Perspective on 2nd q performance

https://seekingalpha.com/article/4276342-ibm-worse-quarter-initially-appears

Given the above article there seems to be a 3 prong approach to IBM’s transformation

Buy Redhat to change the narrative to a “Hybrid cloud company”. (Done)

Transform the current management team to a cloud management team (Schroeder (ceo) and Whitehurst (head of SW) is a good guess. Purge at least 50% of current execs)

Dump underperforming parts of IBM (the continued 7% shrink rate of GTS shows where IBM needs to focus. Look for 35-50% of GTS to be affected)

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To summarize, the much heralded "earnings beat" was due to the following 4 factors:

One time spinoff of two software groups (the HCL stuff and Watson Marketing)
One time sale of real estate
Lower tax rate (more work done offshore in a low rate jurisdiction)
Share buybacks

Here's another one from SA today:
https://seekingalpha.com/article/4276412-ibm-red-new-blue

"In truth, this is the kind of high-margin business that IBM should have acquired years ago in anticipation of the mass migration to the cloud."

Do these Wall Street types have any idea what they're talking about? Pre-IBM, RH was running at a 12-13% net margin. That's not high margin. Selling support contracts for free software isn't a high margin business. On average, those are about the same margins that IBM has seen over the last few years. A commenter on that article had a great comment - "There is nothing clients can do with Redhat now, that they couldn't do before the IBM acquisition." Spot on. Heaven help IBM if the executives think that a Kubernetes distribution is what's going to turn IBM around.

Execs are never "purged". Not going to happen.

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Perspective on 2nd q performance

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