Thread regarding IBM layoffs

Being experienced is not a handicap. You can't say older employees are "bloat" in one breath, and then in the next breath say IBM depends on legacy business.

IBM new CEO mentioned in a meeting the ATT Tech Dev employees now GTS that were outsourced with a one year contract with IBM which will end 09/01/2020. Upper Management could request a 1 year extension on our contract and if the contract is granted we will have jobs for another year.

What the analysts are saying. It appears to be a battle of old IBM (legacy) vs new IBM Cloud/Redhat) The question is will Krishna take all of the bad news on “old IBM” to help the business case of “new IBM”

https://www.marketwatch.com/story/ibm-is-still-counting-on-red-hat-for-growth-as-coronavirus-spreads-2020-04-13

The bad news would be about IBM’s business environment/strategy, and its go forward path. This board has been filled with posts about how bloated IBM is. The virus has nothing to do with bloat. AK has everything to do with developing a strategy and path forward that continues to keep IBM viable. The bad news would be

1. Does IBM spinoff/selloff perform assets That part of the business has been taken over by the Indian body shops, and its a Commodity piece of the business IBM should exit.
2. Does IBM spinoff/selloff the commodity parts of the HW business (storage and Power). IBM relies on the channel to move the commodity parts, and the question would be should an IP deal be pursued as it will save IBM investing in the (channel, marketing, manufacturing, low end lab services, and infrastructure SW)
3. Does IBM address the bloat of 13 layers of management and spreadsheet workers.
4. Does IBM address the bloat of a 35 year Legacy entrenched workforce. IBM has a core group of entrenched 35+ year workforce (ginni is a perfect 40year example) who the industry has passed by. Is it time to ask those folks to leave
5. Does IBM re-org itself to emulate the productivity of younger more agile companies. This isn’t to say the current workforce isn’t productive, but to say IBM can’t invest in shrinking market places

Bad news all at once? For Q1 results? Coronavirus didn't really start affecting the US economy until mid-march. The impact to a big B2B company like IBM wouldn't have been until April. Maybe a few deals that would have closed the last few days of March pushed out, but that would impact signings more than revenue. If Q1 Revenue and Earnings are horrible and they try to blame it on the virus, you're being duped. And you should then be terrified about Q2, which is where the real impact will be.

I hope he shakes it up in a public forum.

It seems others think Krishna May take all of his bad news at once
https://seekingalpha.com/article/4338383-ibm-earnings-preview-all-redhat-now-revenue-and-eps-growth-lagged-for-years

Tomorrow is earnings day. I would give tomorrow a 50/50 shot of including a restructuring announcement in the earnings statement. Very much like the GF deal. Get everything out in the open at once and take all of your charges at once. Again just speculation, but AK is due for some Unique “new CEO” action as he has been announced for almost a quarter, and has been the catalyst for the Redhat strategy for over 18 months. Perhaps a sell off of the perform part of IBM is in the cards as no one would lose their jobs, but just change teams

1iqs. You say Wall Street will never lose interest in IBM. Based on what metric are you using. Bethlehem steel used to own the DOW, and they are gone. GE has dropped in and out of the Dow a couple of times. Same with travelers/citi. Wall Street has been watching IBM struggle vs Google, Amazon, and Microsoft. IBM’s struggling just cements home the idea, that anyone can drop from the Dow in a nanosecond. The longer Krishna treads water vs restructuring just hurts IBM

IBM ... is a part of the DOW, is a Fortune 50 company

Both of these could change, especially if there is a breakup or selloff of divisions.

IBM will look vastly different than it does today ... profitable once again

Despite all of its failings, IBM has been profitable for years. Next Monday's quarterly report will be very interesting.

Hmmm...
Sell off pieces of IBM?
To whom and which pieces?

Wall Street will not lose interest in IBM in our lifetime. It is a part of the DOW, is a Fortune 50 company and is as ingrained in the United States as any other U.S. Multinational.

I recall when Apple and Microsoft were both left for dead in the 90's. Things change.
Krishna is just a stop gap; Whitehurst I am not sure is what is needed in 2021.

1eyu. I completely agree with you. Krishna’s job is to right size IBM with Whitehurst building out / transitioning the technology piece. Everyday that goes by Without some meaningful action from IBM hurts IBM. IBM strongly hinted in their 4th q earnings report that decisive action was going to be taken. They doubled down it it, when Ginni announced she was stepping down. The stock price moved quite a bit as a result. Since then, The silence Is deafening and inaction is taking its toll. Wall Street is losing its interest, and as such its confidence that Krishna was up to the job. They are expecting a restructuring that gets IBM back on a meaningful path. (Empty calories are just that empty, and should be cast aside) As a new CEO you only get one chance to make a first impression, and inaction isn’t what Wall Street was looking for. CEO Krishna the clock is running, and time is not your friend. Meaningful change better happen soon, or we will be saying hello to CEO Whitehurst.

It’s pretty clear that Arvind is temporary. The guy can’t even hold his own in a CNBC interview. No way they will allow him to continue to speak widely. Jim is using this time to develop his plan for restructuring the company. Ginni still runs the show until December and Jim takes over in April 2021. The plan is executed over 12 months. 2 years from now, IBM will look vastly different than it does today. Leaner and lower market cap, but profitable once again.

I expect an announcement in December that Arvind will assume the Chairman role when Ginni steps down at the end of that month, JW will be elevated to a "co-CEO" role, and there will be a transition plan for JW to replace Arvind as CEO and Chairman sometime in mid to late 2021. The current structure is merely an interim arrangement. It only makes sense if they're planning on selling off large pieces of IBM and restructuring what remains before JW takes over. The challenge will be can they execute quickly enough, because nothing at IBM happens quickly.