The current revenue could support the current headcount just fine if the company wasn't slavishly devoted to maintaining and increasing the dividend. Cut the dividend and maybe you could fund real product development again, rather than just buying and cannibalizing other companies.
This isn't the first time I've heard someone say things like @3dku+1lN4fGYj, but I don't agree with this. You?
Short term pain, long term gain. Right now IBM is circling the wagons around a product set that is mostly dwindling in market share. Very little gets created in house due to underfunding of dev, then we overpay to buy companies with new products. If IBM wants to be a growing software company in 10-20 years it needs to invest more in product dev, or just keep watching companies like Snowflake come out of nowhere and eat its lunch.
If they cut the dividend the stock will CRASH and BURN!!!
Define "new product". IBM can create an infinite number of new products while spending very little. Take an existing product, rename it with the latest buzzwords, new product! Take two or more existing products, smoosh them together, call it Cloud Pak For Something, new product! If you mean genuine, ground up, new product, I believe the last one was Websphere in the late 90s.
If you cut the dividend, or even fail to raise it on schedule, the stock will suffer permanent damage.
On the other hand, if this company really does want to compete with hyperscalers and high tech players, it may have to re-think what it does with its free cash flow. How many new products did Mr. R. Thomas say he wants to create over the course of the next few years? I don't recall but I do recall that it was fairly aggressive. How many new customers did he say he wants to bring on board? Also, fairly aggressive. Is it possible to achieve the full on Rob Thomas vision without some up front spending that will make the company take a hard look at where the money is coming from? Borrowing used to be the answer. But money is not as cheap as it was in the glory days of Road Map 2015.
For the record, I don't think the full on Rob Thomas vision will succeed a lot more than Road Map 2015 did. And I think that being dividend royalty is too baked into the price of the shares that make compensation packages for some people rather nice.