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back to article Software team codes IBM higher in Q2

Every quarter IBM orders investors to pay attention to a particular product group as the driver of its success. For this year's second quarter, IBM has promoted the software division as its savior. That's software - not services. Got it? IBM sold a lot of stuff during Q2. In fact, it sold $23.8bn worth of goods and services, …

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Anonymous Coward

You missed the most interesting number in the report

Since I'm an IBMer, I'm going anonymous with this--

The most interesting number in the entire release was that the company spent $19,000,000,000 buying back its own stock. That's nineteen billion dollars.

Think of what it could have done for employees or retirees or earned down the road from reinvesting that money back in the business. I'd have been happy with a nifty $50,000 bonus.

What a grotesque waste of money. I hope it keeps Sammy's stock options afloat awhile longer. :-(

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Anonymous Coward

Misunderstanding

Spending $19Billion in cash on shares still means you have $19 Billion but in stock rather than cash. This is generally good for the shareholders, and if you didn't realise, they own the company and are whom the company works for. Not the employees or retirees, but the shareholders. As a corporation, IBM has a legal duty to do what is in the best interests of shareholders. Not just Sam and the rest of them at the corporate trough, but the pension funds etc. The funds which are investing for your pension (and their own grubby fees of course).

Employees don't really have any skin in the game at all - they are just hired hands. This realisation is difficult at places like IBM where workers used to be treated really well with a lot of cash, bonueses, benefits etc, whilst now all those have been trimmed (slashed) back in the name of profit. The way to better income is either better performance (if you want to play that game) or moving to a better job (if you think another option is on the table for you).

Finally, buying this stock back may actually protect the company from aggressive take over moves, since the stock is less dilute and there is less of an attractive cash pot sitting in the middle of the company.

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"Hooray for WebSphere."?????

from what I recall from recent quarters and sales figures, that should read "Hooray for Lotus" instead, and this is likely to improve even further with the launch of Quickr, Connections, and Notes 8 this year

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Anonymous Coward

0 for 2

First, the second poster "Misunderstanding" is definitely not an IBM employee and was most likely never an IBM employee.

IBM has never treated their employees well unless you're talking about the 60's, 70's and maybe the early '80s. But that was a different culture.

In this century, IBM has under paid, and over worked their staff.

With respect to the first poster, buying back the stock allows IBM to then offer it to their employees at a discount to current market. ESPP is a *good* thing.

With respect to the article, yes Software is more profitable and has higher margins when you consider the considerable erosion to the price people are willing to pay for an offshore/onshore resource even though they wear an IBM name tag over their subcontracted employee badge.

Thanks to this "globalization" (read: move to the cheapest source of labor), labor has become a commodity.

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Anonymous Coward

Misunderstanding

Actually I certainly am an IBM employee, in a technical role, have been for some years, but I'm not a particularly high up IBMer. But I am one who understands the current climate at least. And modern business practice. Not sure why you think I am not...may be because I am not from the United States.

I thought things were quite cushy for all of last century, apart from the early nineties. Since the start of this century its got worse: lower salary increases, PBC bonuses, and fewer Bravo awards for example.

ESPP (and ESPP+) is currently a poor deal compared to the scheme we used to get (about 2 years ago). And that is coincidental with the buy-backs...I guess the changes were a disincentive to avoid share dilution by too much employee purchasing.

Naturally my comments are purely personal opinion and do not represent anything of my employer or its parent companies.

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