Thread regarding IBM layoffs

IBM's Seterus mortgage-services Sold

IBM sold its Seterus mortgage-services business to Mr. Cooper Group, the companies announced Friday.

The terms of the deal weren't disclosed, though IBM said Seterus brought in $200 million in annual revenue.

That revenue was declining and had a lower gross profit margin than the rest of IBM's Global Services unit.

IBM is on a mission to rid its portfolio of low-margin assets.

IBM continued its effort to prune its software portfolio of low-margin products with the sale of its mortgage-servicing business to Mr. Cooper Group.

The terms of the deal, announced Friday, were not disclosed. IBM said in a statement that this business generated $200 million in revenue in 2018; however, the revenue was declining, and the gross margin was below IBM's overall gross margin for Global Business Services, which was 29.8% in the first three quarters of 2018.

"Because the revenue has been declining, this transaction modestly improves Global Business Services revenue trajectory and margin profile," IBM said.

IBM acquired its Seterus mortgage-servicing business during the 2008 financial crisis "to help a client manage a broad mortgage portfolio, including high risk loans," according to a statement.

"IBM was successful in the mortgage servicing work, and the portfolio is now much more stable," according to the statement. "The time is now right to divest this business to a mortgage servicing specialist, whose domain-specific expertise and scale can further advance this business."

The buyer, Mr. Cooper Group, formerly known as Nationstar Mortgage Holdings, is a mortgage-origination and services business.

It's all part of the plan

IBM is on a mission to rid its portfolio of low-growth or declining businesses as part of its push toward a "high-value model." This essentially means the company would rather invest in higher-yield emerging areas, such as artificial intelligence, cloud, and blockchain, than figure out a way to help its declining businesses grow.

IBM's overall revenue declined for nearly six years, before returning to growth in 2018.

Last month, the company sold $1.8 billion in software assets from its Cognitive Solutions segment to the Indian company HCL Technologies.

It has similarly sold off low-performing software units during each of the past 14 years.

Post ID: @WYvDbPc

5 replies (most recent on top)

FYI: Layoffs starting from this already:

Post ID: @WYvDbPc-6rdj

Layoffs ahead, Mr. Cooper does not need additional employees.

Post ID: @WYvDbPc-usf

Lets hope they sell off services as well so we can wave bye bye to all the IBM bloat processes.

I certainly would welcome a new company badge at this point. Sinking ship is an understatement.

Post ID: @WYvDbPc-kuu

IBM wants out of low margin businesses. Where have we heard that before??? Wave goodbye IBM India. Apparently throwing bodies at a solution wasn’t any cheaper and didn’t raise the margins. You want to raise margins??? You have to dump the middle management vs cutting folks who actually do the work. I know IBM management believes if you hire 9 women, you can have a baby in a month, BUT margins are proving them wrong. IBM India. It’s been nice knowing ya. Bain will rightsize the management team, and put a shine on that business before they are done. Older IBM employees PLEASE note. IBM is going to make you an offer you can’t refuse. Wave goodbye. Low margin / high cost portions of IBM will be offloaded. It’s over. Ginni is being tasked with rightsizing IBM and she wants her bonus without clawbacks. That means embracing business models that have far fewer folks. (does cloud or as a service jump to mind). IBM will keep cyclical businesses that give them a business advantage (think monopoly or unique competitive advantage). Otherwise IBM has gone all in on a much smaller (head count wise) IBM. Welcome to the new / agile IBM. It’s not about age discrimination per se, BUT it is about employees who will work for less and who will move at the drop of a hat. (Do younger / less attached employees jump to mind???). WHY YES THEY DO. HUM could this be a business strategy??? HUM maybe. Did you hire those 9 women??? I need a baby next month

Post ID: @WYvDbPc-mts

Keep search, cloud, system. Other business out!

Post ID: @WYvDbPc-gji

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