back to article Ginni, you may have to get out and push: IBM sales, profit stuck in the mud. $13bn is $13bn, tho

IBM on Tuesday delivered its third consecutive quarter of declining revenue, and its shares still surged in after-hours trading. At time of publication, its stock was up 6.5 per cent to $130.47 apiece. Big Blue reported $21.8bn in Q4 2018 revenue, down 3 per cent year over year or 1 per cent in constant currency. The numbers …

  1. trevorde

    Must be the 'Red Hat' effect

  2. Aristotles slow and dimwitted horse Silver badge

    Ho hum...

    Yeah yeah, whatever... I'm sure most normal companies wouldn't mind a flat $5.5Bn in revenues for AI and Analytics. Somehow for the ravenous Wall Street moneywankers it never seems to be enough does it.

    1. Anonymous Coward
      Anonymous Coward

      Re: Ho hum...

      The problem is that Americans don't save very much and don't like paying for unglamorous things like decent roads and universal healthcare. A consumption driven economy only works if there is continued growth in consumption. This puts more pressure (from pension funds and insurance companies) on fund managers, who then naturally focus their efforts on maximising return from a relatively small number of large companies.

      A society in which pensions and health are mostly tax funded has its own problems, but the need for large returns on company shares is much less intense.

    2. Anonymous Coward
      Anonymous Coward

      Re: Ho hum...

      Agreed and many other tech companies are in the same position of making considerable profits but are described in terms of 'ailing' or 'troubled'.

      Sad fact is that for the Street and for investors you've got to grow - merely making money is not sufficient.

    3. Anonymous Coward
      Anonymous Coward

      Re: Ho hum...

      Somehow for the ravenous Wall Street moneywankers it never seems to be enough does it

      If your pension were invested in it you might be less impressed that since 2 Jan 2013 IBM's share price has jittered down from around $195 to around $120. How's about you give me ten dollars now, and in five years you can have $6.15 back? You'll get a dividend, but nowhere near enough to make up for the money you won't be seeing again.

      Just because IBM sell a load of stuff (ie high revenue numbers) doesn't matter. What does matter for investors is two things - the profits they make, and the prospects they have. IBM have faltered on both. If instead of putting ten dollars into IBM in 2013, you'd put it into an S&P 500 tracker fund your pension fund would have got back around $20. That's why Wall Street is unimpressed - because IBM is big enough, and supposedly in a growth sector, it should at least have managed to keep up with the S&P 500, and really ought to have done even better.

      So let me offer you two pills, Aristotles. You can take the Big Blue pill and conclude that converting ten dollars into six is an acceptable performance that people should be happy with. Or you can take the red pill, and wake up in the real world and realise that even an AVERAGE performance would have turned ten dollars into twenty.

      1. Anonymous Coward
        Anonymous Coward

        Re: Ho hum...@ AS&DW

        So let me offer you two pills, Aristotles. You can....

        That was meant to be humour, but it could be read as condescending. Sorry if it landed the wrong way

      2. Anonymous Coward
        Anonymous Coward

        Re: Ho hum...

        "That's why Wall Street is unimpressed - because IBM is big enough, and supposedly in a growth sector, it should at least have managed to keep up with the S&P 500, and really ought to have done even better."

        But you have that backwards. The IBM share price is what it is because Wall Street has decided to be unimpressed. Wall Street is not unimpressed because the price has fallen. Wall Street determines the share price.

        This is the problem with share price; it's subject to irrational exuberance and irrational negativism because trackers just reflect the opinions and prejudices of the managers. In today's world, it's a truly terrible measure of a company's success. Some investment practices are pure woo, but ultimately they are based on herd behaviour (like forecasting based on the patterns of price movements.)

        Buffett got enormously rich because he decided to do proper analysis of companies and their prospects - an expensive undertaking - rather than follow the herd.

        The problem is that even cash generation can be abused because the C-suite can always generate cash by cutting spending for the future.

        The only real solution would involve major changes in corporate governance like long term deferred bonuses to stop short term measures, and no remunerations committee made up of other Cxxs is going to upset the applecart.

  3. Hans 1 Silver badge

    Growth, growth, growth, layoff, layoff, layoff ... all that matters, crush your competitors and grow over them, when they get bankrupt, buy them up and milk their customers until they switch to your real stuff, then dispose of the remains, growth, growth, growth, layoff, layoff, layoff ... market saturation ? what does that mean ... growth, growth, growth, layoff, layoff, layoff

  4. Anonymous Coward
    Anonymous Coward

    excited about what Red Hat and IBM together will mean for customers

    I'm excited about what that mugger and his knife will mean for my wallet

  5. Cuddles Silver badge

    Wait, what?

    "the company's traditional mainframe business, declined 21 per cent

    "This is the most successful mainframe product cycle in quite some time"

    I'll happily admit I'm not too familiar with management-speak, but it really feels like something doesn't quite add up here.

    1. Anonymous Coward
      Anonymous Coward

      Re: Wait, what?

      The problem with quarter to quarter comparisons is that if your business is highly variable, having a really good quarter totally screws the future quarter, ie the 21% decline is not because this quarter was bad, it was because that past comparison quarter was very good ("most successful...").

      1. PassingStrange

        Re: Wait, what?

        Except that this is 4th quarter. The quarter when everyone's trying to get their mainframe numbers for the year up. If things are down 20%, and that's "good" - that's bad.

  6. Version 1.0 Silver badge

    Nobody gets out and pushes

    If you are running a large company and things look bad then you "retire" with a golden handshake and move to another company where you rinse and repeat.

  7. Anonymous Coward
    Anonymous Coward

    Staying Buoyant

    If the company was a hot air balloon, you would think it should be flying much higher.

    Any chance the burners (products) aren't igniting?

    Pilot Ginni: "Nah, just throw off more crew"

  8. cdcdcd

    A bit harsh

    This seems pretty harsh.

    When it comes to analysts you can always find one two who put either a negative or positive spin on any company results. The most important thing for IBM in these figures, from looking at a range of opinions, are the ones pertaining to SaaS and more general service offerings which grew by 18% in 2018 from the 2017 figure. That's massive growth in what is the most profitable part of the enterprise tech. sector - and justifies the hike in share price.

    For the life of my I don't know why IBM didn't just stick to SaaS and develop tools for the cloud sector in general. The IaaS is profitable but no where near as SaaS. I'm guessing they felt they needed to replace the shrinking mainframe market. They have been relatively successful here too. It might seem fair to criticise IBM for pooling every related thing under the cloud term (I don't know anything about this) but that's what most companies have done. I remember hearing similar criticism of MS a few years back; often their cloud business was just their old business for which there was little growth and now look at it. MS is the world's most valuable company and Azure is catching up on AWS fast.

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