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IBM will pare up to 10% of its PC group work force; Some to be reassigned from money-losing unit

THE BALTIMORE SUN

ARMONK, N.Y. -- International Business Machines Corp., the world's largest computer maker, said yesterday that it will cut up to 10 percent of the work force in its 10,000-person PC group, the latest effort to trim the unit's losses.

Some of the personal computer workers will be reassigned to other units, the company said. The cuts, largely in the marketing group, will be made by the end of the year. IBM is merging its consumer and business PC operations to further reduce costs.

IBM lost nearly $1 billion in its PC business last year because a glut of machines led it and rivals to slash prices. The PC unit lost $153 million before taxes in the second quarter, even after IBM cut costs by farming out some assembly to distributors and started selling more PCs directly to customers instead of going through dealers.

"IBM has been slowly evolving to become more efficient," said analyst George Elling of Lehman Brothers.

"Hopefully, this will be the last major step they need to return [the PC business] to profitability."

The cuts were detailed in a memo sent to employees by David Thomas, an IBM senior vice president who heads the PC business. The cuts represent less than 1 percent of the 295,000 people IBM employed at the end of the first quarter.

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