As IBM itself pointed out in its announcement of the share repurchase authorization, the company has bought back a staggering $94 billion in its own stock from 1995 through 2007 inclusive. IBM still has $400 million in buybacks it can pursue from a prior authorization. Last week, the company said that it would probably spend around $12 billion--out of cash flow from operations--to purchase shares in 2008. This share buyback effect will increase earnings per share this year compared to last year (because there will be fewer shares in the comparison), which compelled IBM to raise its earnings guidance by a nickel per share for 2008, which puts it in the range of $8.25 per share. But, IBM also tightened its range, which was between $8.20 and $8.30 per share prior to this announcement. Basically, IBM told Wall Street that it was confident that it was going to hit the low end of its earnings targets from only a few months ago, and it will spend $12 billion to buy a nickel per share to hit what was the midrange of its targets.
This is not just folly, it is obvious financial engineering of the most ridiculously wasteful kind.
While IBM's managers are busy doing whatever it is they do, they could have done some truly remarkable things with $12 billion--not the least of which would be to pay people to work and improve the IT products of the world. Maybe make something those zillions of people want to pay a premium for? Call me silly, but to reach its targets of $10 to $11 per share earnings by 2010, IBM will have to fork out several tens of billions of dollars in share buybacks. Doncha think the $135 billion or so in share buybacks between 1995 and 2010 that IBM will likely pay could have been used to much greater purpose?
IBM's execs, who get paid in stock options that require them to pump up stock prices as high as they can to maximize their own payoff (just like every other public company), have little choice but to endorse share buybacks if they are cynical about their own prospects to develop hot new products to generate equivalent earnings. There's always the acquisition strategy, of course. IBM will have been able to buy SAP two times over by the time 2010 comes around, for instance. But here is what really annoys me about such strategies. If a company has confidence in its product development and looks for or creates new niches to chase, that company's stock price will naturally rise because new products drive new earnings. In IBM's case, it is old products--mainly mainframe hardware, mainframe software, and related services--that are creating the cash. And some day, that profit stream will dry up and IBM will not be in position with a new, vibrant, and profitable set of product lines. (Whoops! We invested in stock instead of products!) IBM could end up being like Apple had Apple not invented the iPod. All kidding aside.
I would prefer for IBM to wake up and do something useful with the piles of money it extracts from mainframe shops that are basically addicted to their COBOL code. Like just give it to the executives and employees with a pat on the back. Or maybe re-create a pension plan? (Silly me, I must be a communist.) Or better still, create new products and new markets and maybe live on as a corporation worthy of admiration and respect. This is just the height of laziness and a complete lack of creative thinking as far as I am concerned. I hope the ghost of Old Tom Watson starts haunting Somers and Armonk.
Among the group's top priorities are access to Chinese markets, expanding the use of technology in the health care system and protecting against computer piracy, according to the group's Web site.
VC? Bet you are wondering about that - this is the beginning of the "Virtual Consulting" era... some guy will talk with you, not understand what you want, ask a guy at the SDCOE what he thinks, design something that won't solve your problem, and have India do the work remote.
Oh yes the important part - How does IBM now gauge a successful project?? Easy - they get paid. If at least 80% of the dollars are in their hand the project is successful. I have witnessed this to a horrible level.
It's bad enough to now be losing money due to no raises...the bonuses are weak, pension killed...the roller coaster of "am I layed off or not"...now this.... someone please just put this company to rest.
I was surprised too that my bonus was not larger on a Percentage basis this year after all the hype. I have been in the same Band since I joined IBM over 10 years ago. The last 3 years I have gotten a PBC = 1. With so much "consistency" in my PBC Rating I should be able to gauge what the fluctuation is in bonus pay and thus see how much "more" was added to the bonus pool. My bonuses over those 3 years were 10.2% two years ago, 7.5% last year and this year 9.8%. Based upon management's comments, I was expecting the Bonuses to be better than 2 years ago.
I don't see any major increase in the bonus pool unless you are only comparing it to last year's pool.
Suruga first announced it would replace most of its systems with IBM's "Next Evolution in Financial Services Systems" (NEFSS) in Oct. 2004. The IBM package included a Java-based banking application from Fidelity Information Services and various flavors of IBM database software that can run on mainframes, Unix systems and x86-based boxes.
At the time, IBM heralded the deal as the first NEFSS adoption in Japan, predicting full-scale operations ready for Suruga in the second half of 2007. But when IBM gave its proposal, the bank turned up its nose at the changes. "We are suing because we decided it would be difficult to implement the system they suggested," a spokesman for Suruga told Reuters.
A group of couriers over the age of 40 sued Federal Express, claiming it tried to push out older workers. The issue was whether they submitted a proper complaint to the Equal Employment Opportunity Commission within the legal time limit. FedEx claimed the couriers filed the wrong form, but the court ruled, 7 to 2, that an intake questionnaire and a signed affidavit — which the E.E.O.C. considered a valid complaint — met its “permissive standard” for what was acceptable.
It is surprising and welcome to see the court apply any sort of permissive standard, considering how it ruled in a similar case just last year. Through a tortured and illogical reading of the law, the court ruled, 5 to 4, that a Goodyear employee missed the deadline for filing a complaint that she was paid less than male colleagues.
That was one of a series of rulings in recent years that stretched the law to come out against little-guy parties. In one egregious decision last year, the court ignored its precedents to hold that an inmate lost the right to challenge his murder conviction because he missed a deadline — even though he had filed the appeal by the day the federal district judge (mistakenly) told him to.
I acted disappointed and somewhat afraid, but this development I think was very good news for me personally. Getting 13 weeks severance and one year medical + CORBA and retiring at around the same time I planned for anyway is a hell of a lot better than nothing!
Any downsides to taking the "performance related" severance and running out the door as fast as I can?
As an initial step, call the Employee Services Center and ask them whether they recognize you as a re-hired employee and whether you are a participant in both plans.
Also, for an official, legally binding answer, you should write the Plan Administrator (mail it via certified mail, with a return receipt) and ask for an explanation of your pension benefits. Be sure to mention that you had two periods of employment, one under the prior plan and a second under the C-B plan.
In your letter, tell them that if they claim your Prior Plan pension was rolled into the C-B plan, you would a complete accounting of the value of your prior plan pension and the opening balance that resulted in for your C-B account. Let us know how it turns out!
Most big companies have been vastly overestimating the kind of returns their pension plans can realistically expect to earn, Buffett writes. He writes that a survey of S&P 500 companies with pension plans shows the companies on average expect their pension assets to earn an annual return of 8%. With more than a quarter of those assets invested in cash and bonds, Buffett writes, the implicit expected annual stock investment return is 9.2% - and that's after fees. "How realistic is this expectation?" Buffett asks.
...Buffett goes on to note that were stocks to return 10% annually throughout this century, the Dow would hit 24 million by year 2100. "If your adviser talks to you about double-digit returns from equities," he writes, "explain this math to him - not that it will faze him. ... Beware the glib helper who fills your head with fantasies while he fills his pockets with fees."
Buffett adds that the presence of "layers of consultants and high-priced managers," or "helpers," at financial advisers and mutual funds is another factor pulling down returns for individual investors as well as pension plans.
With all that in mind, why are companies making investment assumptions that could be vastly overstated? Buffett believes it's a case of CEOs manufacturing earnings growth now, at the expense of problems that will manifest themselves only later. Assuming higher returns means having to set aside less money now to build their pension funds. "What is no puzzle ... is why CEOs opt for a high investment assumption," he writes. "It lets them report higher earnings. And if they are wrong, as I believe they are, the chickens won't come home to roost until long after they retire."
You need to give management the perception that you are a retention risk, not a problem. Get outside sources to give you job offers, letters of praise and hint they might just want you to join their organizations. Internally, discuss opportunities with other units and teams. It's a fine line between risk and problem, but you have to play it or they'll play you like fiddle.
When you are ready to really leave, then play the card once, maybe a few months before you start passing your resume. The moment you are perceived as a problem, if they want to keep you, you'll get more compensation which will help in pumping up the salary in your resume. This only works once and you should be committed to leave before you do this.
BTW, as the recipient of 11 straight PBC 1's in my career I can fully and unequivocally guarantee that you won't always get the promotions, the top bonuses, etc. The only thing a PBC 1 can guarantee is one cycle where you won't get laid off for performance. You can still get laid off for other reasons. It is the gift for management, because when you are at the top of the grid and rating, they can force you to do anything and they know you are now captively "Pavloved" (an IBM Middle Management School term )into moving higher and higher on the performance curve until you finally collapse burned out and ready for disposal as a used up resource.
Certification is a tool used for delaying compensation for performers and a political tool to punish 1st and 2nd lines as well as problematic employees that can't figure out how to toe the line. If your bonuses aren't looking better and you can't get certified, there's someone aiming a heat seeking missile at you and looking for tone right now.
There's probably a more politically oriented and anointed person in your organization that is getting your bonus and will probably certify before or at the time you do. That is, if you aren't sacrificed or canned just to keep her/him moving up the ladder.
As others have stated, the FHA can be taken away at any time - including after one retires. So much for being able to plan one's retirement - you have to assume it won't be there and if it still is it's the icing on a very sour tasting cake. I can't even begin to imagine the rates for IBM's retirement medical after the FHA is taken away.
Your manager may be right, or he could be hiding behind a facade blaming Palmisano. He could be deflecting his decisions or inadequacies as a leader. This is routinely called "transparent management".
First of all, the pot AT THE CORPORATE LEVEL (bonuses) may have been greater. Unfortunately, the fine print deception starts here. The pot amount or even its total net changed is never disclosed, so you won't by design ever know the truth.
Next come the operating units. It's always bad to be a poor performer or even a good performing unit at the bottom of the ranking in a good year. You could have been at the top in a bad year the year before and not get as much money when you are at the bottom of a good year. After Sam pulls the bonuses for the operating Sr VP's and then allocates the bonus pools for the various units, you might be screwed right then and there. Remember, IBM is a socialistic dictatorship, not a company that pays for merit. If for example you are an investment unit you might get a disproportionate amount of bonus "because we want to show the unit is the place to be".
As the money trickles down, the process is repeated. Each level of management pulls money out for their reports then allocates according to whatever performance criteria they chose, not what they've told you. The criteria may change at any time and may not even be remotely justifiable or fair, but that's IBM for you.
When it gets to 2nd or 3rd lines, a new criteria emerges. That of retention needs and desire to screw the captive brain washed "Hitler Youth". If there is a fear you are valuable and need to be kept, more money goes to your pot. If they want you gone and/or they know you are brain washed or kept in a leash, you'll be fed just enough to stay above starvation. Local managers have complete control over your compensation AS IT IS HANDED DOWN TO THEM. If you aren't getting your fair share you are being singled out as a gullible sap, someone they want gone or someone perceived as paid too much, or your management and unit isn't perceived from up above as worth it.
I'd go to your management and ask for an accounting of the bonus. I'd also encourage you to ask others what they got, even across other units. IBM is the land of the mediocre. If you're good, you shouldn't be there. You can make a living working for someone else, but you can't get wealthy. It is your job to make management wealthy, not the other way around.
This is the version that was shown on the Ed Sullivan Show in ‘67. I imagine most DU readers have seen this video before, but I think the comedy is timeless and still hilarious. I still miss Jim Henson. Notice how the “Computer Monster” is the predecessor of the “Cookie Monster” and has teeth.
The Commission's work indicates that expanding access to health insurance coverage is the single most important step to achieving a better system. Presidential candidates from both the Democratic and Republican parties have proposed plans that seek to expand health coverage, albeit in different ways. And although increasing coverage is critical to improving health system performance, research points to a number of other policy steps that need to happen, from speeding the adoption of emerging information technologies that can enhance health care effectiveness and efficiency to building new payment mechanisms that reward quality of care instead of quantity.
Cuomo says he believes the companies used the UnitedHealth Group-owned Ingenix to set rates, which resulted in consumers being reimbursed at unfair and unjustifiably low rates. Low reimbursements mean higher out-of-pocket costs for consumers when they choose or need physicians outside their health plans. "Ingenix is a wholly owned subsidiary of the industry and the company is determining the rates that the insurance companies use to reimburse consumers," Cuomo told The Associated Press. ...
"I believe consumers have been defrauded," Cuomo said. "I believe the companies have been allowed to do it nationwide. I believe there is a certain corporate arrogance to these companies." He said the companies, which face less competition and record profits after a series of mergers, aren't fulfilling their commitment to pay fair reimbursements. "The CEOs are responsible for their corporations and these actions had a significant impact on families all across the state," Cuomo said.
Keep the Pressure on! Take a stand! SAY NO to Pay Cuts! Tell me more...
Alliance reply: The stockholder meeting is tightly controlled and very little dissent is allowed. Just getting to speak, outside the proxy presenters, is very difficult. Besides, the stockholders only care about 1 thing--is the stock price going up. Employees who are stockholders are a very small percentage. We would suggest you write the letter and we can put it on the Alliance web site. More people will see it.
I do recognize that many of you spend time travelling that is not considered billable. You should continue to log that time as nonbillable for the actual time worked. However, to achieve our growth objectives, our model requires that each practitioner average a minimum of 44 billable hours per week. For those of you who are currently exceeding this run rate, I thank you and encourage you to keep up the great work. For those practitioners averaging less than 44 hours per week, please work with your project management to structure your workload to accommodate the minimum of 10% overtime. Exceptions, including contracts capped at 40 hours, should be brought to your Practice Leader or RDM's attention for escalation. Billable utilization has a major impact on our financial results, so your efforts do make a difference. I sincerely appreciate the value, innovation, hard work and commitment each of you deliver on a daily basis!
Donna D. Satterfield AIS Americas Cross-Sector Leader Global Business Services" -Leaving-
Whenever the time came to write up my PBC rating of myself, I think that I having a gift of worthsmithing was invaluable. I was always able to justify at least a 1, mostly 2s, and finally a 2+ rating, once those came into existence. I truly believe that a key is not only what you say but how you say it that counts. It's difficult for a manager to down a rating when you indicate that what you've done has either saved some cost and/or increased customer sat.
I know this is such a stinkin' chore to do at the end of each year, but it helps that whenever a project turns out right, keep some notes in your own little PBC file so that you can "spin" it during PBC rating time at the end of the year. For those of you still employed by Big Blew, I feel for you. I know the company is unstable and senior management have all lost their minds, but if you're willing to stick with it, please join the Alliance. If I hadn't left when I did I would have joined! Unfortunately, I didn't know there WAS an Alliance until after I left. Good luck to all. -Mistressofthei5-
We are only trying to save and reduce our cost too. Hey and I'm sorry if I can't afford to do my laundry as often either as you know , we are only trying to save ...our customers will understand that ...and if we show up on site all sweaty after riding a bike to a customers site it's nothing personal we are just helping to save money..you understand gas is so expensive and then there's the environment thing too. Yeah I know you give us money for gas but that just drives up the nations imported oil debt and my personal cost at home for my after work use of my car.. using all that oil...cuz, you only pay for business use of my car..I'm not finding the trade-off to my advantage anymore with gas approaching $4/gal.
So thanks, but I think that I'll be riding a bike to the customers site now on. As a final note I want to thank you for lowering our tax bill by lowering our wages. Now our community gets to lay off some of our teachers and my kids have to sit in an overcrowded classroom. I don't know I thinking about home schooling now, however that is pretty time consuming so I hope that you understand that it's nothing personal if I need to stop working overtime as we are only trying to save that's all. -Oz-
I'm not about to look a gift horse in the mouth (and some will argue that this is no gift, but earned through hard work), but it messes me up to think that our team took a 20% hit with last year's RA, we're about to take another hit and the work just keeps piling up. I feel so disillusioned on what should be a happy day, getting my payout info. Instead I just sit here wondering whether it would even be worth it to try and achieve a 1 on this team. It sounds like if my dept paid out less than 5% on a 2+, then the 1's probably didn't do that much better. I'm starting to agree with a previous poster that my time above 40 hours is better spent on another job; the o.t. is worth exactly nothing to IBM since that's what they pay me for it.
And for those newbies who regularly chorus "you knew the deal when you took the job", no we didn't. My band and job have changed so many times in ten years (and we don't get a say in such things at all) that whatever I may have thought I agreed to ten years ago, eager just to get my foot in the door, is meaningless at this point. Yeesh, I sound so bitter and I'm really not.. just kinda non-plussed.. all the time now. -Huh?-
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC.
In addition to all the problems you've aptly described, they now have the problem of explaining these changes in government and commercial hourly contracts. This may finally explain the mystery as to why IBM introduced new contract templates in 2008 that brought about penalties and other disincentives for clients to have retainers and contingency hourly contracts. They want to be able to manipulate their employees at will and divorce individuality from the services business. In other words, they want the freedom to screw their "resources" at will and cover it up from the customers. They also want the freedom to financially engineer anything they want in a customer relationship through the use of modular service product protected via severely restricting contract language. They intend to make a 30-40% profit in EVERY deal, no matter what happens. One day, customers will wake up and see their business model and run like hell away from them, just like Microsoft and others.
If they successfully (and the outcome is still in doubt)make services into a canned product like McDonalds or Wal-Mart, they may lose the client looking for quality and a fair price but possibly gain market share with the bottom feeders. Is this strategy change in business a result of some insight or desperation? Time will tell.
The only way to achieve this is for software and companies to converge - perhaps a small number of mega-corporations world-wide who standardise their software and business processes. IBM is too small in too big a world to wield this influence I suspect - though they seem stuck in a time-warp where once they were king.
Though you may think IBM is doing you a favour, I suspect you are being taken advantage of. Your one consolation is that you are developing a management skill set (if this is what you want)which you can sell to the market at a market rate post-IBM.
As ABC said though, you either manage or design/architect - not both - at least not at once. Both are demanding enough in their own rights such that to do one or the other properly requires your complete attention. IBM makes this mistake with it's business analysts too where they spread them across a number of different activities (business analysis, management and design etc). The good business analysts I have known are good at that activity but bad at any other, there may be exceptions though. I would not be surprised if IBM has given you a role because you were available and told you that it was being an architect when it was something else - HR are generally woeful at understanding roles (I had a colleague being put forward for a role classified as business/analyst when it was in fact a network administrator's role - poles apart).
You first need to be able to define for yourself the difference between management and architecture and then decide which one you want to do.
I do recognize that many of you spend time travelling that is not considered billable. You should continue to log that time as nonbillable for the actual time worked. However, to achieve our growth objectives, *our model requires that each practitioner average a minimum of 44 billable hours per week*. For those of you who are currently exceeding this run rate, I thank you and encourage you to keep up the great work. For those practitioners averaging less than 44 hours per week, please work with your project management to structure your workload to accommodate the minimum of 10% overtime. Exceptions, including contracts capped at 40 hours, should be brought to your Practice Leader or RDM's attention for escalation.
Billable utilization has a major impact on our financial results, so your efforts do make a difference. I sincerely appreciate the value, innovation, hard work and commitment each of you deliver on a daily basis!
This is true even for the cases of traveling and work-at-home employees that don't have IBM offices, so therefore cost IBM nothing in terms of traditional office expenses.
Somehow, though, the company found the funds for a $15 billion stock buy back, which amounts to $43,000 per world-wide employee, or $118,000 per U.S. employee. Stock buybacks, of course, help drive up the value of stock options and grants for our senior executives.
These policies illustrate all too well how little value IBM places on its employees.
This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.