Thread regarding IBM layoffs

IBM has been "transforming" itself for 8 or 9 years now without much to show for it. Doesn't matter who is CEO now, the hybrid cloud strategy either will bear fruit (sustained revenue growth) or IBM will be broken up and sold in pieces in 18 months. Time is almost up.

AK ran the Cloud division into the ground as SVP, why would it be better as the CEO?

AK is playing the IBM game that the past two CEOs have been playing... he does not care about IBM, he only cares about his wallet. The board better act quickly to get him removed and find someone else.

Do I think JW would make a difference from AK? Yes I do, but from this point of view. JW see’s IBM via an unbiased lens and with zero sacred cows since he is new to the organization. AK sees IBM via a biased lens and with all of the baggage a person who grew up thru the organization has (eg favorites, sacred cows, golden projects and leaders) JW and AK OR whoever else the board appoints are all driving to the same destination. Hybrid Cloud, AI, and Enterprise. The problem AK has is he is driving the fire truck BUT stopping at all of the red lights on the way while IBM burns. JW or someone else who doesn’t have baggage, most likely would blow thru the red lights getting to the fire that is IBM, and execute. IBM has to transform and prove to the street that they are serious about it. IBM did this in the past when they were burning down via Gerstner. (He was hired in April, and laid out a plan and took the medicine (8.9billion dollar charge and 60k laid off) by early Sept. He showed Wall Street he had a plan, and laid it out to them quickly and effectively in that they saw what it was going to cost and where the restructuring was heading. Yes it took a year to implement after announce, but there was a game plan). AK on the other hand is almost a year into it as the leader, and IBM’s plan is fuzzy at best. Yes GTS is going to get spun off, but that is still a year away until we know what it looks like. There is zero visibility as to how NEW IBM will engage customers or even an idea of who will work for them. Wall Street has lost their confidence in AK, and the industry is zooming by at double digit growth while IBM continues to shrink. So would JW be better? If he restructures IBM according to a game plan that Wall Street, the employees, and our customers understand and can get behind them, then yes he would be better. Right now IBM is burning, and AK is stopped at the red light listening to elevator music asking for directions. It’s death via a 1000 cuts. The continuation of yet more on coming restructuring charges means the plan is in flux, and no one knows where we are heading or when we will get there, OR what it’s going to cost manpower wise, industry wise, or money wise. NOT a way to inspire confidence

JW is useless... do you really think replacing AK with JW will change anything?

The real problem is that the whole strategy is flawed... most customers don’t want to pay for OpenShift when K8s is free. And most customers understand that it does not make sense to run everything in containers... especially software that are servers. Also, what real additional revenue is brought to the company by forcing customers to migrate all their infrastructure to containers especially on premise since we all know that the IBM Cloud is absolute c-ap? You are just trading a revenue for another revenue which is mostly the same... and surely in the process you will alienate some customers who will stop using your software!

IBM thinks he can become a multi-cloud integrator... they are plenty of other companies that are ahead of IBM in that game... IBM has been constantly late and behind in every technology trends in the past 15+ years!

2abo Don’t be surprised if AK is asked to leave. Thursday was a shock to Wall Street as management didn’t warn them. The institutions (70% of the IBM stock holders) want their pound of flesh, and AK is the only guy holding the bag. He has one play left given that Wall Street has lost faith if he wants to remain CEO. Accelerate the remaining restructuring charges into early 2021 and execute them ASAP, to get the bad news behind him (Gerstners 8.9 billion take it all at once strategy). Yes it will be painful, but it’s the only play left given his slow poor performance to date. Wall Street doesn’t believe IBM’s Exec managements words anymore, and that is the kiss of death. Actions are the only “truths” left that they will accept. Let me ask you this. Would CEO Whitehurst dally, or execute a restructuring into what he already knows? A new Redhat

Robert Cringely was right years ago. Copy-cats at Microsoft worked in their case by copying both Apple and later Amazon into model that fit and made sense. Copy-cats at IBM was trainwreck. Instead of taking sides at the minimum promoting IBM HW and SW for services engagements, we acted like competitor out of desperation to meet Services quotas.

And Client Reps / Exec's one-trick ponies always looking for Outsourcing agreements and services to get rid of our own products. Dumb and Dumber

Anyone saw Stephen Weiss on CNBC's Half Time Report on Friday (1/22)? He chewed up IBM like no one has done before. IBM was discussed and some lady on the show said she loved IBM because of AI. Stephen decided to comment and it was ugly but he is right. He essentially said that IBM is dead money at this point, that the current CEO (AK) should never have been picked and that he would be replaced within a year. He went on saying that Watson for being out there for 10+ years never showed any results. He finally stated that his company had tried to do business with IBM, but that the IBM products never worked!!

What a slap in the face for IBM...

No matter how you look at Thursday’s results, it was a disaster. Remember 4th q is always the quarter where IBM shines, and that did not happen this time. Wall Street has lost their patience, and showed it on the analyst call by asking AK directly “why should we believe you” If you are an analyst following IBM, the question at top of mind is “why can’t you cut faster then revenue falls” AK you inherited the first cut when you became CEO from Ginni, and you still watched all 4 divisions lose revenue over the next 9 months of your tenure. That kind of leadership does not inspire confidence in management or their game plan to turn IBM around. Watching AK’s baby “cognitive” decline almost 5% in 4th q has put real fear into Wall Street and there is a strong undercurrent favoring just breaking IBM apart. AK your time is running short. Better put the restructuring into overdrive

Yes the term "Cloud" is just wickedly good creative accounting. Like a Database tool or product running on-prem server that maybe connects with Cloud app somewhere...no wait maybe in the future it will connect to Cloud-query that's it.

Countless lies, that's correct. And if you speak up it is death sentence. So good and honest managers are intimidated and scared to speak up too. Then I learned why better to pretend to agree with lies or be silent, when I got RA'd myself. Only way to survive is to be silent if you speak up will be added to the the next RA list.

TBH Red Hat is the only part of the business that is performing with 19% growth.

Please give management a little more time to bring Red Hat in line with the rest of IBM.

When analysts ask these kind of questions AK you are in trouble, as the street has lost their confidence in your abilities

Toni Sacconaghi

Yes, thank you. If I just kind of stand back from the results this quarter, typically your revenues are up $3.4 billion from Q3 to Q4. That's the average of your last three years and there's very little movement off of that average. This year was $2.8 billion. So at least in my eyes, it looks significantly worse. And I understand there were some issues around transaction processing, I understand year-over-year comps, but this is a sequential change, which seems to be notably below trend and I hear your assurances around the current spending environment.

I guess the question is, and the elephant in the room is how do you know that there isn't something more sinister afoot here that there is an accelerated migration to the cloud that you are not, IBM is not participating in? Or your – particularly some of your software offerings in cloud and cognitive are not as competitive as you might think and that's ultimately what's being reflected here. And I guess to that end as well, maybe Arvind, you can directly address why the confidence in mid single digit growth in 2022? It sounds like at constant currency, IBM is going to be flattish or maybe slightly down in 2021. So what drives the 500 basis point improvement, which on a huge company like IBM is really, really notable? How much of that do you expect to be in organic? Thank you.

So 2021 brings 3 billion more of restructuring PLUS the 260 million carry over from the current 2.3 billion. That should make 1st q fun. Let’s put that in terms that hit close to home. 2021 will have 150% of restructuring vs what you just lived thru.

So let’s net out the analyst call

1. GTS continues to get trimmed The new CEO said it was a requirement to make them competitive day 1. Newco has already said their goal is 90k heads. This is my speculation, but I expect GTS started this journey at, at least 150k heads The ax has been swinging pretty hard.
2. GBS AK enthusiastically said GBS’s future was in consulting and partnerships. He said IBM planned to grow both quite aggressively.
3. Cognitive Both AK and the CFO said Redhat has to perform going forward, They both said the division was being restructured to make it perform according to the plan outlined by Redhat. My speculation here is as Redhat ramps up, legacy (think competing) IBM products ramp down.
4. Systems. Again both AK and the CFO said systems are cyclical, BUT they both called out mainframe as the gift that keeps on giving on a cyclical time frame. What both completely ignored was storage and Power. I speculate both Power and Storage are not long for the Hybrid cloud portfolio.

“ What happens when most of the workloads live in AWS, Google, or Azure?”

IBM is no more?

The systems side is a dying business, but the software profits of the golden goose mainframe continue to power the company.
IBM has some solid software products and smart people, but when the money is in your dying business and you (similarly to Oracle) call "cloud revenue " something mysterious that few believe, you are in trouble.
RedHat business on OpenShift and Enterprise Linux is a liferaft that only floats so much expense. This only gets them as far as containers on-premise can carry you. What happens when most of the workloads live in AWS, Google, or Azure?

IBM is still wasting money leasing office space during a pandemic. lol
Top heavy mgmt towers & several useless internal fluff teams k–ling profits.
No waste is ever trimmed at IBM and that's never going to change.

Yes, but AK has to take it slow to make Wall Street believe that there is a turnaround point some day... he also need to cash in and try to beat Ginni and the 500 million she made!

Out of the analyst on the earnings call, only Tony Sacconaghi knows that IBM is a fraud and doomed... the other ones are all id–ts who keep on raising IBM stock price targets.

GTS is going first... which division is going to be next?

Surely Systems has to be addressed. Everyone says IBM is not IBM without the mainframe and the revenue stream is cyclical. But it's a declining market and does the positive side of the cycle justify/offset the negative? And Power along with Storage continue to flush the toilet with losses quarter after quarter greater than any other unit, on a smaller revenue stream!

“ TBH Red Hat is the only part of the business that is performing with 19% growth.”

Seems like the solution for IBM to return to revenue growth is to sell or spinoff all divisions but Red Hat... Problem solved... GTS is going first... which division is going to be next?

Yes, time to leave the sinking ship... next RA in 3Q and it will as big as the 1Q layoff... get ready... 3,2,1... your manager is calling and it is not to give a raise or a bonus!!! Lol!!!

This company is totally out of control...

So Red Hat performance was excellent, but he still needs "accelerated performance". Which part of this sentence is the lie?

From the CEOs desk:
However, we all need to shift to a growth mindset in 2021 and focus on sharpening our execution to deliver on the promise of the hybrid cloud and AI opportunity for our company. Here is how each one of you can contribute to our success:

We must see accelerated performance from Red Hat
We must see improvement in the rest of the software business, including the deployment and adoption of Cloud Paks
We must see GBS make more inroads in hybrid cloud services
We must see IS sign new logos to improve their backlog
We must see the z15 cycle dynamics exceed that of the z14

Systems down again! Z is cyclical, but Power and Storage (almost) always show a decline. Sure they had margin, but on declining revenues!

Buy some now, and dump them before the next earning call. I am sure some smart a** on Wall Street are milking the faithful grandpas grandmas this way.

EVERY QUARTER for as far back as I have been watching the decline (at least past 6 years) the stock price goes way down after earnings, then creeps up inexplicably snd steadily until the next earnings, then back down, to slightly lower than the previous quarter.

Like clockwork. Lucy and the football.

Any one left standing is sooooo screwed if you stay. Get out now. Your on the Titanic and oit is going down fast!

anyone that continues to hold stock in this loser company deserves what they get

There were some interesting numbers during the analyst call

1. Of the 2.3 billion in 4th q restructuring, 260 million wasn’t spent due to regulatory requirements They expect that to be spent as 2021 progresses.

2. They expect to take another 4 billion in restructuring (3 billion in 2021, and 1 billion in first half of 2022)

TBH Red Hat is the only part of the business that is performing with 19% growth.

Total IBM Revenue - Down 6%
Cloud & Cognitive Software - Down 4.5%
GBS - Down 2.7%
GTS - Down 5.5%
Systems - Down 17.8%
GF - Down 4.8%
Yet "Cloud Revenue" is up 10%
How can that be?
Same old trick as in the "Strategic Imperatives" days.
Start counting some of the old legacy biz as "the new thing" (Cloud), increase how much of it you count as the new thing each Q to show "growth", eventually stop reporting it since everything is now the new thing, announce a NEW new thing, repeat.
People still fall for this?

Wow - I am so glad I got out when I did. They had just completed the $34K Red Hat acquisition as I was leaving and they can't even figure out how to monetize that. Not to mention that the new CEO came from Cloud & Cognitive and that group saw a huge decrease in revenue. What a joke. Arvind is a Ginni wannabe...