IBM was able to weather 22 consecutive quarters of revenue decline mostly through cost cutting and constant promises about how they were going to be relevant by developing the next big area they were working on. Through all of that, the CEO pocketed plenty. The stock price dropped 25-35% during those five years.
Very true. And nothing is changing. Cost cutting through layoffs remains the main source of saving and pushing through the next quarter. Until there is finally nobody left to lay off...
@wzo You have exceeded the jargon threshhold for a single post.
To jgm You have hit the nail on the head. IBM wants to be a fortune 250 supplier (does this sound like what Cloudera announced yesterday (Eg 800 top customers)). If The division you work in at IBM has sub 45% margins, consider yourself unwanted. IBM’s strategy is a high margin / high growth business. There are some exceptions due to those exceptions opening doors. (system Z jumps to mind). This is driven via the 1 trillion in legacy code written for Z. HPC also will fill that void, as IBM wants to fill the AI gap that exists within Intel’s offerings. Certainly consulting around strategic initiatives and the services that they generate will command great margins. Lastly IBM will continue to invest, and mine patents, as they have good margins that extend for a long period of time. Outside of these general areas, the pickings are quite slim. Will there be some “niche” high margin markets OF COURSE, but they will be the exception, not the rule. Get ready for a skinny IBM headcount wise. Think 175k heads worldwide max. More likely 150k. PLEASE NOTE SO and AMS will still be offered via IBM, BUT via a spin-off company much like HPE/CSC did, and not directly via IBM. IBM will have a vested interest in the spin off (most likely a partnership, where IBM gets paid a finders fee, or gets to mark up the spinoff’s base rate). Either way IBM is going to shrink, and shrink a lot. As far as current IBM employee futures, look to the IBM margins of your division, and you will be able to see where you are heading
To the person who started this thread, who exactly are you quoting and agreeing with?
we can only hope that the dead weight of low margin/low quality services is sold off...they just piss off customers and prevent them from buying higher margin products. Even if the overhead problems from corporate dead-weight was solved, IBM has never done commodity well - they dumped laptops, then intel servers, and services is the next one that needs to go. Keep high-end strategic consulting sure, but SO and AMS need to just go, probably sold to one of their offshore competitors.
This is just Tim Ringo’s (go ahead and google him) strategy in slow motion. They had to adopt a slightly different strategy due to difficulties in finding talent. THUS the “hire youngsters and dump oldsters”. That reduces the legacy costs big time (especially when the youngsters don’t invest in their future (ira/ retirement)). Net net IBM wants America’s headcount to go down to 35k - 40k. Europe to 25k , and Asia to 20k. IBM India becomes the contractor arm of IBM via a spin off, and everyone is happy