I am a former IBM'r (for a brief time) and was recruited by IBM based on my cutting edge experience. During my initial training, I saw people quit saying "This is a scam!" I have never seen worse executive management decisions in my life and I've been around a while.
Highly skilled, highly productive people are cut by the thousands and yet, do-nothing upper management with insane salaries get to keep their jobs and particularly if they are 2nd or 3rd generation IBM'rs. It's rife with nepotism and politics especially if you are anywhere near NY. Warren Buffet usually doesn't invest in businesses he doesn't understand. How can he understand this one, when no one at IBM understands it, not even the CEO?
I would only buy IBM AFTER it crashes well below $100 per share AND completely new management comes in and layers of management especially at the top are jettisoned. I've also done my own intelligence research and have been following the Resource Actions to estimate true head counts. IBM stopped reporting official head counts because they want to give false perceptions about it's condition.
The same thing is true about how IBM creates and destroys business units - it's an accounting shell game. And they don't care who gets hurt or caught in the middle of any of it. Many customers are leaving IBM, and many don't want to!
But IBM is doing things that make it bad for all but the very largest customers. I estimate that IBM employees globally is well under 350,000 this first half of 2017, and by the end of the year I expect the actual number will be under 300,000 globally. I would give this a + or - 10% accuracy because... they have all sorts of games, like interns, government subsidized jobs in some countries, contractors who are temporary, short term extensions for people who are being RA's or are at or near retirement, etc...
They also post many jobs that never get filled or frequently get put on hold and/or get cancelled. So when Ginny says to Trump "We are hiring 25,000 people this year" she doesn't say she's also letting 50,000 people go, and that half of the 25,000 will be low paid and/or temporary, etc... It's about the NET result. And the NET result is that IBM's revenues are falling, IBM's profits are falling, IBM is losing market share to competition, IBM is losing more USA employees than anywhere else, and IBM's headcount is not only falling it's going to lower skilled, less experienced and lower paid workers. Further the ratio of USA to non-USA employees is rising every quarter.
I dont' know what the actual targets are but it can be compared to the top competitors who actually do have high revenue growth and high profitability. Look at TCS and other large tech giants that are staffed mainly outside of the USA. IBM is on course to match those ratios or at least close the gap a great deal. As of 2016 I estimated that this ratio at IBM was 1 USA employee to 5 non-USA employees. For 2017 I estimate that it will go to 1 : 6 or 1 : 7 By 2020 I expect IBM to be at 1 : 10 that's IF IBM still exists as IBM.
It could face an HP type of breakup, especially if Buffet lets Ginny take it into a complete nosedive. Contrast these ratios against the more aggressive ratios of the competition of more like 1 : 20 Even at the present rate of purging people in the USA it still means 2/3 of the USA employees will need to go to reach that kind of ratio. 10 years maybe... Which is way too long to to be good for shareholders. And it's really bad for customers because IBM cuts the people who service the customers first!
The executive management just can't figure out how to pare down management or it's own executive bloat. Quite literally I have been on calls with over a dozen management and executive people all crowing about how some 1 low paid off shore engineer must get something done. That one guy has to make up for all of their salaries... that's a very flawed business model that is not sustainable. Eventually, through attrition (like retirements, deaths, etc) or shear frustration some of those people will leave and will not be replaced. Instead contractors will fill gaps, college interns or lower paid college hires who are starry eyed and fed a bunch of lies will fill some roles for a while.
But ultimately, between 2018 and 2020 look for a very different IBM with only about 30,000 USA employees and 300,000 total. That's IF it isn't broken up! Of those, roughly half will be management, executives, HR, marketing, sales, PR, or other non-technical roles. So I project only 15,000 serious technical jobs in the USA and of that almost 1/3 going to less experienced college grads, interns, etc... In that scenario IBM does not look good as a future employer for an experienced US technical worker. More evidence of this is to look at IBM's acquisitions.
Companies that IBM has been acquiring tend to have extremely low USA worker counts, with ratios often well past the 1 : 20 And so then by 2025 to 2027 only about 15,000 employees in the USA... only about 7,500 actual hands on Tech! I predict the total head count will loom around 300,000 while that ratio churns, unless there is a breakup.
If there is a break up, I would see it mostly going along Business Unit lines. I could see several business units being merged or just eliminated. And so in that break up scenario I would expect to see this USA head count reduction to accelerate. Maybe down to 15,000 USA employees by 2020. DELL is now nearly the size of IBM which is a rather amazing demonstration of how bad IBM's management has been compared to competition. I would expect either IBM's remaining Hardware (Mainframes, R&D) and STG to be picked up by DELL.
IBM's Cloud unit, which is where nearly all of it's software has moved, could spin off into it's own entity or be acquired by those heated competitors... MSFT, AMZN, DELL or even APPL (who has more cash lying around than anyone). IBM's Watson unit might also make a good spinoff, but again those AI competitors might be willing to bite, but not at IBM's current valuations... no way it's worth that. I suspect some part of IBM may remain and be called IBM... but that will be some tiny fragment of a once great giant, that was destroyed by greed, arrogance and ignorance.
This post is not mine, saw it @JtAUPMv-4kbud and wanted to bump it