IBM shuffles units, axes staff, sees profit shrink

Taking bets on when I'm a Blight on Mankind goes belly up. This is the pattern of a company that is beginning to fail and eventually is liquidated.

GDM coming home to roost, the customers have found them out..

Selling entry level skilled workers at a premium outsourcing price was always going to bite them in the end.

About four years before it is split into three

Is my estimation of how long the current IBM will survive at its current rate of losses->resource actions->more losses. IBM's choice of growth areas is already crowded enough with big players and IBM simply is too risk averse and not flexible enough to beat them.

So after about four more years of trying, IBM will be split into three companies: mainframe(y), patents (will be called R&D but will not convert any research into real products but instead have patent royalties as its main revenue source) and services. The first company will last forever, as long as big banks continue to rely on big iron. The second will become a patent licensing shop that will slowly die (decades) as its patents expire and no new ones make up for the lost revenues.

The third one will at that point have its majority of workforce already off-shored, so it will shortly be sold at a discount price to some well established provider of global services that already has its workforce located in India (Tata?)

So long, it's been (kinda) good to know ya

I'm glad I worked at IBM; I met some great people, and learnt stuff.

I'm delighted to have left earlier this month. I couldn't wait to get away, and passed up the opportunity of being considered for their latest, and meanest, redundancy scheme. Wasting another summer there just wasn't worth it.

It's like a weight has been lifted off my chest.

EPS

EPS $2.35 for the quarter. Say <$10 for the year.

How much money was wasted trying to get EPS $20 in 2015?

IBM (& IBMers) are still paying for that target.

Profits sinking

I guess that management will get a bonus for this come the end of the year. It's not clear at the moment how they will justify it but it will be instructive to see how they sell it. Basically IBM has been in a death spiral for a number of years now yet if you talk to your "Investment Advisor" the chances are that they will tell you that it's a great time to buy some IBM stock because prices are down.

So Management Pay is rising, Wall Street is looking good, Tech stock is a bargain, there are lots of job openings - by classical terms the economy is doing well ... wage stagnation is just a blip, I'm sure they will improve next year, or the year after that maybe?

new "reporting structures"

Still safely inside the legal limits, but essentially fiddling with the books. When the accounting department ot a tech company is more creative than the R&D departments, things start going south. I agree with SecretSonOfHG, in a couple of years Big Blue will be split into several companies. Which will delay the inevitable, but not prevent it.

After all, nobody was ever fired for replacing IBM with something cheaper.

It's not just IBM

Like most people who've been in this industry for a long time, I've moved around over the years (BT, DEC, Compaq, IBM) now retired. Ex-colleagues are telling me that the (bad) behaviours of senior IBM management are increasingly the norm in this industry and many others as well, all of it boiling down to the poisonous combination of only focussing on the short term while having no vision or leadership ability. Net result is that when you're (like I was) nearer the bottom of the food chain you get inconsistent multiple goals, measured almost on a minute-by-minute basis, with the near certainty that you can't meet all of them and the consequence of that is going to be "career" damaging. It's very easy to say to those who are left after this round of redundancies "Leave before it is too late ...it'll happen to you sooner or later" but it is surprising how working in that type of environment damages self-confidence and motivation to move on. To all those left I'd say that it can be damned hard to escape but it's worth it

Cut

"We will cut our way to growth." The MBA's employed by IBM have been trained in nothing but cost-cutting, cost-containment, expense control, and monitizing, monitizing, monitizing. Developing or exploiting a new technology is not something they know anything about. Buzzwords, hype, and verbal complexity is all they know how to do. It is a total shame that IBM has come to this. But it was inevitable that the virus of B.S. would spread uncontrollably across the Apple Orchard and beyond. The IBM Fellows were not listened to, and the empty suits (and dresses) were listened to. Too Damn Bad.