And who will be the next CEO?
It's time for some change.
20 replies (most recent on top)
What that analyst in yahoo finance (and IBM itself too) fail to realise is that there is no such thing as "organic revenue growth". Customers are consuming IBM products because they are getting help from multiple cross BUs to support their solutions. There are "organic revenue decline" that equates to do nothing. If they really think revenue is growing organically, they are deliriously happy go lucky.
This article seems to have captured where IBM is heading
https://finance.yahoo.com/news/ibm-facing-down-bear-aplomb-215527696.html
You may be right that nobody wants the legacy, BUT I suspect you are incorrect. IBM literally mints money from mainframe as they are the only game in town. 10.5 billion in free cash flow has the bean counters salivating. That’s the advantage of being a monopoly. (pricing power) The hyperscalers are so busy nuking each other for share that they lower their margins extensively. Everyone talks about how Mainframe is shrinking, and yes it is in their smaller installations, BUT if you look at the fortune 1500, mainframe has barely budged in the last 15 years. Every fortune 1500 mainframe customer who has tried to migrate off, has found it difficult to impossible. They have now embraced the model of live with it on the back end, and modernize and enhance the customer facing front end. The hyperscalers just can’t crack mainframe due to a lack of skills, and a technology disadvantage that intel will never fill the void on. THUS how do they compete? Buy the whole slimmed down company, separate it into a separate division, and use it to catalyse the adoption of your intel cloud over your competitors. Also note once you own IBM, you can make operations far more efficient You can retire the dividend, you can farm the owned IP for free (linux and the patent portfolio come to mind), you can eliminate 50% of the management team, you can eliminate 75% of the overhead team (finance, benefits, personnel, etc etc), you can abandon or selloff products that don’t feed the mainframe. Just those actions will result in a 10-15 billion bottom line contribution all the while still farming the enterprise free cash flow, and riding the enterprise services, SW modernization, Ai, and hybrid cloud business model that the 1500 enterprise mainframe customers refuse to abandon. Will IBM a have to streamline even more before someone takes a run? You betcha, as no one wants to do the heavy lifting of streamlining. (40-50k worth of employees will be impacted) The CEO and CFO have laid out the “enterprise” strategy. It now just boils down to how fast can they accomplish their execution of that strategy. Strap in as phase 2 of the streamlining has to happen sooner rather than later as Wallstreet demands performance against the public plan
Why would anybody buy IBM?
Buying a company to get its legacy customers has a terrible track record, especially when it's obvious that the long term plan is to wind down the legacy business and migrate customers to the buyer's own technology. What usually happens is that as many as half of those customers defect to other vendors, who get that business without paying the acquisition costs (and disruption etc.) of the acquirer.
And I doubt very much any of cloud hyperscalers will be interested in the hardware investment required to keep updating Z.
Defection and decline of the Z base might be slower than previous examples, but it will still happen.
Don’t be surprised if one of the hyperscalers doesn’t make a bid once IBM streamlines. Ask yourself what is IBM streamlining to? Yep just a niche hyperscaler centered around enterprise
When one of AMZN or MSFT or GOOG acquire IBM and sell off the consulting and other pieces to get Z Business and those clients. Just speculation but....
When IBM changes the CEO title to Lieutenant General and he gets to out rank Baba
When he finishes transiting 100% of US to India.
Throw the bank and beg for Jim Whitehurst to come back.
When his head turns red from the Hat
I miss Ginni. This is sarcasam.
Rob Thomas. Nobody likes him though.
This is not going to be a popular one, but I actually like both AK and RT from what's seen from them so far. Sure, there are still many work in progress items, but they seem to be really trying to fix the course GR and her predecessor completely misguided. You gotta give them that much.
AK illegally stole the CEO appointment from GR! GR for CEO in 2024!! Stop the steal!!!
RT blazes daily
He has only been the CEO for a little over 2 years. I don't think he's going anywhere soon.
Of course it will be Rob Thomas. The combination of his high IQ, technical brilliance, business acumen and 007 good looks and charm make him the natural choice! Get ready bluebirds.
Rob Thomas is readying to be next CEO...? Golden Circle Boy.
Most of the AAs are too old. JG, TR, PC all >60. RL is too new to IBM. RT is young and a lifer but god forbid.
Probably after they sell GBS off
When ibm figures out what it’s going to do….. in the meantime the same empty suits prevail…