back to article IBM sued for talking up semiconductor business it couldn't give away

A US public pension fund has filed a class-action lawsuit against IBM, claiming the company misrepresented the value of the semiconductor business it offloaded to GlobalFoundries in October. The suit filed by the City of Sterling Heights Police & Fire Retirement System in Michigan accuses IBM of having inflated its own share …

  1. Anonymous Coward
    Anonymous Coward

    Worthless chip manufacturing plant??

    Hell!! I'd have taken it if it was free. I'm sure it would have made a fun place for parkour, or indoor motorx, or with its clean air systems, a hotel for people with chronic allergies, and they have big ovens don't they - that bake round disks - can anyone say GIANT PIZZERIA! Come on these factories are NOT worthless. Next time gimme a call first!

    1. chris 17 Bronze badge

      Re: Worthless chip manufacturing plant??

      we could have setup a just giving page and chipped in the money from the bottom of the sofa, car seat etc

    2. naive

      Re: Worthless chip manufacturing plant??

      Not worthless to IBM since it makes the Power7 and Power8 cpu's IBM uses in p/i/z-Series systems, that is the only reason they paid up. Even there could have been some pressure from the government not to shut it down, since it then become a bit too clear USA is slowly becoming a nation of burger flippers with everything outsourced to China for the holy grail of "shareholder value".

      A bold move would have been to invest so it could perhaps also fab ARM on 14nm or less, but what can be expected from women at the steering wheel, like HP, IBM will be destroyed by a female having no affinity with technology.

      1. Jimmy2Cows Silver badge
        FAIL

        Re: Worthless chip manufacturing plant??

        Could probably have made your point without resorting to blatant sexism

        1. FutureShock999

          Re: Worthless chip manufacturing plant??

          He could have...but I'm not sure he would have been as on target.

          SURE it is sexist to claim that women know very little about high tech chip design and the industry that bakes them. A tour of any chip foundry would confirm that, unless you are talking about the line workers. That's not to say that a handful don't exist...but it IS a 98% male dominated niche. And it is a very specialised niche, with non-linear value propositions and unique economic models - probably the closets industry would be automotive manufacturing. Again, a field with a nearly zero exec female management number.

          Women are GREAT as leaders at building consensus, understanding customer-centricity, at encouraging teamwork, and occasionally being ruthless and aggressive. But unfortunately, in the high-tech world, it is clear that much of the female leadership comes from a very non-technical background, and really does not have a firm grasp of the intricacies and non-linearities of the market. So while they might be great at ensuring eBay has a fantastic customer experience, they have not been as impressive when asked to manage technology product portfolios and strategies...again, not their background.

          The IBM divestment decision REEKED of short-term, exec-compensation-stoking transactional thinking, designed to maximize exec numbers to ensure they got the most in their stock grants that year...at the expense of a long-term Unique Value Proposition in the mid-range and even upper-range systems market. Instead, IBM would focus on "Services", that easily off-shored, amorphous product that can mysteriously plug the numbers gap in future projected revenue spreadsheets. The gap where having a Power-fueld midrange server market used to fill. And that's a pretty big gap, especially as a large amount of IBM's "Services" business is driven by them being the hardware vendor of choice in the account!

          So call it sexism if you must. It is however, a fairly depressingly accurate description of American tech management...

          1. DanDanDan

            Re: Worthless chip manufacturing plant??

            I hate to say it FutureShock999, but you're being sexist.

            Making generalisations such as "Women are GREAT as leaders at building consensus, understanding customer-centricity, at encouraging teamwork, and occasionally being ruthless and aggressive" is blatent sexism.

            Ginni Rometty has a batchelors in computer science and electrical engineering, worked for General Motors, was a systems engineer for IBM and basically has a very technical background, in addition to her "fluffy wuffy soft skills and business acumen".

            So can you please stop generalising about one gender or another and focus more on individual merit instead of spouting 19th century crap?

            1. enormous cow turd

              Re: Worthless chip manufacturing plant??

              @DanDanDan, And Jeremy Clarkson has an Engineering Degree from Oxford Brookes...

          2. Florida1920 Silver badge

            Re: Worthless chip manufacturing plant??

            @FutureShock999

            I worked in the electronics business for more than 40 years. I knew people who loved the business and knew their products inside and out, and others who were only looking for their next job, with better salary, perks and stock options. Over time the latter outpaced the former. Most of the companies I worked for over the years are gone; in another post I mentioned IBM, and another company still around is Fairchild Semiconductor.

            Did the others -- Digital and Gerber Scientific among them -- fail because of women? No, because women simply weren't allowed into the Boy's Club on Mahogany Row. As my career advanced I spent enough time hanging out with the boys on the row to know they were little more than little boys in expensive suits. The off-hours conversations were reminiscent of fifth-grade locker room banter. No way they'd let the girls see them in their natural environment.

            I knew a few female managers, some good, some bad, just like their male counterparts. When I had the opportunity I tried to fill open positions with qualified female candidates, and never regretted the decision. Some of the men, on the other hand, would try to play the "old-boy" routine. You know, we're all mates and all that. Never once did a woman who worked for me try to play on her gender to do an end run. Okay, I was a squishy liberal, but the diversity made work more interesting and I couldn't help noticing the men started wearing better ties.

            I'm not claiming businesses would run any better if there were more women running them, but I don't think they'd run any worse, and at least they'd be more representative of reality.

        2. David Austin

          Re: Worthless chip manufacturing plant??

          If you care to remember, Jimmy2Cows, Meg Whitman replaced Léo Apotheker over at HP after he attempted corporate suicide by discontinuing Several promising products, threatening to split the business, and making a bad bet on Autonomy

          http://www.nytimes.com/2011/08/27/business/for-seamless-transitions-at-the-top-dont-consult-hewlett-packard.html

          Meg, on the other hand, grew eBay from 30 employees and $4 million revenues to 15,000 employees and $8 billion revenues

          http://en.wikipedia.org/wiki/Meg_Whitman#eBay

          Be it business or technical credentials, I know which one of the two I'd pick every time.

          1. Otto is a bear.

            Re: Worthless chip manufacturing plant??

            Think you got the wrong person there Jimmy was commenting on the sexist remark, by Naive and not on the suitability of gender.

            1. David Austin

              Re: Worthless chip manufacturing plant??

              Absolutely right, Otto. was aimed at naive. Apologies to Jimmy2Cows.

      2. Anonymous Coward
        Anonymous Coward

        Re: Worthless chip manufacturing plant??

        I suppose it all went downhill when they got the vote...

      3. SecretSonOfHG

        Re: Worthless chip manufacturing plant??

        Your last paragraph ruins an otherwise interesting post because of your sexism. I don't see how different things would have been if IBM CEO were a male instead of female.

        MBA-level encroaching in the pursuit of short term financial profits for the sake of share holder value (which directly benefits the value of their own stock options) while completely ignoring your core business and the long term future of a company is not by any means female exclusive and actually quite common practice nowadays.

    3. Florida1920 Silver badge

      Re: Worthless chip manufacturing plant??

      I worked in IBM's Dutchess County, NY, chip plant in 1970, shortly after it was built. New York State built them an exit from Interstate 84, "Lime Kiln Road." The building was freakin' HUGE. As a contractor I had to park in the outer limits and enter through the main entrance. From there it took 10 minutes to walk to where I was working, troubleshooting an early foundry machine. There weren't many support columns, and they could rearrange the offices and corridors at will. Which they did one weekend, totally baffling me. If you removed all the offices it would make a heckuva skating rink, bumper-car track, rifle range.... I later (1987) worked in a fairly large DEC plant in Westfield, Mass., but nothing like IBM's Hopewell Junction venue.

  2. Anonymous Coward
    Anonymous Coward

    probably better if you checked the facts first... or even jimmypedia

    http://en.wikipedia.org/wiki/Ginni_Rometty#Career

    Seems Ginni started out as a systems engineer, who knows, maybe she's really a BOFH who's made it to the top :)

    1. Anonymous Coward
      Anonymous Coward

      Re: probably better if you checked the facts first... or even jimmypedia

      I suppose we find out in 50+ years after naive's post when their remains are found during the demolition of a former IBM building with what unusual marks on their remains. Marks consistent with some form of chainsaw and circular saw.

      We'll get a hint if naive goes quiet....

  3. BennyJ

    Do these lawsuits ever actually work? For starters, if IBM had to pay $1 to every shareholder, its share price would drop by $1 so I hope this pension fund isn't still a shareholder. And if they are not, how much can they possibly expect to gain? Besides, who could have predicted that IBM would get less than nothing?

  4. Brewster's Angle Grinder Silver badge

    "...erasing more than $18bn of market value in two days..."

    Hey, I'm no economist, but I'm sure that "value" went somewhere. IBM didn't just have a KLF moment.

    1. seven of five

      This money did not go somewhere as it never really existed. Hmm, so somehow it went where it came from: nowhere...

      1. Brewster's Angle Grinder Silver badge

        @seven of five Neither of us are quite there.

        If I'm honest, I was arguing the case, "I bought for $x and now have to sell for $x-ε", while I think you were arguing, "I bought for $x, was hoping to sell for $x+δ but now have to sell for $x" whereas the reality is probably, "I bought for $x, had convinced myself I could sell for $x+δ and now have to sell for $x+δ-ε"

        Both of our arguments have merit. Value that never was has not come into being. And real value has gone to somebody who wasn't suckered by management.

    2. Tom 13

      @Brewster's Angle Grinder

      Of course the odder part is, that market loss is almost 4 times what IBM wrote off their balance sheet. Seems to me the market was reacting to something besides the loss of the FAB.

      1. Brewster's Angle Grinder Silver badge

        Re: @Brewster's Angle Grinder

        @Tom13 You made my comment look much astute than it was. ;) Thanks.

        I would guess the market expect IBM to be less profitable in the future.

  5. Anonymous Coward
    Anonymous Coward

    Way Off

    IBM didn't pay global foundries to take the business. They would have obviously just shut it down and sold off the land and equipment for something positive instead. They paid global foundries $1.3 billion in addition to all of their current fabs to continue making IBM chips into the future. GF is on the line to produce several generations of chips. Essentially it was an outsourcing agreement. The $2.4b worth of property and gear plus $1.3b in cash = GF makes chips for IBM for a decade. Wow, this is a ridiculous lawsuit.

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