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6, 2000 April, 2000

Highlights—February 22, 2014

  • Financial Times: Big Blue investors may not have a winning hand. Why I avoided investing in IBM. By Terry Smith. Excerpts: Buffett’s purchase was over $10bn of stock in technology company IBM, making it Berkshire’s second-largest portfolio investment after Coca-Cola and turning Berkshire into IBM’s largest shareholder.

    Since his purchase, IBM has reported falling revenues. The fourth quarter of 2013 was the seventh in a row in which revenues were lower than they had been in the equivalent quarter the year before. The chief executive and other senior executives have volunteered to forego their bonuses for 2013 as a result of this poor performance. As the Lex column of the FT said recently, “IBM quarterly results practically write themselves now: dreadful revenue growth accompanied by cost controls, share buybacks and dividends that combine to make the technology legend look somewhat less bad than the top line would suggest”.

    It so happens that I was looking at IBM at about the same time as Warren Buffett was accumulating his stake, but I decided to avoid it. Why?A couple of features about IBM unsettled me. One was that they had announced a “road map” to generate growth in earnings per share (EPS) to $20 by 2015, up from $11.50 in 2010. I do not like management that uses terms such as “road map” unless they are discussing driving cars. “Plan” is a perfectly good word.

    I also dislike the focus on EPS. Not all earnings are created equal. Some require greater or lesser amounts of capital to generate them and not all are delivered in cash. This should come as no surprise to Mr Buffett, who identified return on capital as the primary test of company performance in his 1979 annual chairman’s letter. Much EPS growth is generated at the expense of return on capital and so destroys value.

    But if the focus on EPS growth was worrying, the planned means of achieving this identified in the “road map” was even more troubling: roughly 40 per cent revenue growth, including acquisitions, 30 per cent operating leverage and 30 per cent share buybacks. ...

    Moreover, although some buybacks create value for shareholders, many do not and are executed seemingly irrespective of the valuation of the shares. A company cannot create value for remaining shareholders if it pays more for the shares it buys than their intrinsic value, but many companies (and investors) are fooled by the familiar boast that buybacks are accretive to EPS. In an age where the alternative use of cash often generates little income because interest rates are close to zero, almost any alternative is accretive to EPS, but it does not necessarily create value.

    I found a five-year plan for significant share buybacks particularly disturbing. How can the management possibly know whether the shares will trade sufficiently below intrinsic value to create value enhancing buyback opportunities on such a scale and so far ahead?

    One other feature of IBM struck me in 2010 when my Fundsmith colleagues and I were reading the company’s 2009 annual report. We noticed that it had a $1.9bn error in its cash flow statement. We rang IBM to check that we were not misinterpreting it, and they confirmed we were correct and that we were the only people who had asked about it.

    Maybe others had discovered it and didn’t bother to call, but I suspect the reality is that very few investors or analysts read annual reports and 10k filings any more. The error was corrected in the 2010 annual report and did not materially affect my view of IBM, but it certainly affected my view of those who were analysing it.

  • Triangle Business Journal: IBM remains stingy on details regarding U.S. layoffs. By Lauren K. Ohnesorge. Excerpts: IBM still isn’t commenting on job cuts reportedly hitting its U.S. operations.

    But spokesperson Doug Shelton does have words on cuts reported in Europe and India.

    “IBM continues to rebalance its workforce to meet the changing requirements of its clients, and to pioneer new, high value segments of the IT industry,” he says, adding that Big Blue is positioning itself to lead in areas such as cloud, analytics and cognitive computing. And it’s those priority areas getting focus and investment. ...

    IBM employs more than 400,000 people worldwide, Shelton says. Ten thousand of those used to be in Research Triangle Park, at least in 2008 when the computer services firm released its last regional headcount. Since then, IBM has not provided an RTP update. Lee Conrad, spokesperson for Alliance@IBM, the union seeking to represent Big Blue, says it’s shrinking. ...

    IBM hasn’t offered specifics on either the number of jobs that were impacted in 2013 or those that will be impacted this year.

  • EE Times: Big blues at IBM India. By Sufia Tippu. Excerpts: In one of the largest-ever lay-off drive among global technology companies, IBM is said to have started cutting jobs globally on Wednesday, with first casualties in India.

    WRAL TechWire, a tech-related website, quoted IBM staffers in Bangalore as saying that “people broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands.” Unofficial estimates put the sacking number at around 1,000 in Bangalore alone. ...

    "STG Bangalore literally turned into a slaughter house today," Lee Conrad, national coordinator for Alliance@IBM, a union-backed workers group to The Economic Times in an email. "Several employees were called to a meeting and RA'd... and they were asked to vacate premises immediately. Severance package was on an average three months basic component of salary, which is like six weeks full pay," Conrad said.

    RA refers to 'resource action' that IBM's managers at various units were asked to prepare for, ahead of the job cuts, according to media reports in the US. "People broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands," according to the email. ...

    Although IBM has not confirmed the layoffs sources confirmed that hundreds of IBM staffers at its Bangalore office were asked to leave suddenly. Some of them, it is said, were given just a couple of hours notice and asked to leave behind their laptops and vacate the premises pronto, said the DNA newspaper. ...

    In India, IBM has a head count of over 130,000, its largest presence outside the US. ...

    Currently the talk among recruitment experts is that IBM may be targeting up to 2,000 job cuts in India though nobody is confirming this figure yet. ...

    The layoff count as off Thursday evening as compiled by the Alliance based on reports from workers and affiliated unions in Europe:

    • Belgium, 105
    • Argentina, 600
    • Brazil, 1500
    • Netherlands, 240
    • Norway, 35
    • France, 480
    • Italy, 430...

    If IBM cuts follow a similar plan as implemented in 2013, some 13,000 layoffs across its workforce of more than 434,000 are expected. That 2013 plan led to hundreds of layoffs in North Carolina and about 3,500 across North America, based on documents and sources. IBM still employs about 9,500 people across North Carolina. ...

    “Hundreds of us have left our cities and made Bangalore our home because we were employed by IBM here. IBM was such a well-reputed company and we were so proud to work here. There are several premises where IBM operates in and each has become a landmark in the city. Tell an auto rickshaw driver that some address is near the IBM building in say, Bannerghata or Hebbal, he takes us unerringly to the correct address. Our parents are also so shocked at this turn of events” said another young IBMer, who came from Kolkatta. ...

    When contacted by PTI, an IBM India spokesperson said, "As reported in our recent earnings briefing, IBM continues to rebalance its workforce to meet the changing requirements of its clients and to pioneer new, high value segments of the IT industry."

  • DNA (New Delhi, India): Tax evasion - IBM India told to cough up Rs5,357cr. By Gangadhar Patil. Excerpts: n what may well be one of the biggest cases of corporate tax evasion, the income-tax department has served a demand notice to IT multinational IBM India, asking it to pay income tax to the tune of Rs5,357 crore. The October 28 notice followed a detailed investigation during which the department found that IBM India had suppressed revenue to evade tax under the export promotion scheme of the Software Technology Park of India (STPI). ...

    Following the Karnataka high court order, the department carried out a deeper probe and noticed that IBM India had made “incorrect claims”. In its tax return for the financial year 2008-09, IBM India claimed a loss of Rs400 crore. But the income tax department found that the company suppressed an income of Rs7,288 crore in 2008-09. IBM India’s total income for 2008-09, according to the tax department, was Rs 10,866 crore (counting the suppressed component). The company claimed tax benefits u/s 10A and 10AA for 2008-09, but has consistently failed to produce records to show income from software exports to justify the exemption claim, according to the demand notice.

  • The Journal News (Westchester, Rockland, and Putnam counties, NY): Big Blue's small taxes: Report says IBM pays far less than corporate rate. But tactics are legal, typical among U.S. multinationals. By Brian Tumulty. Excerpts: A new report that finds IBM Corp. paid far less than the 35 percent corporate tax rate over 12 years is no surprise to tax experts who say that’s legal and common among U.S. multinational firms.

    According to the report from Citizens for Tax Justice, IBM paid an effective corporate tax rate of 5.2 percent between 2001 and 2012. The group released its analysis after Bloomberg News published a story this month about IBM’s offshore tax strategies. ...

    Bloomberg’s story reported that IBM’s tax rate fell in 12 of the past 14 years. It said IBM used a Dutch firm — IBM International Group BV — as a holding company for 40 subsidiaries with 205,000 of its worldwide employees. ...

    “Congress has your taxes taken out of your paycheck before you get the money,” he said. “But multinational companies can pay their taxes decades into the future by siphoning profits out of the U.S. with accounting devices. If you consider the time value of the money, many companies actually turn a profit on their income taxes.” ...

    IBM has been under fire from some labor and advocacy groups in New York for recent layoffs in the Hudson Valley and for long-term workforce downsizing over the past 20 years. At one time, the company was the largest private employer in the state.

    Between 2000 and 2013, IBM received $880 million in tax breaks from state and local governments, mostly via industrial development agencies, to expand operations in New York, said the Washington-based group Good Jobs First.

  • Seeking Alpha: Cisco Is Better Than IBM. Excerpts: In the past year, two companies have been singled out as legacy tech bellwethers struggling to adapt to a shifting landscape: Cisco Systems and International Business Machines. As the following chart shows, shares have dramatically underperformed the broader market over the past year with worsening performance over the past six months. While these firms do face challenges, it isn't all bad news. As has been said many times, a CIO has never been fired for hiring IBM. Of these two struggling companies, only one makes sense in your portfolio. In this article, I will explore each company's operating performance, financial strength and valuation to explain why investors should buy CSCO and sell IBM.

    For several years, IBM has been struggling with stagnating revenue, though a movement into higher margin businesses has helped to offset some of this problem. For instance, in the last quarter, revenue dropped 5% and missed street estimates by $550 million, but operating income grew 8% while EPS of $6.13 actually bested estimates. However if you look closer at the results, investors will note that the company's effective tax fell to 11.2% from last year's 25.5%. Normalizing taxes for favorable one-time items, operating income would have been $1 billion lower or about 8% lower year on year, and EPS would have fallen 3% despite significant buyback activity.

    Gross margins are relatively mixed at IBM. On a GAAP basis, they were down 0.1% to 51.7%, though they were up 0.3% on a non-GAAP basis. SG&A and R&D spending are also accounting for a larger percentage of revenue, and IBM has been cutting headcount to cut expenses. For all of 2013, revenue fell 4.6%. IBM is trying to push into cloud technology and services and is betting big on Watson. It is a cloud computing system that learns from new data and has been useful in diagnosing diseases at hospitals. IBM is trying to push Watson solutions throughout the business world. The company is hoping Watson can generate $10 billion in revenue within a decade, compared to the $100 million it currently generates. ...

    IBM is trying to figure out a way to grow Watson 100 fold over 10 years, which is a herculean objective. For a company that hasn't grown revenue in five years, that task may very well prove impossible. It also shows the challenge IBM's size poses. Even if it hit this target, Watson would only boost revenue by $10 billion in 2023 while the company generates over $100 billion today, meaning less than 1% annual growth. With current downward trends in IBM's revenue from existing business, IBM could very well have less revenue a decade from now than it does today even if Watson were to hit the target. To be truly successful, IBM will need to deliver three or four Watson sized successes. With less than $100 million in revenue, it looks like IBM could fail to deliver one.

  • Seeking Alpha: Is The Market Right About Discounting IBM? By Jacob Steinberg. Excerpts: IBM's year-to-year revenue decline caused a lot of concerns in the market and many investors are wondering if the company will continue to see growth in the near future. For the last 20 years, IBM has been focusing on products and services with higher margins rather than high revenues, but this practice proved troublesome for the company in emerging markets where local companies rely on cheaper service providers. Furthermore, IBM was hit by the recent strength of the US dollar compared to the currencies in many developing countries. These days, developing markets are a huge theme for the investors and if a company fails to post revenue growth in countries like China, investors tend to write it off as dead.

    It looks like IBM will continue to cut costs by reducing its headcount and utilizing other means. This is another thing the market doesn't like. If a company is in a lay-off mode, the market will assume that it is in deep trouble even if the trouble might not be as big. For years, the investors punished companies like Cisco despite strong results partly because these companies were always in a lay-off mode. IBM coupled laying-off employees periodically with acquiring a bunch of smaller companies in order to grow its revenues while cutting operating costs. This strategy resulted in limited success and the company added a lot of debt to its balance sheet. The company's insistence on a strategy with limited success also continues to scare off many investors. ...

    Yes, IBM keeps buying shares back in order to boost its earnings per share figures, but, what's wrong with that? As long as the company continues with this practice, each share becomes more valuable and even if the company posts no growth in the short term, each share will represent more earnings. The chart below shows the share count of IBM during the last 30 years. Notice the sharp decline in the company's share count after 1995. There are very few companies in the market that are as aggressive as IBM when it comes to buying its shares back. I should add a word of caution though: when a company buys its shares back aggressively, it can tell us both positive and negative things. On the positive side, it can tell us that the company's management thinks that the shares are very cheap and investors should be rewarded. On the positive side, it can tell us that the management doesn't invest the company's money into organic growth but rather financial engineering. In either case, each share is getting more valuable each year because there are less shares to go around.

  • CNN/Money: IBM Watson chief departs to join Silicon Valley venture fund. Three years ago, IBM's Watson made its public debut on the television game show Jeopardy!, where it beat its human competition. Since then, the game show-playing supercomputer has branched out to other pursuits -- trying to serve the more serious needs of the health care and financial services industries, for example. Now, one of its biggest advocates is branching out, too.

    Manoj Saxena, the former general manager of IBM's Watson Solutions, led commercialization efforts of the company's once-gimmicky machine. Fortune has learned that the executive (and former startup founder) has left IBM to join The Entrepreneur's Fund, a Silicon Valley-based venture firm that primarily invests in early-stage enterprise software companies. Naturally, Saxena will be leading investments in so-called cognitive computing apps, especially those built on the Watson data analytics platform. ...

    IBM continues to have big hopes for Watson. Just last month, the company announced it would invest more than $1 billion to create the Watson Group, dedicating 2,000 employees to commercializing the technology. Last November, it opened up its "Watson Developers Cloud," giving third parties access to its software development tools. And CEO Ginni Rometty has said the technology will usher in a new era of computing -- yes, one as big as mainframes and PCs.

    But unlike platforms like Google's Android or Apple's iOS, IBM's Watson will likely take many more years to become mainstream, if it ever does. Just "teaching" Watson -- a.k.a. feeding it mountains of data -- can be costly and time-consuming. With that said, funds that focus heavily on investing in these kinds of applications should help speed things along. (Kleiner Perkins Caufield & Byers' iFund, a $100 million fund focused on investing in iPhone apps, certainly didn't hurt Apple's ecosystem when it launched back in 2008.)

  • Glassdoor IBM reviews. Selected reviews follow:
    • Fear and Loathing - If You Think its a Great Place Work you must be A Salesman” Support (Current Employee). I have been working at IBM full-time for more than 10 years. Pros: Some of the staff are technically brilliant and working with them you learn a great deal. Leave for health issues is very generous.

      Cons: Global delivery staff from third world countries are often inept and do not do their jobs, meaning that we have to do the 'heavy lifting' on their behalf. Their is a culture of fear as to who will be the next to be cut. Salaries tend to be static, even if you take more responsibility.

      Advice to Senior Management: Staff have no respect for you or understanding of your plans. You 'rule' with fear.

    • Shareholder friendly - Employee unfriendly” Anonymous Employee (Former Employee). I worked at IBM for more than 5 years. Pros: Focus on overall growth markets (like shedding PC/server divisions and focus on services).

      Cons: 1) No sustainable growth strategies. Focus only on lowering cost but not on increasing value/revenue. 2) Regular layoffs resulting in poor employee morale. 3) Talented employees moving on leading to regular attrition of knowledge base and talent. 4) No exciting projects or technologies that compete with other innovative tech firms. 5) A company culture that seems to be steeped in bureaucracies and "processes" 6) Average employee is underpaid compared to similar level employees in other firms at the same locations.

    • Used to be great...” Staff Software Engineer (Former Employee), Austin, TX. I worked at IBM full-time for more than 10 years. Pros: I hear some people get paid well, that was not the case for me.

      Cons: In the 12 years I was at IBM, the company changed drastically. It started with little things (no more free lunches, etc.) and eventually ended with major changes (401K), which mostly affected us blue collar workers. The morale after the summer 2013 layoffs was infectious and I honestly hated going to work. I combated this by just working from home, but in the end I just saw too many people who didn't care anymore.

      A lot of people had and still have the "I'm waiting for my [severance] package" mentality, which I will admit, I had for some time as well. I also saw many friends who were laid off, struggle to find jobs and that really bothered me. I spent the better part of six months studying and applying for jobs outside of IBM. I frequently encountered negative comments and stereotypes about IBMers from recruiters, HR personnel, and other engineers.

      Unfortunately, regardless of your skill set there is a general pessimism towards IBMers. I think the longer your tenure at any company, the more skepticism people will have towards your skill set. Looking back I think I thought the severance package was worth waiting for mainly because I had started to believe what some managers at IBM had instilled in me: fear and self-doubt. Many times when I complained about pay, bonus money, or ratings, I got the good old "you should be happy you have a job". The last one my manager gave me was "IBM offers a lot of flexibility for you and your family".

      It is not IBM's responsibility to keep you skilled, but it's usually good question to ask yourself: can this job/company help me grow professionally? I feel pretty blessed that I left and I think it was a smart move emotionally and professionally. I have encouraged friends to leave as well, but for some that just seems impossible.

      Advice to Senior Management: I don't think you can right the ship, there are just too many messed up things going on there. I hope the best for all IBMers and hope that I am wrong about IBM. Good Luck IBMers.

    • Not what I would call a good job” Applications Developer (Current Employee), East Lansing, MI. I have been working at IBM full-time for more than a year. Pros: Work/life flexibility and working from home on some days. 3 weeks of vacation after a year. Smart and industrious work force. And you can't beat the brand recognition.

      Cons: The pay is very low. Management only stresses billable hours. If I were to take my 3 weeks of vacation I would be subject to punishment for not meeting my 95% utilization target for billable hours. You are not likely to do the job they hired you in for. My title is application developer, that is what I hired in for, but I don't do that at all and never have during my time with the company (I have been with IBM for 1 year and 1 month and I write this after I have placed my 2 week notice but still currently employed by them). Many people have been forced into testing positions who were hired as application developers.

      Advice to Senior Management: Please work on the job descriptions and improve them. Consult more with your employees. The reality is many of them are looking for jobs right now and want out. Pay the employees more, put those you hired as application developers into application developer roles.

    • Once great company plundered into mediocrity” IT Architect (Current Employee). I have been working at IBM full-time for more than 10 years. Pros: I've worked with some of the most intelligent and dedicated individuals in the IT industry. Unfortunately, many have moved on to better companies.

      Cons: Employees are treated as commodities. No respect for the individual. Constant threat of layoffs. Salary targets are below industry average. Extremely low employee morale.

      Advice to Senior Management: Get your act together before you're left with a board of directors and no employees. Unless that is your goal.

    • CbD Program: dishonesty, poor management, little challenge.” CbD Consultant (Current Employee). I have been working at IBM full-time for more than a year. Pros: Ability to work from home, travel perks, network with many people and external clients.

      Cons: Very poor management; no one knows what you are doing. Typical "CbDers" were lucky to speak with their managers twice a year, of whom were managing 100+ individuals. Your performance is measured entirely on what you say you did at the end of the year.

      To be blunt, the company was dishonest about what the CbD program is. The program marketed itself as "strategy & transformation" roles. In reality, the only projects myself or other CbDer's found themselves on were IT implementation projects, which offered little challenge.

      IBM's recent marketing campaigns claim the company is involved in analytics, mobile, cloud and social media work. I saw nor heard of any real projects in these fields. These appear to be areas IBM would like to be involved in, but hasn't yet been able to figure out how to do so. It's easy to see right through their fancy marketing after working for IBM.

    • “Sinking ship” Senior Software Engineer (Current Employee), Durham, NC. I have been working at IBM full-time for more than 10 years. Pros: IBM has/had a lot of great people who have passion for their work. IBM is great at acquiring college talent via their Extreme Blue program but they cannot retain it. Very flexible with work location and hours.

      Cons: IBM's 2015 stock plan has resulted in cutting top technical talent. Executives are so focused on short-term earnings that they have sacrificed the future. Innovation has ground to a halt and most divisions are struggling to find the next big product. Without a major change in leadership, the company is going to sink. Top performers (top ~10%) were not given a raise two years in a row, sending a very clear message that talent can go elsewhere.

      Over the last five years, here are some of the "savings" that were enacted: taking away free coffee, the "adopt a plant" initiative and removal of individual trash cans to minimize housekeeping costs, elimination of employee services and education center. Worst of all, our 401k was changed to only vest in one lump sum at the end of the year instead of per paycheck. If you leave before December, you lose anything you would have received. They will slash anything or anyone regardless of the bigger picture. It is very difficult to move internally and the employee rating system is broken.

      Advice to Senior Management: Can the 2015 plan. Bring in a new CEO from the outside to clean house and focus on R&D again.

    • Great place to gain experience and learn from seasoned researchers and engineers” Staff Software Engineer (Former Employee), San Jose, CA. I worked at IBM part-time for more than 10 years. Pros: I worked and IBM research and it was a place for great minds to meet. The environment was conducive to challenging yourself and to excel at whatever you did. The possibilities were limitless.

      Cons: IBM is a large company and no mater what you did it did not seem to impact the company much.

      Advice to Senior Management: Spinning of groups to work as almost a separate business unit gave the groups a lot of autonomy and a sense of accomplishment when success metrics were setup just for that group.

    • Stressful beyond any normal work conditions, overworked, excessive hours, mandatory travel weekly, management bullying.” Advisory Software Engineer (Former Employee), Boulder, CO. I worked at IBM full-time for more than 10 years.

      Pros: In the beginning it is a great opportunity to grow within the company. Also, in the beginning wonderful benefits for health and pension, 401k, etc.

      Cons: Many benefits reduced, pensions taken away. Advancement diminished, layoffs every year, only to hire new, inexperienced employees or worse move jobs to other countries and layoff US employees after 20-30 years of experience. Excessive work hours mandatory, averaging 60 or more hours per week with no compensation for salaried employees. Mandatory travel, even when you live within 10 minutes of a site location! Mandatory travel, meant on a plane weekly, home on weekends only. Management bullied employees, forced early retirement, health risks due to excessive stress.

      Advice to Senior Management: Treat employees with respect, positive reinforcement, realistic hours and work location. Allow employees to become the expert in their position, before moving them around to just fill projects with bodies and expect immediate performance. Stop threatening employees about being replaced with off shore work force. We are humans with families, not machines!

    • IBM is over rated and under served” Anonymous Employee (Former Employee). I worked at IBM full-time for more than a year. Pros: Decent salary. Hiring process was easy, too easy. Job didn't turn out to be as described, product was deficient, sales materials were poor.

      Cons: Management doesn't have a clue how to motivate. Leadership is lacking. Old guard is only concerned with keeping their job, not in advancing yours. Every time you need a support resource the finger pointing starts. Managers preside over individuals who know far more than their managers

      Advice to Senior Management: Need better evaluations of old managers who aren't productive and can't mentor.

    • Great group of people, little motivation to excel” Management (Former Employee), Markham, ON (Canada). I worked at IBM full-time for more than 5 years. Pros: Working from home was a definite advantage for me as could avoid the commute. The majority of the people encountered were great, professional and hardworking individuals striving for the best for the customers.

      Cons: Little incentive or motivation to work hard and do well...lots of employees were successful on doing the minimum whilst others worked hard and extensive hours for little or no recognition. Lots of talk about the ability to have additional training, but no opportunity provided for this.

      Advice to Senior Management: Listen to your staff and allow them creativity to develop/design something new.

    • Had many different jobs within IBM in almost 27 years at the company.” Senior Manager (Current Employee), Rochester, MN. I have been working at IBM full-time for more than 10 years. Pros: You can get plenty of independence and responsibility, and great people to work with.

      Cons: There are fewer great people left - many are voluntarily leaving for more money/less stress. Decreasing staffing, increasing workload, and disconnected management can make the days very long.

      Advice to Senior Management: People join companies, but they leave managers. Your line management team is overwhelmed with too many direct reports (I know of 1st lines with 40+ direct reports) and too much individual responsibility. Coaching and mentoring is suffering woefully, leading to increasing retention problems. Take action now to reduce the span of control and demonstrate that you truly value line management as professionals who develop what you state is the companies greatest asset - its people.

  • Glassdoor IBM Canada reviews

  • Alliance for Retired Americans Friday Alert. This week's topics include:
    • President Obama Takes the Chained CPI out of his Fiscal 2015 Budget
    • Volkswagen Workers in Tennessee Narrowly Vote not to Unionize
    • “Doc Fix” is in the Works, but it may not be a Reason to Celebrate
    • Listen to the Alliance Point of View on Labor Radio
    • Come to the Alliance’s Convention, April 28 – May 1, 2014, at Bally's Hotel Las Vegas
  • Washington Post: They quit their jobs, thanks to health-care law. By Sandhya Somashekhar. Excerpts: Count Polly Lower among those who quit their jobs because of the health-care law.

    It happened in September, when her boss abruptly changed her job description. She went from doing payroll, which she liked, to working on her boss’s schedule, which she loathed. At another time, she might have had to grit her teeth and accept the new position because she needed the health benefits.

    But with the health-care law soon to take effect, she simply resigned — and hasn’t looked back.

    “It was wonderful. It was very freeing,” said Lower, 56, of Bourbon, Ind., who is now babysitting her 5-year-old granddaughter full time. With the help of federal subsidies that kicked in Jan. 1, she is paying less than $500 a month for health coverage for herself and her husband. ...

    But they called the impact positive, arguing that people have for too long been stuck in jobs that are a poor fit or that they dislike, simply for the benefits. While some people may make the calculation to just work less to keep more generous benefits, many will use their time to do something more productive, such as start their own business or take care of family members, advocates of the new law say.

New on the Alliance@IBM Site

Job Cut Reports

  • Comment 02/17/14: I'm pretty sure the reviews on glassdoor.com are planted by HR or management. I don't see, how given the current turmoil, the CEO can have a >50% approval rating, and >50% company recommendation. Many of the recent reviews read suspiciously. -Anonymous Coward-
  • Comment 02/17/14: RE: -Anonymous Coward- - Yes, I cannot fathom what planet those Glassdoor reviews come from. They either have to be brand new, new hires, or fake posts by HR to make working for IBM look palatable. -robot-glassdoor-poster-#2134-
  • Comment 02/17/14: IBM UK is losing hundreds of jobs this quarter through voluntary separation, which will go involuntary if not enough volunteers. All divisions affected, ISC, GTS, S&D, etc. This after the sale of its global BTO CRM business, and sale x86 to Lenovo,hundreds more out the door, well done again IBM execs! your 2015 strategy is working. -anonymous-
  • Comment 02/17/14: I'm curious if IBM still recruits at US college campuses. Even more curiously, I wonder if they use the blatantly fraudulent pay range charts to entice recruits. -Jeff Johnson-
  • Comment 02/17/14: IBM Rational India also RA'd a hell lot of people yesterday. But unlike the STG employees who were given just 2 hours these people have been informed in advance about the layoffs. -IBMRational-
  • Comment 02/18/14: I worked for IBM Research for many years, and left a couple of years ago to another industrial research lab. On a side note, I can only say that this was the best decision I made in my career. Most of the researchers I know (especially those who worked at Research in its heyday) treat IBM as a dead end these days. I used to get IBMers CVs with lists of papers and patents, and usually did my best to help them in my current job. Recently, they're full of press releases, instead. As a bit of friendly advice: Please don't include these. They look bad, and only make it hard for us who want to help fellow IBMers. Remember, in places that still do research, only academic publications count. -Former IBMer-
  • Comment 02/18/14: We still stand in solidarity with out global IBMers in Canada, Australia, European countries, China, and South America, and now especially in India with the massive disrespectful and undignified RA firings. The Alliance has made it clear it wants to stop further RAs not only in the USA but ANYWHERE IBM employees are! If we helped in Bangalore stave ONE IBM employee's job we are proving our actions are working. We just NEED MORE TO JOIN our cause: here in the USA and in other countries. Strength is in numbers/members. -IBMUnionYES-
  • Comment 02/18/14: Heard from manager that China STG cuts will be announced tonight (Wednesday there). No information/comment on whether US STG will also be tomorrow. -If you can dodge a wrench-
  • Comment 02/18/14: Rumour has it the Australian redundancies expected either this week or next. Pay outs expected to be less than previous years. Management ordered to get a set number of people off the books by 31st March. All brands. This despite new managers re-locating to Australia (at great cost!) to take up new roles (instead of putting locals in to the jobs). Existing bad managers getting their own cronies in because they are Yes men. -GoingGoingGone-
  • Comment 02/18/14: The RA started in Mexico on Feb 17th, the is a rumor saying 300 will be out -vigilant-
  • Comment 02/18/14: RAs in Brazil, full power, so far about 400, mostly PBC 3 in Technical areas, and any in Manager area (BDM, SDM, TPM and Ms). -anonymous-
  • Comment 02/18/14: IBM India SWG Rational labs shootout news==100 out of 300 engineers flushed out of IBM building in waves of tears.....The remaining are support staff and key developers. Basically IBM SWG Rational India and products are busted lock-stock-n-barrel. -blindIBM-
  • Comment 02/19/14: Flash news: Second wave of RAs in STG India will start in second quarter ..June 2014 and Mgrs are busy as ever preparing the list .. -STG India-
  • Comment 02/19/14: China is now the go to exploitation target for tech and US corporations. I know a lot of our development has gone to China from the US. Africa is on the frontier for re-exploitation after China. After that it will come back to the US. By then US will become attractive again. It is already happening in manufacturing as it is coming back to the US. As you can see, you cannot rest on your laurels and plan your life around US corps. At least in India this will help reduce the crushing inflation on the working classes as they had to compete with overpaid, surly tech workers amongst them and possibly bring religion and Zen back into Indian life as US corps exit. Bangalore a once beautiful and temperate British hill station for the hot months, has now seen its 300 year old trees destroyed and reduce into a cramped ugly metropolis. Hopefully the tech workers will leave Bangalore and move to Beijing and Bangalore will come back to its original inhabitants. -dd-
  • Comment 02/19/14: If they are making massive cuts in India, China and Brazil I would suspect there are far more than 15K overall worldwide being cut. The cost and savings to IBM to layoff somebody in those countries is much lower than the cost in the US because their wages and burden rates are much lower than a US, Western European or Australian employee. Add this 15K + number to probably 50% of the current STG X-series team that Lenovo will not offer positions to and there will be well over 20K road killed by IBM one way or the other very shortly. -longtimebeemer-
  • Comment 02/19/14: China STG RAs is confirmed. I work with a few teams in China. Some of the teams were all cut. So far, the number I have gathered from the teams that I work with 23 out of 33 will be gone in 2 days. Waiting to see next week US STG. -Anon-
  • Comment 02/19/14: Today Mexico GDL site started with the RA -Anonymous-
  • Comment 02/19/14: In Brazil, many former Blue Harmony team members are being fired, just because they had the "bad luck" of not having allocation at this exact month, no matter how they contributed in the past, or how much they would be able to contribute in the future. What a short term management "strategy" ! Managers seem to be acting in "despair mode". -Anonymous-
  • Comment 02/20/14: To all those top performers (PBC 1) Ginni promised a 6% bonus, well she just changed her mind. Nothing, nada, zero and as for a pay raise for PBC 1s, well good luck, it's based on your band level and what point you are / market value etc, same old BS song and dance they give us year after. -Anon-
  • Comment 02/20/14: Getting conflicting info regarding the 6% bonus for top performers. Some teams hearing they will get it. others stating No GDP for anyone.. -Anon-
  • Comment 02/20/14: In Brazil, we heard about 400 to 1,500 employees being or to be fired (from a total of around 20,000 employees). This week, each day I come to the office I hear about at least 2 or 3 people I know that have been fired (from GBS, SO Delivery, etc.). Some of them use to have a good performance, were very dedicated and honest and had a friendly attitude to all their colleagues, were working in IBM for more than 10 years (some of them for 30 or 40 years !), many in their late 40s to early 60s, some managers (even 2nd lines). I mean, I am shocked that IBM is firing very good and decent people, dedicated employees, only to save some money... -Anonymous-
  • Comment 02/20/14: In preparation for upcoming layoffs in the U.S., does anyone know how our health coverage might be positively impacted by the Affordable Care Act (ACA, aka "Obamacare")? I am theorizing that post-layoff we would now be eligible for unemployment benefits as well as full ACA benefits at no cost? If not currently in need of superior medical care (i.e. working through a current medical condition), it seems like paying $$$ for COBRA would be a waste. I'm curious for the opinions or findings of those who have explored this topic further. Good luck too all in the next few weeks, and thanks for Alliance for making this public forum available. -Anonymous-
  • Comment 02/20/14: To all those top performers (PBC 1) Ginni promised a 6% bonus, well she just changed her mind. Nothing, nada, zero and as for a pay raise for PBC 1s, well good luck, it's based on your band level and what point you are / market value etc, same old BS song and dance they give us year after. -Anon- -Anon- LOL. Me thinks Ginni will be sacked by the board before she pulls a Carly Fiorina on IBM and takes it to the brink. Ginni seems to be, in over her head. I remember her Think40 challenge to endeavour to spend 40 hours educating your self. Well it was all lip service from above because the program had no money set aside or teeth and the managers were not mandated to help workers to participate in the program. Much of it was you using your own private time and/or money going on the Web and educating yourself. It was a scam and is a proof of IBM's disinvestment in its employees as it funnels more of the profits to Wall Street scum. -another anon-
  • Comment 02/21/14: Confirmed RA in IBM Malaysia, which happened 2 days ago. Around 100+ employees were fired. There is speculation that another round of RA will happen soon. -disappointed-
  • Comment 02/21/14: Does anyone have any news on upcoming redundancies in Australia? I know of GMU folks based in Oz who are going - but no word yet for us local employees. Been over 20 years and I've never seen morale so bad as it is at the moment. My advice to anyone with any marketable skills - get out while you can, I've tested the market and I can tell you having IBM on your resume is now seen as a *negative*. Remember - as the old song says "There is Power in a Union". -Ozzie-
  • Comment 02/21/14: I have gone up two levels and to ask for a package if RA's are coming to my segment. I've had very positive interactions with companies that concentrate on customer value, innovation and product engineering rather than short term financial engineering. I'm hopeful that outside IBM, things are much better. All the real talent that I worked with have already left IBM. There's a perception that the only reason anyone is still here is that they can't find another job. There is no passion for IBM and what they do. IBM markets to its employees as if they are customers. Look at Ginni's 2014 speech; it was nothing but propaganda. How the CFO can publicly say that $1B is put aside for layoffs and a few days later the CEO fail to even mention it in a ~30min all-hands talk is beyond insane to me. IBM treats their employees as if they were retarded children. -Exit stage right-
  • Comment 02/21/14: -Anonymous- Regarding the ACA. There are calculators available for you to use to estimate what your insurance costs would be based on your location etc. They use the Modified AGI to calculate how much money you will make in 2014. I am not sure if the separation pay is included but I assume it is because it is taxable. If you live in a state where you can collect unemployment, that will also be taxable and included in the MAGI. If you also include 3 months of income you received before being laid off, I doubt you would be eligible for much of a subsidy in 2014. If you are still unemployed or working part time in 2015, it would be more likely to help you. -longtimebeemer-
  • Comment 02/21/14: IBM has laid off more than one third of it's US employees over the last 5 years while growing the workforce overseas. Why does the media ignore this? -Anonymous-
  • Comment 02/21/14: To all those top performers (PBC 1) Ginni promised a 6% bonus, well she just changed her mind. Has this been verified on VT or anywhere? -whowantsmyshares-
  • Comment 02/22/14: In regards to the Stock Awards IBM gave the Employee's for making the 2010 Roadmap. The Award was given on 06/16/2011. 7 Restricted Stock Units ( RSU's). The Award does NOT Vest until 12/01/2015. So the bottom line is: If you are not Employed on 12/01/2015...You Get NOTHING! This is the excerpt from the Awards Document:
    Termination of Employment: In the event you cease to be an employee (other than on account of death or becoming disabled as described in Section 12 of the Plan) prior to the Vesting Date(s) set in your Equity Award Agreement, all then unvested RSUs under your Award shall be canceled.
  • Comment 02/22/14: To -whowantsmyshares- The 6% bonus is confirmed, PBC 1s will get it. FYI - some managers was informed that no GDP for anyone, others heard differently. -Anonymous-
  • Comment 02/22/14: Surprised that PWC has not issued a "going concern" letter. With all of the creative accounting methods meant to bamboozle investors, its a wonder their independent auditor has not resigned. Prediction: we'll watch IBMs demise in a future episode of American Greed. -GreedWontWin-
  • Comment 02/22/14: "IBM has laid off more than one third of it's US employees over the last 5 years while growing the workforce overseas. Why does the media ignore this?" Because IBM can. Because IBM can see to it. Because IBM can stop reporting USA employee counts and still get tax breaks based on job numbers, retention, and job creation they don't reveal. IBM still has billion$ of $$$ to influence and even threaten the media and keep it largely out of the big news markets. Some news does get out to news outlets but it is sporadic and limited. IBM is basically buying out the big news media and the State and local county government economic development agencies. -anonymous2-
  • Comment 02/22/14: People need to stop scaring others about reduced severance. There is no proof of that, plus in Canada you're entitled to one week pay per year worked regardless of PBC. Plus you're also suppose to be given 2 weeks notice per year worked so if anyone actually fought it you would get 3 weeks pay per year worked but no one does and they take the 2 weeks. Ibm is actually saving $$ on the two weeks. Only way you would get nothing is if you're a contractor, you quit or got fired. -whatever- Alliance reply: There is no guarantee of severance pay in the US: https://www.ohiobar.org/forpublic/resources/lawyoucanuse/pages/lawyoucanuse-182.aspx
If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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