If the global economy is improving, IBM's top line numbers aren't showing it yet. To be sure, the company was able to eke out 1 per cent revenue growth in the fourth quarter of 2009, with sales of $27.2bn, and net income rose 8.7 per cent, to $4.8bn. But given how awful the fourth quarter of 2008 was - and that IBM's sales were …
That'll please those made redundant and the pensioners!
If I was an IBM shareholder I wouldn't be complaining too much, after all IBM did still make a profit in a hard period. Most importantly from a propaganda point of view, they reversed the big losses in marketshare in the blades market which is one of the most profitable x64 areas, though how much of that was pants-around-the-ankles-to-get-the-deal selling is not revealed.
I'm surprised TPM is still implying that IBM should have bought Sun, maybe it's the thought of the instant jump in UNIX marketshare, but IBM seem to be doing quite well without. And would all the expense and aggravation of sorting out Sun have been worth it for the the short-term expansion of diminishing returns in the shrinking UNIX market?
Whilst IBM seem happy to go on about the number of UNIX conversions they have snagged, I'd be much more interested in seeing how many other vendors' UNIX installs they have converted to x64 using the Transitive software, especially if it was as a stepping stone in a migration to Linux. After all, Transitive was their back up plan after they left Sun at the altar, so did that purchase return the investment? Any posters here know?
Good despite the resession however.......
......it remains to be seen how much of that good fortune will be shared with the employees who's hard work made all this possible and had to take the hit in cost cutting that drove the profits up.
Redundancy by Stealth in IBM UK
Question: How does IBM increase its profits and Earnings Per Share figure through the recession with decreasing sales?
Answer: By aggressive cost cutting, aggressive offshoring of jobs from the US and the UK, and huge share buybacks. Many would say this is not a good way to ensure the long term future of the business.
Last year IBM made over 10,000 employees redundant in the US - and transferred the jobs offshore. In the UK, IBM has been engaged in a Redundancy by Stealth programme, which has just recently been exposed in the UK Parliament. The recording of the debate is at:
and the transcript is at:
This shows that IBM UK staff have strong support in the UK Parliament, and there was very strong criticism of IBM UK's actions from MPs of all parties. It is now clear that IBM UK has been planning for some time to combine closure of the final salary pension schemes to existing members with a programme of redundancy by stealth aimed at staff over 50. Over 800 staff have been forced to 'volunteer' for early retirement, so leaving without any of the usual redundancy or early retirement packages. Some have already left, the remainder will leave in tranches over the next few months.
IBM UK has taken great care to keep within the letter of the law with these changes, but this debate shows that it has not avoided real damage to its reputation.
The Minister who replied to the debate can do very little to help, but she was very supportive to the employees and very damning of the comapany's actions. Her concluding words were:
"It is important that the IBM board looks at our debate today and that it takes due notice of the surprise, worry and anger that have been expressed. I have a great deal of sympathy with those feelings, which have been well reflected in the debate, and I hope that IBM will take note of them."
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