentives. Twenty-five years ago, American corporations bore little resemblance to today's hard-nosed institutions. Indeed, by modern standards they were Socialist republics. C.E.O. salaries were tiny compared with today's lavish packages. Executives didn't focus single-mindedly on maximizing stock prices; they thought of themselves as serving multiple constituencies, including their employees." ... "Now, as each day seems to bring a new business scandal, we can see the theory's fatal flaw: a system that lavishly rewards executives for success tempts those executives, who control much of the information available to outsiders, to fabricate the appearance of success. Aggressive accounting, fictitious transactions that inflate sales, whatever it takes." If link is broken, view Adobe Acrobat version [PDF--17 KB].

  • Christian Science Monitor: Despite soft economy, a call for foreign tech workers. Excerpt: "Last year, IT firms laid off 2.6 million workers and hired 2.1 million. The size of the IT workforce shrank from 10.4 million to 9.9 million. As a result, hundreds of thousands of IT workers are jobless or work in other fields. Yet from Oct. 1, 2001, to March 30, 2002, employers applied to the Immigration and Naturalization Service to bring in 105,800 more foreign workers." ... "To Norman Matloff, a computer-science professor at the University of California, Davis, this hiring of foreigners is mostly unnecessary with so many Americans, including graduates in computer science, available. To Mr. Matloff, it reflects the desire of high-tech companies to get cheaper and more malleable foreign workers."

  • Pittsburgh Post-Gazette: White House Watch: Pension reform is quietly being retired. Business doesn't really want to change its way of doing business. Excerpt: "If you're feeling mellow and don't want to get outraged, stop reading. Now. This column is about how our retirement savings are disappearing and how the federal government -- and Congress and the White House -- are doing nothing about it."

  • Yahoo! Finance: Hitachi and IBM Reach Definitive Agreement On Hard Disk Drive Operations. Excerpt: "Hitachi, Ltd. and IBM today announced that they have reached a definitive agreement to transfer their hard disk drive (HDD) operations to a new standalone company under majority Hitachi ownership. These plans were originally announced in April as part of a larger storage relationship between the two companies. Hitachi has agreed to purchase the majority of IBM's HDD- related assets for $2.05 billion, which includes the transfer of IBM's HDD-related intellectual property portfolio to the new organization. Hitachi will initially own 70 percent of this new company and will make a series of fixed payments to IBM before assuming full ownership after three years."

  • Seattle Post-Intelligencer: Political Cartoon by David Horsey--Capitalism 101: How Corporate CEOs, sitting on each other's boards of directors, determine their salaries...

  • Los Angeles Times: The Business of America Is Out of Control. Excerpt: "In this case, it isn't happening. Representative government is inert against the disclosures of corporate corruption, corner-cutting, fraud and unfairness. It doesn't seem to matter that the allegations grow more numerous and shocking by the week. Headlines tell us that Congress is gridlocked over "reform" of the accounting profession and pension law. But look past the rhetoric and you quickly see the arguments amount to little more than whether to use squirt guns or water balloons against a high-rise fire. For instance, Congress cannot agree whether chief executives should have to attest to the honesty of their company audit reports. You mean they don't already?" ... "The decline of stocks has meant not just a loss of billions of dollars in savings for millions of workers, but it also has exposed levels of social corruption and avarice that the U.S. has not seen since the Gilded Age at the end of the 19th century. For a family that has watched its retirement shrivel by one-third while corporate executives rake in nine figures, it is no satisfaction to hear the Bush administration and timid opposition Democrats argue over how many contacts Enron had with the White House. It is of little consolation to listen to regulators promise that market forces will eventually set things right after taking us so far off track. Americans know exactly what's going on."

  • Notice to Burlington IBM Employees: "Due to the recent termination's we are having a Alliance meeting in Burlington. We noticed everyone needed a place to unwind and talk about what has happened. We have provided time for everyone to socialize, look for a job/ business and especially FREE LEGAL ADVICE. One or possibly 2 labor attorneys will be there to answer questions pertaining to the IBM separation package or whatever is on your mind. Read more...
"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
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