In one of the stronger signs that the economy is bouncing back, hiring freezes are starting to thaw out. Last night IBM (NYSE:IBM) announced that it would be adding 10,000 fresh faces to its payroll in fiscal 2004.
The fact that IBM's biggest growth driver right now is services contracts makes Big Blue's optimism even more compelling as it implies that companies are starting to spend again. It's also a refreshing surprise because IBM had announced that it would be trimming its global services staff earlier this month.
Over the last few years, too many companies managed to grow the bottom line by trimming overhead rather than by increasing the top line. That's fine from an efficiency vantage point, and it will pay off in the long run, but the economy's stuck-in-the-mud ways was clearly eating away at the country's patience.
In other words, while the market applauded the cost-cutting moves by companies like Oracle (NASDAQ:ORCL) and Disney (NYSE:DIS) it was high time for Corporate America to start working both sides of the equation.
It's fitting that one of IBM's latest ads features a company that has exhausted its cost-cutting ways before turning to IBM for help in solving its sword-in-the-stone quandary. The solution? Stop cutting and start growing.
With IBM having grown its own earnings by 37% this past quarter on just a 9% uptick in revenue, one can argue that the margin milking has just about played itself out.
It's time to grow. IBM is ready to make sure that its payroll follows suit.
