Stock crashed 30%, are layoffs inevitable?
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IBM yesterday recommitted to a 2026 1 billion FCF increase. Given declining SW and Infrastructure revenue (800 million), and flat Consulting revenue, that increase in FCF most likely is coming from a reduced cost input. How does IBM reduce cost? We all know the answer.
@g6 what?
@a1 I got 1:1 yesterday... You know what was the reason of the call...
@ca why do people say this? All the time? Is it an effort at sarcasm? There are RAs all the time and will be in the future no matter what. It’s this company’s only growth driver. RAs or chapter 11. It’s disgusting and terrible - like this company - but no CEO can say, ever, that there won’t be layoffs. Under any circumstances. No lawyer would allow it, no PR person would allow it. They just can’t say that.
The main question on the earnings call will be whether the $700M in mainframe sales that supposedly slipped the last couple weeks of June will happen in Q3, in which case Q3 revenue guidance should be the prior forecast + $700M. In fact, we're 3 weeks into July now so really the question is whether most of those slipped sales have already closed.
If Arvind tap dances around this question expect the stock to be trading below $200 tomorrow morning.
@cq
At the opening bell on Wall Street, IBM share price was below $210. The after hours rollercoaster should be entertaining, after the earnings report.
@bm CORRECTION, the wrong people (Arvind and his Pipmunks) will have jobs. US employees will be put on PIPS and Laid Off.
And their jobs will be transferred to Arvind's motherland, India where there is no profit or growth.
@cj
The best prediction
I heard from a reliable source that IBM will be split into three companies, each run by the designated class of executives: I for Id--ts, B for Buffoons, and M for Mo--ns.
@bm but at least the people will still have jobs
Sign of RA would be one of the many topics investors will be listening for during earnings announcement today.
My guess of some kind of work force rebalancing announcement is a toss up.
With Q2 infra and SW revenue drop along with to meet the free cashflow target (a major gap) for the year, a sizable cost cutting is a typical go-to actions.
On the other hand, after panicking the market with the Q2 early announcement, Arvind may try act calm ('everything is being well handled and we don't need to do anything drastic') which is very possible given his 'I am always right' arrogance.
My bet is that if Arvind play the 'act calm' card, the market will interpret as more of the same (which failed) and share price will drop. If a major cost cut/efficiency is announced, the share price will go up some what (since doesn't solve the core revenue growth problem).
Will know soon enough. 5 PM EST is the earnings announcement.
RA’s for the most part are based on revenue. If it goes down, RA’s go up. The standard equation is they are aligned at the hip. If revenue drops 1% then head count will drop 1%. NOTE the restated earnings actually had revenue increasing 1%, so RA’s don’t look likely if we use the standard equation. The real question is did 2nd q show the beginning of a new business go to market model (eg AI in a data center is replacing IBM’s hybrid cloud approach). If yes then a restructuring may be necessary
@bm How many people does IBM realistically have working on Quantum Computing right now? A few hundred at the absolute most?
Arvind said no layoffs in 2026
There will be no layoffs, most likely.
The huge pool of US based tagged as the low 15 % is available.
No questions asked.
The useless managers are working hard to fullfill the wishes of their master, Alvind.
Alvind needs his $100 millions bonus.
Quarterly RA's is an IBM ritual
@af The stock price has virtually nothing to do with the likelyhood of an RA. Stock price does not directly impact IBMs financials. If your logic held true, there wouldn't have been RAs in 2024/25 when the stock price was rising significantly. However the reverse might be true - an RA may impact the stock price. But see the comment below this about the Quantum spin-off...
Not as likely as you might think. IBM will be spinning off employees and assets to the new Quantum Computing Joint venture it's creating with the US Government. Moving employees into that new entity will result in the same financial impact as a RA. That means it's unlikely that an RA will be coming anytime before this spin off IMHO>
It’s coming. If stock drops below 200 definitely on horizon
My manager was RAed and replaced by an AI named Blob.
Who got the 1-1 calls today ? Be honest.