Updated from 4:33 p.m. EDT

IBM

(IBM) - Get Report

will cut 10,000 to 13,000 workers, representing 3.3% to 4% of its overall staff, as it attempts to streamline its services unit, a division that hampered first-quarter financial results.

The cuts, to come mostly in Europe, will result in a second-quarter charge against earnings of $1.3 billion to $1.7 billion; IBM sees benefits from the restructuring showing up in the second half of the year.

IBM had been expected to post second-quarter earnings, excluding charges, of $1.03 a share on revenue of $24 billion, on average, according to Thomson First Call. For the year, analysts had expected earnings of $4.84 and revenue of $100 billion.

The move is the latest measure by IBM to bolster its sagging stock, which hit a 2 1/2-year low of $72 on April 20. The company

boosted its dividend late in April and increased its stock-buyback program.

Rumors of a European restructuring have been circulating ever since the company disappointed Wall Street with

first-quarter earnings that missed estimates by a nickel a share.

IBM shares traded above $90 at the start of April and closed Wednesday at $76.47, having fallen for 14 straight sessions at one point last month. They crossed at $77.85 in after-hours Instinet trading, up 1%.

When IBM announced results for the first quarter on April 14, CFO Mark Loughridge said business significantly and unexpectedly declined in March, noting that service customers deferred more contracts than expected. The company vowed it would take actions to improve its performance, utilizing cost cuts as one tool.

IBM says the cuts will enable a shifting of resources to higher-growth markets and opportunities. Specifically, IBM says it will reduce bureaucracy and infrastructure by creating smaller, more flexible local operating units in Europe that will have more direct contact with customers.

CFO Mark Loughridge will host a conference call at 8 a.m. EDT to discuss the cuts. IBM employed 329,000 workers as of the end of 2004.