10,000 Workers Take IBM Offer to Retire Early : Surprisingly Big Number Will Result in $250-Million Charge in Fourth Quarter

More than 10,000 employees are accepting early retirement incentives offered by International Business Machines, an overwhelming response that will result in a charge of about $250 million against fourth-quarter earnings, the company said Thursday.

Additionally, the company will take a charge in the quarter to cover other of its previously announced cost-cutting measures. It did not disclose an estimate of that charge, although analysts estimated that it, too, would be “substantial.”

IBM, the world’s largest computer maker, also said that it “sees no signs of improvement in its general worldwide business climate as 1987 approaches, and cost reduction and resource balancing actions will continue throughout the company.”

The early retirement program is being extended to some of its operations outside the United States and will be continued, in modified form, for its U.S. employees.

Considered Positive

Analysts agreed that the charges would make for grim fourth-quarter results, shaving perhaps 70 cents a share from profits to about $2.45, but they generally cast the announcement in a positive light. Last year, IBM earned $4.36 per share in the fourth quarter.

“I think this is a case where bad news is really good news,” said Rick Martin, an analyst at Sanford C. Bernstein & Co. in New York.

IBM said the “measures will begin to produce substantial savings in the last half of 1987 and continue in subsequent years.” Martin estimated those savings at $600 million to $700 million annually.

However, news of reduced estimates of IBM’s 1986 earnings spurred active trading of the stock Thursday on the New York Stock Exchange. The stock dropped $1.375 a share to $125.375.

IBM has 405,000 employees worldwide, about 238,000 of them in the United States. Most of those accepting the early retirement plan will be leaving the company in the next six months.

Surprise to Company

The response to the incentives was a surprise to the company and analysts alike. When IBM announced the program in September, Wall Street estimated 4,000 employees would accept.

Later, as signs of the plan’s widespread acceptance emerged, those estimates were doubled. But 10,000 was not on anyone’s chart.

The popularity of the program adds to its long-term benefits for the company, analysts agreed.

E. F. Hutton analyst Michael Geran, who lowered his estimates of 1986 earnings by 75 cents to $8 per share, said the program was a “judicious way . . . to downsize the company to reflect current revenue expectations without interfering with the tradition of full employment.” IBM has prided itself on not resorting to wide-scale layoffs as other computer makers have.

IBM, whose products range from desk-top personal computers to mammoth mainframes, has seen its grip on the industry weaken amid the weak capital spending environment and the sluggishness in certain market segments this past year. Thursday’s announcement heightens the likelihood that IBM’s annual profits will decline for the second year in a row, and bore a reminder that future profit improvements will be hard-won.

Thus, IBM said it would continue to make early retirement an attractive option to its employees, although benefits of the extended program would be less generous than the original offer.