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back to article IBM wrings more profits out of declining Q3

IBM has not tried to defy the gravity of the economic meltdown, but rather has used it as a means to wring more profits out of its business, and in the third quarter Big Blue continued to expand its bottom line even as its top line continued to shrink. In the quarter ended in September, IBM posted revenue of $23.6bn, down 6.9 …

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XIV - Hot commodity or the only thing on the truck

The XIV is only looking like a hot commodity as it is the only thing IBM are selling at the moment. Just like filers are a hot commodity for NetApp! The rest of IBM's range is so uninspiring that they are turning into a storage 1-trick-pony which is risky when that 1-trick is a SATA array claiming to be an Enterprise class Tier 1 array! It's an OK product but it's not the answer to every question, which IBM seem to think it is currently. But in all fairness, if the other products I had in my portfolio were the DS8000 and DS5000, I'd be pushing XIV as well!

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@Man Mountain

Oh - right. Sorry, forgot for a moment there that you actually know everything there is to know about IBM's portfolio. Guess the reason it's Sam up there and not you is because you turned the job down.

Or could it possibly be because there are those that talk, and those that do?

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IBM will face trouble in 2010...

"Outsourcing is clearly not only a good business, but good for business, as Big Blue has been shifting big chunks of its support and supply chain operations overseas for the past several years."

In simple terms, this is a sign of the downward spiral and its only a short term trick to fudge the earnings numbers.

What happens when a lot of the outsourcing deals are up for renewal?

The customers of IBM watch and see how IBM is increasing margins by shifting the work overseas. Thus when the contract ends or is up for renegotiation, the customer will crush IBM's margins and negotiate for better terms. This will put more pressure on IBM to increase margins in a declining business and there will be further decline in revenue.

Note, that that is the outsourcing business. With respect to moving operations overseas to lower cost centers... Well what happens when you need a deal done and the back office staff is out of the office because of the time zone shift? Not good.

In short, it looks good for the current quarter so Sam and friends get their options. Longer term... IBM is going to hurt and hurt big time.

Its not just hitting the numbers but how you hit the numbers. You can get anorexic but at some point its going to kill you.

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Agreed with Ian Michael Gumby

IBM Execs cooking books and outsourcing jobs to unsuitable cheap labour abroad to ensure their bonus's and perks at the long-term expense of the company.

I think shareholders will eventually wake up to the fact that 'outsourcing' is often a board room racket.

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