IBM needs to hit at least $11.40 in earnings per share for the company's top brass to get their 2010 bonuses, so on Tuesday its board of directors gave Sam Palmisano, Big Blue's president, CEO, and chairman, the means to engineer that number with a $10bn bag of cash. The board declared a dividend of 65 cents per share on IBM's …
Stock is at an all time high
Other than that I could not give a rat's ass.
As for the consumer mkt, IBM has never been successful there and Oracle will never go there.
HP and Dell are just resellers in that space.
Hat's off to Apple which sells to the masses and are a very large Power customer.
Leisure Suit Larry
No surprises there.
They've just cut car allowances, apparently to encourage you to magically make your car more efficient.
Oh hang on a minute, maybe it's a company-wide pay cut for everyone. Ah, that'll be it.
IBM did not cut car expenses
IBM just wanted to stop people that drive from san fran to los Angeles every week from charging 385 miles each way at 50 cents. ($385)
When you can rent a car with unlimited miles for $35.
Oh yes they have cut car expenses
Here in the UK we already pay additional tax (benefit in kind) for less efficient vehicles, the IBM mileage rates do not currently cover the costs per mile of my 2 litre diesel vehicle so it costs me to visit customers, and now IBM would claim back an addiitonal £20+ per month from my compnay car allowance under the excuse of encouraging staff to go green.
Further erosion of my benefits so the guys at the top can get their bonuses.
And thanks IBM for pushing me out of the final salary pension scheme, lost out on that this year too but at least your keeping your shareholders happy.
Not sure I understand the anger
Timothy seems to have a bug up his backside regarding IBM. I don't understand the constant carping about share buy backs. There are two ways that a company can return profits to shareholders - dividends obviously put money directly into the shareholders pocket, but if you accept that a stock's street price is related to EPS, then buying shares will drive the price of the stock up, giving the shareholder value.The advantage of the latter approach is that the stockholder gets to choose when the profits are taxed whereas dividends are taxed immediately.
I guess the third way is to invest in the business to come up with new stuff to sell, thereby growing the business long term. On that measure, Apple and IBM had about the same revenue last quarter. Apple spent 464 million on R&D, IBM 1.4 billion. I guess it is cheaper to invest in shiny.
From inside Big Blue it's worrying....
It's worrying because that's all the Executives seem to be focusing on. Strategic share buy-backs are fine but (as Timothy noted in an article about a year ago) IBM seem to be addicted to the damn things. We started down this road something like three or four years ago and it doesn't show any sign of stopping.
There's only so much manipulation the market will take before it says, "Sorry we're not playing any more," and the stock tanks. Restrict the supply of shares too much; and you reach a tipping point where the market judges you to be over-valued. With an IBM where costs are cut to the bone and (certainly in my area) R&D is being hampered, this is a real concern.
Loss of focus.
I think that large parts of IBM.. including much of upper management has lost the focus that was found under Lou Gerstner, who had to dig into the core of what IBM was/is to make it survive, IBM is a Technology driven company.
Now I think that selling off the PC business and the hard disk business were the right thing to do, but they (upper management) haven't been able to replace the revenue with organic growth. Sure IBM have been buying up lots and lots of smaller software companies and a few hw companies, to increase revenue that way. But IMHO that has been kind of defensibly. They haven't been doing gutsy "expand the business into a new marked" kind of buy's.
HP has by buying EDS, Oracle have bought SUN, SAP have bought Sybase...
And to be honest I think that the investors would rather have seen IBM use the 10 Billions on entering or re-entering a marked, rather than pumping up the stock. I mean double the 10 Billions and IBM could have bought Juniper networks. That would have been a strategic move, with CISCO entering the Server Marked.
This buying up stocks is top management trying to force the stock up high enough so that they can make a stock split, that normally also will benefit the stock. It's the same problem with companies around the world, upper management isn't thinking about what is best for the company but what is best for their stock options.
Whilst they've treated me well
There are a lot of pissed off IBMers at the moment. Costs are still being controlled to the penny, raises and bonuses for many are minimal, other benefits are being cut. And then they go announcing massive profits, share buybacks and the like.
It rubs you up the wrong way after a bit. Why should they spend 10 billion on shares when I could do with a new laptop and haven't had a decent raise for a couple of years due to the company moaning about hardship?
Not that good people leaving really bothers big blue, they'll just buy in more. In fact I think that's the plan - buy products, sell them for all they're worth but put as little investment into them as possible, watch people leave and the product stagnate. Buy another one, repeat.
Anonymous posting for pretty obvious reasons.
I won't be anonymous...
Yes, I have escaped the blue pig aka borg.
Thumbs up for the author's article which is very well written and spot on.
IBM is treating their employees like crap because they can. Go ahead and leave. They will replace you with an offshore resource, if they can, or they'll hire in someone more desperate for a job that has a pulse. Since you left, they don't have to worry about giving you a package as you exit, where they would if they made you redundant.
The problem with share buybacks is that its an artificial pop in price. But if the street doesn't buy it, then your share prices will still take a hit. (A double screw to the employee who didn't get a bonus and holds IBM stock.)
As to IBM's mystery source of money... its out there... where the US Tax Man can't get it. IBM is run by bean counters and they will play accounting tricks when they can.
More government oversite needed
Many large corporations have become nothing but fiefdoms for the top management to pillage. They do insane long term moves just to satisfy short term greed. Corporate boards aren't doing their jobs (even Apple sits on $51 bn that should go back to shareholders). Buying stock when you are near all time highs is fiduciary malfeasance. Since large shareholders can't or won't step in, congress needs to. Corporations need to pay income tax because they are starving their workers of raises and bonuses and local, state and national governments have to pick up the slack. Its a shame companies like IBM lost their way and stopped producing products that people wanted to buy and just became a financial organization intent on milking the mainframe and AS/400 for all it could.
Somewhere along the line Directors started thinking of themselves as *owners*
Not the highest paid *employees* of a company.
This move is excellent for people on performance related bonuses but likely to do *nothing* for long term business value.
Will the stockholders *do* anything about it? They are the *real* owners after all.
Just a Glitch .... Nothing to See here, Honest ...... Please Move On. Thanks Suckers/Seeders.
"Big Blue's Big Sam gets $10bn for bonus stock boost .... IBM wastes cash, sidelines innovation"
Timothy, Is that the same as runs out of new ideas? That would then have Big Blue reliant and fully dependent on ideas it would need to be phishing and phorming from its global client base .... which is a stealthy Intellectual Property theft move which cannot be good for business .... or Wall Street and the NYSE.
Being laid off by them was the best thing that ever happened to me.
Being laid off by them was the best thing that ever happened to me.
Unfortunately when you've made your pact with the devil (Wall Street) you have to play by his rules. Rightly or wrongly share buybacks are part of the game. However, I do agree that IBM seems to place way too much focus on its EPS targets which tends to overshadow everything else.
Lets not forget they still invest heavily in R&D and pump huge amounts into developing Risc and mainframe and supercomputer architecture and even Linux and Java - unfortunately these just seems like old news to the outside world.
Maybe if they'd managed to have IBM-inside stickers on the XBox, PS3 and DS they'd have better visibility in the consumer space but in general the margins aren't there unless you can come up with something closed and proprietary that people want to buy and the antitrust authorities will permit - IBM may have the engineering capability but have never been that brilliant at marketing in the retail channel.
Part of the problem is that in the last couple of years innovation at IBM has centered around wishy-washy all encompassing sloganware like the Smarter Planet initiative which nobody really gets. At least the AS/400 and 360 were truly innovative and something concrete that you could sink your teeth into - this is what's missing now.
IBM Management are short sighted, greedy, f**kwits!
Hold the Press! *sigh*
Have to agree
At one time - IBM was the business model every aspired to. Hell I built my career on mainframes and as/400, iseries, i5, system i or whatever the hell it's called rthis week.
Their thinking seems to be build a better mousetrap - then don't use it because now what do we do with all that leftover cheese? and how the hell do we justify keeping the cats around? and God help the pest control business.
They went from a company that stood for excellence and execution to one with pockets of competence with short-sighted leadership - ship of fools if you will. Just hope they figure out a means to stay relevant for awhile... still polishing up some other skill sets that show some dynamic thinking for the future.
So that's where my salary increases have gone for the last six years.
Must get myself a new job, IBM has long since been a decent place to work.
Big Blue regularly buys shares back and regularly gives out options as executive bonuses, down to quite a low level of 'executive'. (Must be low, since it used to include me.) So actually there is a money-go-round that IBM always wins from*, and it does keep the staff who are in line for options dancing in their own shadows, which is part of the goal.
*because they only buy shares back when they're undervalued, and it's the employees who pay tax on the options, if they (the options) aren't in the toilet as usual.
Paris, 'cos I'm not sure she'd understand the con, either.
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