Tech giant IBM has said it will take a charge of up to $2.5bn (�1.7bn) to cover job cuts and the restructuring of its business.

Although IBM has weathered the tech downturn better than many of its rivals, chief executive Sam Palmisano is struggling to reverse a 33% drop in its share price this year.

Earlier on Tuesday, the firm said it had cut 1,500 microelectronics jobs, the latest in an ongoing programme of reductions of its 300,000-strong workforce.

Previously, the firm said it was selling its loss-making hard disk drive business to Hitachi for $2bn, transferring 18,000 workers to the new company.

Cutting costs

IBM's announcement was taken as a positive sign, indicating that the firm was not prepared to let its business be eaten away by the market slowdown.

Mr Palmisano is worried about the firm's shares

"[IBM] need to resize the business for the current level of demand," said Victory Capital analyst Marty Shagrin.

Overall, the firm is aiming to cut close to 10,000 jobs, many of which have already been eliminated.

IBM will also close older aluminium technology capacity for microchips and focus on copper technology, increasing its custom chip design business.

Full disclosure

Chief financial officer John Joyce said that the sale of the disk drive business would benefit IBM this year, but refused to speculate on the precise effect on performance.

"There's no point in trying to update those full year expectations after just six weeks," he said.

"But these actions we announced today put us in a better competitive position for the second half as well as 2003."

IBM has come in for criticism over its failure to disclose financial information, as investors became jittery in the wake of Enron's collapse.

The latest announcement is part of its pledge to increase disclosure.