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Highlights—April 19, 2014

  • Uni Global Union:

    IBM unions agree new global strategy to fight job cuts.


    Excerpts: The Global Union Alliance @IBM, alongside UNI Global Union, IndustriALL Global Union and IndustriAll European Trade Union, will issue a series of demands to IBM management designed to protect the firm’s loyal workforce at a time of huge upheaval for IBMers.

    The demands include:

    • A company strategy focused not solely on earnings per share but also on the appreciation of IBMers’ contribution to the cause.
    • Improved working conditions, fair evaluation systems and appropriate participation of all IBMers in the success of the corporation by salary increases and other benefits for its employees.
    • Worldwide recognition of trade unions as partners in social dialogue and partners for collective agreements. ...

    Since the announcement of IBM strategies known as “Roadmaps” in 2010 and 2015, unions say the company has mutated into a machine focused solely on profit. Earnings-per-share became the corporation’s most important goal and a lack of appreciation of its own workers now threatens to undermine the corporation from the inside out. ...

    Since launching its so called "workforce rebalancing" drive in which thousands of jobs are expected to go, IBM has played down the importance of its own employees. The global workforce policy of IBM is increasingly focused on reduction resulting in a lack of motivation and a climate of fear in the workplace.

    “The IBM Global Union Alliance is saying to IBM that you need to treat us with respect, with dignity, and listen to employees when they discuss the situation within IBM. We want to make a better IBM, we want to make a better future for IBM employees worldwide,” said Lee Conrad, the long-time coordinator of the IBM Global Alliance.

  • Financial Times:

    IBM hit by costs of restructuring. By Hannah Kuchler. IBM suffered a more than 20 per cent fall in net income in the first quarter, as revenues slid and a massive restructuring programme cost the computing company almost $900m. ...

    The company spent $870m on restructuring its workforce as part of its plans to maintain earnings growth in the face of flagging revenues. It has not announced how many job cuts it expects in the US, the latest market to be hit by redundancies, but one analyst estimates it could be up to 13,000. ...

    It also repurchased shares worth $8.2bn, in a buyback that Martin Schoroeter, chief financial officer, explained would be loaded towards the front half of the year. For the full year, the company plans to spend a little less on buybacks than last year, he added.

  • New York Times:

    Profit and Revenue Slip at IBM as Hardware Sales Fall and Layoff Costs Rise. By Steve Lohr. Excerpts: IBM is investing heavily in the future. It has placed multibillion-dollar bets on businesses to deliver computing remotely over the Internet cloud, on sophisticated data-analysis software and on its Watson artificial-intelligence technology.

    But the giant technology company faces a classic bind: Can the new offerings grow fast enough to offset the erosion of its traditional hardware and software businesses?

    The company’s first-quarter results underline the challenge. The company reported on Wednesday that its profit fell and its revenue declined. It is the eighth consecutive quarter in which IBM’s revenue has slipped, with this quarter hit hard by a falloff in its hardware business. ...

    IBM’s quarterly profit was hurt by a charge of $870 million for the severance costs for workers who were laid off. Every year, the company, which employed more than 430,000 people worldwide at the end of 2013, sheds workers in markets and product areas that are declining and adds employees in other units. But the $870 million charge is high, and the company chose to take it all in the first quarter.

    IBM was also hurt by a slowdown in previously fast-growing markets abroad. Sales in China, for example, were off 20 percent. ...

    IBM has long said its business model is geared to deliver profit growth rather than sales growth. But investors, analysts say, are anxious to see signs of revenue growth, especially since cost-cutting and share repurchases have played a large role in IBM’s strong earnings performance in recent years. The first-quarter results, according to A. M. Sacconaghi, an analyst at Bernstein Research, only “amplified the existing concerns about the quality of I.B.M.’s earnings.”

  • The Street:

    Greenberg: Even the Analysts are 'Confused' by IBM. By Herb Greenberg. Excerpts: The analysts finally appear to have lost their patience with IBM. ...

    There was a time, not long ago, that the only thing IBM investors cared about was the company's ability to hit its made up "roadmap" target of non-GAAP $20 a share by 2015. It was a great investor relations marketing tool, but it also put the company under the gun to pull out all stops to make a silly number.

    Now, even though the company says it's still on target to get there, investors in recent quarters have become more focused on the quality of that number.

    After all, last quarter's revenue of $23.5 billion is pretty much flat with March 2010. Between here and there revenue was on a roller coaster, suggesting just how much IBM is really not growing.

    Just look at operating margins, which last quarter sank to 13.2% -- the lowest they've been since 2007. Put another way, just to keep the revenue from going even lower the company had to do quite a bit of wheeling and dealing with its customers, who increasingly are in the driver's seat. Schroeter pretty much said so himself, when he mentioned "substantial price pressure" in connection with IBM's global business services group.

    All of which gets back to the increasing irrelevance of that $20 roadmap target. It appears analysts are finally wising up and becoming more focused not just on the number, but the quality of the number. (Funny how that happens once a stock starts falling.) As Reitzes said in a post-earnings report, "Although IBM maintained its guidance for 'at least' $18 in non-GAAP EPS for FY14, the company really lowered its operating profit forecast for the year quite materially."

    In effect, he's calling out IBM for its numbers game-playing and says that IBM should "completely change its business model" and "abandon it's non-GAAP roadmap..." About time somebody said that.

    A selected reader comment follows:

    • IBM has a BIG flaw in their strategy that has NOTHING to do with the scholarly analysis of free cash flow etc. As others have said, it has been years and years and years of employee cutting, cost cutting, benefits cutting, stock buybacks with borrowed capital at the wrong time, FINANCIAL ENGINEERING, and a clear underemphasis on the so-called STABLE "developed markets" to grow the so-called ever increasing UNSTABLE "emerging markets" ONLY to focus on a profit target that has thoroughly backfired.

      In essence, the company has sacrificed employee morale, customer satisfaction, and revenue, ALL attributes that CANNOT be manipulated, for a profit target that CAN be TOTALLY manipulated.

      If it turns out that, from a geopolitical standpoint, the emerging markets (BRIC-lead countries) become unstable and less desirable economically speaking vs. the developed "Americas" market, then IBM is in VERY big trouble. What this means is that the strategy they have in place for almost 15 years is totally backward and they will be totally exposed in the emerging markets.

      We are already seeing this in the plunging sales in China, Russia, India, and soon to be Europe etc. while they will have to re-ramp up thousands of employees who have been let go in the Americas. As some have said, looks like it is not if, but when, the regime change is coming.

  • The Four Hundred:

    GlobalFoundries Is The Front Runner To Buy IBM Chip Biz. By Timothy Prickett Morgan. Excerpts: If the rumor mill is correct--and stories with concrete details that appear in the Wall Street Journal usually are--then it looks like IBM is one step closer to selling off its chip manufacturing business. And it looks like GlobalFoundries, the former chip-making arm of Advanced Micro Devices that is owned by the government of Abu Dhabi, is the front-runner to acquire the business. ...

    It is a tricky business, selling off IBM Microelectronics, as you can see. But once IBM lost the game console businesses of Microsoft and Sony to AMD, the fate of IBM Microelectronics was pretty much sealed, no matter how much extra business IBM might try to attract as an ARM chip or Power embedded chip maker. If IBM didn't buy something on the order of $14 billion in its own shares from Wall Street every year, it could easily indulge in chip manufacturing. Even after losing the game console business, IBM Microelectronics is still bringing in around $400 million in revenues per quarter, about 20 percent lower than it was at five years ago. The problem is that each node gets increasingly more costly to bring to market, and the move from 300 millimeter to 450 millimeter wafers is going to add further to development costs even if it will eventually drop the costs per chip.

    To make it plain and simple: IBM made the choice to put financial engineering ahead of real chip engineering, and now it is suffering the consequences. Now, Big Blue needs to find a buyer who will continue making its Power and System z chips and invest in the future to advance process technology. There is no question in my mind that IBM will prevail in this effort, but I think that if you look at the math of the deal very closely, with a wafer supply agreement that is inevitable between the buyer and Big Blue, you will see that it will all net out to a wash and IBM may end up paying slightly higher costs for each chip. But, it won't have what I presume is an unprofitable business dragging on its Systems and Technology Group business.

  • WCAX:

    Is IBM's future in Vermont uncertain? By Gina Bullard. Excerpt: According to the Wall Street Journal, GlobalFoundries has emerged as a leading buyer for IBM's semiconductor division. But what could that mean for the plant in Essex Junction?

    Reporter Gina Bullard spoke with the writer of the Wall Street Journal article, Spencer Ante. He says the sale could go through in the next couple of months and could include IBM facilities in Essex, Fishkill, N.Y., and Montreal. Ante predicts Fishkill is more likely to be sold than the Vermont plant because the Essex facility has older technology, but GlobalFoundries could be forced to buy it as part of the deal.

  • The Register:

    What's a right pain in the ASCII for IBM? Its own leech-like hardware biz. Keep your eyes on our cloud while we remove this pesky thing, say execs. By Jack Clark. Excerpts: IBM's total revenues for the quarter were $22.5bn, down four per cent on an annual basis and earnings-per-share are $2.54. This represented the eight consecutive quarter of declining sales for the venerable company.

    Though IBM met the expectations of beancounters polled by Yahoo! for earnings (though they were down 15 per cent year-over-year), its revenue missed Wall Street hopes of $22.91bn. ...

    The results show that hardware, as ever, is sucking profits out of the company and dragging down revenues. The division's revenue of $2.4bn was down 23 per cent year-on-year and around half off of the previous quarter's $4.3bn compared with a 2 per cent rise in IBM's other higher-margin Software ($5.7bn) and Services ($9.3bn) divisions. ...

    But as IBM grows some divisions it is pruning away at others. El Reg hears employee morale at the corporation is down following massive layoffs in Europe, India, and America in the last quarter.

  • Zerohedge.com:

    Big Blue: Stock Buyback Machine On Steroids. By Tyler Durden. Excerpts: The Fed’s financial repression policies destroy price discovery and honest capital markets. In the process these deformations turn financial markets into casinos and corporate executives into prevaricating gamblers. To be specific, most CEOs of the Fortune 500 are no longer running commercial businesses; they are in the stock-rigging game, harvesting a mother lode of stock option winnings as the go along. ...

    The poster boy for this deformation is IBM which for all intents and purposes has become a stock buyback machine on steroids. It had a bad hair day yesterday, reporting still another year/year decline in sales, but that goes right to the heart of the matter. During the last seven years IBM has been a stock traders dream, climbing an almost picture perfect chart from $94 per share in March 2007 to a recent peak of $212.

    But as shown below, those gains had nothing to do with what has been a historic ingredient of stock appreciation—-namely, expansion of its asset base and revenues. In fact, sales revenues in Q1 2014 clocked in at virtually the same number as Q1 2007...

    So how has IBM and its ilk achieved revenue-less earnings growth? After all, reported EPS has gone from about $7 per share to $15 during the period. The short answer is that its executives and board have utilized every accounting and financial engineering short-cut in the book to disguise an equity liquidation campaign as a splendid strategy for “growth”.

    During the 7-years ending in 2013 IBM booked about $100 billion in net income, and spent virtually every single penny on share buy backs. So the once and former king of the global high-tech industry had nothing better to do with its cash than shrink it equity base. Accordingly, its share count dropped by 20% over the period, thereby accounting for about 45% of its EPS growth. ...

    Coughing up rivers of cash was only one arrow in the quiver of IBM’s shareholder value enhancement strategy, however. Its lawyers and accountants weighed in smartly, too. During fiscal 2007 Big Blue’s tax rate was already low at 28%, but by dint of the best tax maneuvers money can buy, IBM’s tax provision dropped to just 15.5% last year. So if you hold constant IBM’s tax rate and share count at the 2007 level, EPS would have been about $9.50/share in 2013, not the $15 reported.

  • Reuters, courtesy of Yahoo! Finance:

    Mexican mobile phone operator sues IBM for $2.5 billion. By Nate Raymond. Excerpts: Mexican mobile phone operator Iusacell SA de CV sued IBM Corp on Wednesday, accusing the U.S. technology giant of making fraudulent representations that caused it to lose $2.5 billion in profits.

    The lawsuit, filed in federal district court in New York, centered on a contract that Iusacell said IBM induced it to enter into in Mexico.

    "Events subsequent to the execution of the agreement have revealed that IBM both knowingly misrepresented and wrongfully concealed from Iusacell material facts both before and during the parties' relationship," Iusacell said in the complaint.

    IBM said in a statement that the lawsuit was a "transparent attempt" by Iusacell, which is co-owned by media and retail mogul Ricardo Salinas' Grupo Salinas and broadcast giant Grupo Televisa, to avoid its contractual obligations. ...

    According to the lawsuit, Iusacell's management designed a plan to boost the market share and revenue of the company, which was then the third-largest mobile phone operator in Mexico.

    Doubtful its existing information technology systems could support the plan, Iusacell sought advice from IBM, the lawsuit said. Several pages of the complaint are then redacted, leaving it unclear what happened next.

    Iusacell, however, said in the lawsuit that IBM's capacity limits crippled its performance.

  • Seeking Alpha:

    Lacking Growth, IBM Is A Sell. Excerpts: On Wednesday afternoon, IBM reported first-quarter results that were roughly in line with analyst expectations (financial and operating data available here). However, some investors were expecting more, and shares dropped 4% in the after-hours session. Shares are sitting at roughly 10-month highs, so this quarter provided a solid opportunity for some profit taking. After reviewing the quarter, this action is fully merited, as IBM suffered a year-over-year decline in revenue for the eighth consecutive quarter. With limited growth prospects, IBM shares are fully valued at current levels, and investors should look elsewhere for value. ...

    In an order to grow EPS despite declining sales, IBM continues to aggressively repurchase its stock. The average diluted count was down by 82 million shares or 7.3% over the past twelve months. During the first quarter, IBM bought back stock at a blistering pace, spending $8.17 billion just in the quarter. The dividend also cost $990 in the quarter. Keep in mind, GAAP operating cash flow was only $3.3 billion, and first-quarter free cash flow was $631 million. As a consequence, cash on hand fell by about $1.3 billion, and total debt increased by about $4.3 billion.

  • The Register:

    El Reg drills into IBM: The storage biz's got that sinking feeling. How long before Blue Big HQ pulls the plug on the whole thing? By Chris Mellor. Excerpts: With the tremendous noise of chickens coming home to roost, IBM's first quarter storage revenues carried on crashing down with depressed revenues.

    Revenues from IBM's Systems and Technology unit (STG) were $2.39bn for the quarter, down 23 per cent compared to Q1 2013. ...

    IBM's storage business used to be a billion-dollar-a-quarter business. Now it's half that. How low does it have to go before IBM CEO Ginni Rometty decides enough is enough and there's no realistic prospect of salvation?

  • Kalcalist

    (Israel; translation from Hebrew to English courtesy of Google Translate): More Layoffs at IBM: Dozens laid off Haifa Labs. American computer giant has started round of layoffs in recent weeks the company's flagship facility in Israel, which employed about 500 scholars software and hardware. Estimated last summer also laid off 150 employees from the company's sales in Petah. By Tikva Assaf Gilad. Excerpts: The company relies more on products of acquired companies. Dismissal laboratories have probably three main reasons: cuts to global research division; decline in orders for laboratory products and growing reliance on products originating in companies being acquired by IBM, which reduces the dependence on the developed products in existing facilities. ...

    IBM Haifa Labs, run by Oded Cohen, are the company's largest outside the U.S.

  • Glassdoor IBM reviews. Selected reviews follow:
    • “Love has turned to hate, with due cause...”

      Senior IT Specialist (Current Employee), San Jose, CA. I have been working at IBM full-time for more than 10 years.

      Pros: I loved IBM when I first started working here years ago. But much of what I loved no longer exists — including respect for employees and trustworthy management and a fun working environment — yes, it was fun! However, the only benefit to working at IBM these days is the flexible work schedule and the ability to work from home.

      Cons: The constant layoffs (at least one or 2 RAs per year involving 3K to 5K US employees, each time, for 5 years now), and the various incentive programs to increase attrition make IBM an extremely dismal and demoralizing place to work. IBM has more recently stooped to increasing the quota percentage of negative appraisals across target organizations. These "3" appraisals identifying "lowest contributors" are a way of avoiding costly layoffs for which IBM annually takes a $1 billion restructuring charge. So, by falsely and unfairly identifying hard-working employees as "3" performers, IBM is able to force these people out without severance packages. These appraisals are not fair, and long-time, hard-working IBMers are being cheated out of their severance as those targeted for the "3" appraisal generally have enough years to collect the maximum 6 months severance through an RA.

      Advice to Senior Management: Stop the unfair, unjust, and unethical quota based distribution of "3" appraisals. We all understand that layoffs must occur due to business reasons, but it is unfair to cheat IBMers out of their severance packages by falsely accusing them of being low performers. Obviously, they are not low performers as all of the lower performers have been laid off. These are shameful and unethical practices.

    • “Accounting analyst”

      Accounting Analyst (Former Employee), New York, NY. I worked at IBM full-time for more than 5 years. Pros: Flexible schedule, nice peers if you are lucky, nice managers if you are lucky enough. Large company with more opportunity to grow. Cons: Bad compensation, bad experience with unreasonable managers. Constantly laid off. Working on the week ends. Advice to Senior Management: Employees would be considered most important value to the company. So please tread them nicely to trigger their passion to work and prompt their potential.
    • “Don't think IBM will help you in career progression”

      Project Manager (Former Employee), Sydney (Australia). I worked at IBM for more than 5 years.

      Pros: Access to the largest library of technical information. Depending on what account you work on, you may be exposed to interesting but not bleeding edge technology.

      Cons: No interest in allowing you to gain qualifications at IBM expense. You should plot your career progress yourself. Very bad managers are just moved around the organisation spreading their crap on others unfortunate to be on their team. Poor remuneration in relation to market rates.

      Advice to Senior Management: Get rid of bad managers and apologise to staff who have had to put up with them.

    • “Limited to administrative growth opportunities”

      Anonymous Employee (Current Employee), Boulder, CO. I have been working at IBM full-time for more than 5 years.

      Pros: Flexible work schedule; casual work environment; (with management support) it is easy to get involved in volunteering and community outreach initiatives; strong brand; mentoring placement.

      Cons: Very top-down management style, and low and mid-level management are unwilling to try new approaches (no matter how logically sound the suggestion is, change is viewed as a liability). Focus is on investment in emerging markets, and the focus in mature markets is on cost reduction. Although salaries are decently competitive, bonuses are not. Career growth opportunities are primarily administrative-based or in management.

      Advice to Senior Management: Reduce administrative tasks for technical staff, allowing them the time to apply high-level skills. Promote cross-training of early career IBMers immediately.

    • “Inside Dubuque delivery center!”

      Systems Administrator (Current Employee), Dubuque, IA. I have been working at IBM full-time for more than 5 years.

      Pros: Extremely diverse workforce! A very green workplace; friendly environment. Talented people to work with and know.

      Cons: Dubuque is a terrible place for people of color. Not much work/life balance for people in technical roles; chronic burnout. Overtime slashed for three consecutive quarters now; morale is very low. There's something very, very wrong when people are leaving on their own and don't have another job to move on to.

      Advice to Senior Management: Stop worry about Roadmap 2015! Take care of our customers, both internal and commercial, and the rest will work itself out. Stick to IBM principles instead of paying lip service to them!

    • “Bad Management, Low Morale”

      Anonymous Employee (Current Employee), New York, NY. I have been working at IBM full-time for more than 10 years.

      Pros: Work at home options; good team work across business lines. Excellent skill base of employees.

      Cons: Bad morale. Management has one focus and that is on themselves. Only goal of company is for 2015 EPS goals that will eliminate more employees.

      Advice to Senior Management: Care more about employees than themselves. Treat people with respect and instill a sense of pride in their accomplishments. No raises or bonuses and take aways all the time.

    • “They don't care about moving people up, no salary increases.

      ” Java Development Team Lead (Current Employee), Lansing, MI. I have been working at IBM full-time for more than 3 years.

      Pros: IBM has a good education program, allowing you to take online courses. The projects expose you to differing technologies and experiences. They are a challenge.

      Cons: IBM, at least where I am, does not give yearly increases, to my knowledge. They expect you to bill your maximum hours, and do your online education on your own time. There is a lot of bureaucracy. I just earned an MBA in Aug 2013 and applied for internal entry-level consulting positions; everyone I have contacted about those positions has virtually ignored me. There is a large emphasis on the numbers, but little or no emphasis on rewarding a good job.

      Advice to Senior Management: Concentrate on the customer and service. The numbers will follow. Don't just rely on numbers: talk to people — you are not doing this nearly enough.

    • “Where's the IT support when you need one?”

      IT Professional (Former Employee), Manila (Philippines). I worked at IBM full-time for more than a year.

      Pros: Competitive benefits, flexible work hours, multi-cultural work environment.

      Cons: Internal IT support is inadequate. Standards and processes are there but are not implemented consistently across the different organizations. Surprisingly has bad technology infrastructure resulting in slow networks and sending/receiving emails getting delayed by 4-5 hours or more. Seasoned employees have very bad and unprofessional attitude towards their peers—would bad mouth their peers in front of clients so that they would appear to be good at doing their jobs.

      Advice to Senior Management: Fix the network, enforce industry standards, fire self-serving employees, listen to the rank-in-file personnel's complaints.

    • “Worked in IBM Regional Contact Centre in Cyberjaya, Malaysia for 7 years”

      Team Lead (Former Employee), Cyberjaya (Malaysia). I worked at IBM full-time for more than 5 years.

      Pros: Appreciate your technical know-how and analytical skills. A lot of learning opportunity.

      Cons: Unfortunately, I have been working from a Helpdesk specialist up until as a team lead, but was not appreciated for my effort. IBM management likes to make a lot of blank promises, like telling you "you are on top of the list". But eventually never happened. Just a way to keep you working there without extra effort.

      Advice to Senior Management: Don't make promises, especially blank promises to a staff, whether or not the staff is an IBM contractual or third party contractual. And don't ever make a promise of transferring the staff to another dept for a promotion if you don't have the intention of doing so or if you are going to give the job to someone else and then tell the staff the job have been given to someone else and tell the staff sorry.

    • “Comfortable place to work but very inefficient.”

      Anonymous Employee (Current Employee). I have been working at IBM full-time for more than 5 years.

      Pros: Flexible work schedule and telecommuting. Developing products can be interesting.

      Cons: You are forced to work using IBM's platforms and infrastructure which is usually behind the industry. Also with so many different pieces of the architecture of the software solution being developed at the same time, it raises the risk significantly as many pieces are interdependent of each other and when one fails, it breaks all others. Many different departments with different goals and agenda's lead to the nothing getting accomplished.

      Advice to Senior Management: Our company suffers from large corporation syndrome, in which too many chefs in the kitchen. Too many decision makers in which it takes too long for any decisions or direction to be made, which shorten life-cycle period for planning, architecture, development, testing, etc...which always results in hacked work and lots of technical debt.

    • “Sweat shop.”

      Quality Assurance Analyst (Former Employee), Dubuque, IA. I worked at IBM full-time for more than 3 years. Pros: It's a large company and if you are lucky or rub elbows with the right people you can get out of IBM Dubuque and possibly into the real IBM. Cons: IBM Dubuque is a very undesirable location for more than one reason. It's easy to get in but very difficult to get out of IBM Dubuque and remain in IBM. Advice to Senior Management: Be prepared to work, work, work and then go to work.
    • “Finding time to grow”

      Anonymous Employee (Former Employee). Pros: Depth of skill across company presents good opportunity to engage others to grow and learn. Employees have chance to help on extra projects. Cons: You can expect to have minimum free time in your standard schedule to engage in learning or work on the extra project. You will need to put in extra hours to make it happen, and likely your own project is already pushing to eat up extra hours.
    • “7 different managers in 6 years”

      Consulting IT Specialist (Former Employee), Minneapolis, MN. I worked at IBM full-time for more than 5 years. Pros: Huge opportunities. Always working with new technology. Cons: My job changed drastically 5 different times in 6 years. Add 7 different managers and it is virtually impossible to establish a career. Did I mention 2 salary modifications as well? That is a code word for reduction. Advice to Senior Management: Too many middle managers taking credit for any positive action.
    • “OK for a large corporation.”

      Senior IT Project Manager (Current Employee), Vienna (Austria). I have been working at IBM as a contractor for more than 3 years. Pros: Can be a very good company to work for if you are in the right department with a good manager. You need to be involved with the right people for it to be a great experience. Cons: Can be too rigid and bureaucratic — totally disallowing common sense to prevail. In my experience if you did not work 60+ hours a week you could not even begin to stay above water.
    • “OK”

      Systems Service Representative (Current Employee), Piscataway, NJ. I have been working at IBM for more than a year. Pros: flexibility with home life; good vacation right when start. Cons: very little room for advancement within the company.
    • “I'm By Myself (IBM)”

      Senior Managing Consultant (Current Employee), Philadelphia, PA. I have been working at IBM full-time for more than a year. Pros: Stable company, work from home when not travelling. Cons: Salaries not competitive, no bonuses this year, quality of management, too many middle managers, lack of training, no career paths.

      “Lost in a deep BLUE abyss”

      Human Resources Leader (Former Employee), Washington, DC. I worked at IBM full-time for more than 10 years.

      Pros: Very smart people, with deep personal and professional commitment, who remain blissfully unaware that they will have no future.

      Cons: One of the most depressing, alarmingly arrogant and confused IT companies in the world. Acting like wolves, hunting in small packs, they eventually run out of food and are then forced to eat their own kind. Greed remains the key motivation for leadership, who will seemingly stop at nothing to best a colleague, weaken a partner or flip a customer. Reckless outsourcing of American jobs for low paid, often unqualified personnel in so called “growth markets”. Stay away from this work environment.

      Advice to Senior Management: Bring back the H in HR? Work with, not against your people resources. Get a plan for the future. Clean out the top of the business, not the people who actually perform.

    • “Really depends on the people you work with.”

      Project Manager (Former Employee), Wrocław (Poland). I worked at IBM full-time for more than 3 years. Pros: There's a lot of knowledge to absorb; the ability to see a really big company at work. There are also opportunities for overseas employment and other 'missions'. Ability to work from home. Cons: - Pay is below market; - If your manager is terrible (and that happens a lot), your life will be miserable; - There's little team building; - Way too process focused; - Not enough focused on people; - Many people have virtually no idea what they're doing. Advice to Senior Management: Focus more one people than nickel-diming everything. Free coffee would be a start.
    • “Two tours totaling 14 years — leaving again”

      Sales Specialist (Current Employee), San Francisco, CA. I have been working at IBM full-time for more than 10 years.

      Pros: This is a great company for one to start their career, but don't make the mistake of hanging out too long. IBM is a sales organization, which just happens to be in technology. It used to be run by sales people with an ethos of work hard, play hard. But that's been gone for a decade +. The bean counters have taken over the top offices and have slowly taken away all the things that made this company fun to be a part of. If you're on commission, expect a 1% salary increase about once every 3 years, so negotiate well on your way in the door. My recommendation for anyone starting here is to learn all you can in 2-3 years, then leave and go to a competitor — you'll see the same business from another angle and become a very well rounded IT professional.

      Cons: Like any sales organization, whatever you achieved in the past, is the past, and there is a new quarter ahead. If you're hitting your quota early, they will increase it and say that you'll appreciate the challenge. There is management by intimidation, but retribution seems rare. The last few months have been a particularly heartbreaking time - 4 rounds of layoffs in the last 6 months, because the share price is much more important than the people who've made this company great for our customers.

      Commission statements are delivered via random number generator, where it's nearly impossible to determine if you're getting paid on your accounts, or those of someone else. If you have a commission dispute, IBM outsourced that aspect of the business to South America years ago, and they have little time, or sympathy to help resolve money issues for people whom they feel are paid too much.

      Tuition reimbursement is a thing of the past — better to hire from outside than foster organic development. At conferences when the company hosts a party, they'll let in the customers, but not the IBMers who brought the customers. Sometimes a little awkward.

      With regards to compensation IBM consistently pays at the low end of the scale. And the benefits get more expensive and cover less each year.

      Advice to Senior Management: Way too many levels of management, which is why our products are so expensive — 75 people (65 of which are overlays who never touched an account) need to get paid for every widget sold.

      You need to closely examine the first line managers, as they are essential to the career development of the people in the field. While there are some outstanding people here, I've had a few managers who provide zero value, and have actually done damage to the morale of the team they manage. Keep in mind the job of a first line manager is among the worst in the company — your job is to deliver bad news from above, have very little influence over change, and your main task is to inform your team of new administrivia tasks with short deadlines, and forward emails.

  • Glassdoor IBM Canada reviews
  • Alliance for Retired Americans Friday Alert. This week's topics include:
    • On Tax Day, Alliance Calls for End to Corporate Tax Loopholes
    • Social Security to Stop Collecting Relatives’ Old Debts by Intercepting Tax Refunds
    • City of Detroit Reaches Preliminary Bankruptcy Deal Involving Pensions
    • Corporate-Backed Debt Reduction Group Facing Money Troubles
    • Commemorations Mark Centennial of Ludlow Massacre
    • Fiesta Addresses Machinists
    • Just Over a Week until Start of National Membership Conference in Las Vegas
  • New York Times:

    Executive Pay: Invasion of the Supersalaries. By Peter Eavis. Excerpts: Corporate America’s well-oiled compensation machine is running like a dream.

    Browse the proxy statements of the nation’s largest corporations and you’ll find the instruction manuals for this apparatus explaining how to finely calibrate the pay of top executives with company performance. ...

    The current system of executive compensation, with its emphasis on performance, can theoretically constrain pay, but in practice it has not stopped companies from paying their top executives more and more. The median compensation of a chief executive in 2013 was $13.9 million, up 9 percent from 2012, according the Equilar 100 C.E.O. Pay Study, conducted for The New York Times. The 100 C.E.O.s in the survey took home a combined $1.5 billion last year, a slight rise from 2012. And the pay-for-performance metrics — particularly the idea of paying executives with stock to align their interests with shareholders — may even have amplified that trend. In some ways, the corporate meritocrat has become a new class of aristocrat.

  • H.R. Benefits Alert:

    Top 10 ways companies cut healthcare costs. By Christian Schappel. Excerpt: Towers Watson, a renowned human resources consulting company, and the National Business Group on Health (NBGH), a non-profit advocate for large employers’ healthcare concerns, just conducted their 19th annual survey of large employers to pinpoint the most effective healthcare cost control strategies.
  • New York Times opinion:

    Three Expensive Milliseconds. By Paul Krugman. our years ago Chris Christie, the governor of New Jersey, abruptly canceled America’s biggest and arguably most important infrastructure project, a desperately needed new rail tunnel under the Hudson River. Count me among those who blame his presidential ambitions, and believe that he was trying to curry favor with the government- and public-transit-hating Republican base.

    Even as one tunnel was being canceled, however, another was nearing completion, as Spread Networks finished boring its way through the Allegheny Mountains of Pennsylvania. Spread’s tunnel was not, however, intended to carry passengers, or even freight; it was for a fiber-optic cable that would shave three milliseconds — three-thousandths of a second — off communication time between the futures markets of Chicago and the stock markets of New York. And the fact that this tunnel was built while the rail tunnel wasn’t tells you a lot about what’s wrong with America today.

    Who cares about three milliseconds? The answer is, high-frequency traders, who make money by buying or selling stock a tiny fraction of a second faster than other players. Not surprisingly, Michael Lewis starts his best-selling new book “Flash Boys,” a polemic against high-frequency trading, with the story of the Spread Networks tunnel. But the real moral of the tunnel tale is independent of Mr. Lewis’s polemic.

    Think about it. You may or may not buy Mr. Lewis’s depiction of the high-frequency types as villains and those trying to thwart them as heroes. (If you ask me, there are no good guys in this story.) But either way, spending hundreds of millions of dollars to save three milliseconds looks like a huge waste. And that’s part of a much broader picture, in which society is devoting an ever-growing share of its resources to financial wheeling and dealing, while getting little or nothing in return. ...

    But if our supersized financial sector isn’t making us either safer or more productive, what is it doing? One answer is that it’s playing small investors for suckers, causing them to waste huge sums in a vain effort to beat the market. Don’t take my word for it — that’s what the president of the American Finance Association declared in 2008. Another answer is that a lot of money is going to speculative activities that are privately profitable but socially unproductive. ...

    In short, we’re giving huge sums to the financial industry while receiving little or nothing — maybe less than nothing — in return. Mr. Philippon puts the waste at 2 percent of G.D.P. Yet even that figure, I’d argue, understates the true cost of our bloated financial industry. For there is a clear correlation between the rise of modern finance and America’s return to Gilded Age levels of inequality.

  • Morningstar Advisor:

    Obamacare and the Early Retiree. One of the biggest risks for the early retiree has been the rising cost of health care and the pressure on savings when health issues arise. The Affordable Care Act could reduce that risk. By Helen Modly and Tommie Monez. Excerpts: We've all seen it--clients who are unrealistic about their spending habits, overly optimistic about the strength of their portfolios and the direction of the markets, and who just can't wait to embark on a leisurely retirement in their 50s or early 60s. But all too often, health-care expenses in the period between early retirement and Medicare eligibility have cratered those plans and dreams.

    Enter Obamacare. Love it or hate it, the Affordable Care Act (ACA) offers an element of predictability in the health-care marketplace. Premiums based on pre-existing conditions are a thing of the past. The only criteria for setting premiums are age, geography, family size, and whether or not the applicant is a smoker. And, interestingly, not all states consider smoking status when setting premiums. ...

    Health-Care Premiums. Under the old rules, basically there were no rules. The insurance companies could use occupation, age, health history, or more to determine premiums. Under the ACA, rates for older adults cannot exceed three times the rate of a younger person. This is the heart of the concern that not enough young people will participate in ACA plans for the economics to be financially viable. However, this pricing restriction can be very beneficial to the younger retiree.

  • The Fiscal Times:

    Offshore Tax Havens Cost You $1,259 a Year. By Brianna Ehley. Excerpts: Happy Tax Day! Here’s something to think about when rushing to meet tonight’s tax filing deadline: The federal and state government loses more than $180 billion in revenue every year to corporations and wealthy people who shelter their money in offshore tax havens. To put that in context, every U.S. taxpayer would have to slap an extra $1,259 on their tax bill this year in order to make up for that lost revenue.

    That’s according to a new report released by the U.S. Public Interest Research Group –a Boston-based firm that advocates for tax reform. The group says more than $150 billion in federal revenue and $34 billion in state revenue is lost every year to major corporations and wealthy people that stash their cash offshore in order to skirt hefty U.S. tax bills. PIRG notes that corporations account for about $110 billion of the total lost revenue—with wealthy individuals making up the rest. ...

    “Tax haven abusers benefit from America’s markets, public infrastructure, educated workforce, security and rule of law -– all supported in one way or another by tax dollars –but they avoid paying for these benefits,” PIRG said in the report. “Instead, ordinary taxpayers end up picking up the tab, either in the form of higher taxes, cuts to public spending priorities, or increases to the federal debt,” it said. ...

    Though most companies are still paying some taxes, complex tax tricks and loopholes are still driving down the actual tax rate many are paying. The Government Accountability Office said in 2010 that companies were paying an average effective tax rate of 12.6 percent—well below the nominal federal tax rate of 35 percent.

New on the Alliance@IBM Site

Job Cut Reports

  • Comment 04/13/14:

    RA (redundancy in the UK) to start in IBM UK this quarter. Managers will be told "this is how many people you can have in your team, decide who you are keeping". Those that just escaped in 1Q will not be so lucky in 2Q. Quite what the clients will make of this erosion coupled with the x86/networking sell off, the loss of the court case, and the blatant breach of its own business conduct guidelines to staff, trust is almost non-existent and you will not find an employee in the UK that trusts IBM any longer. Fortunately as that does not show on the balance sheet it really doesn't matter. -Anon-
  • Comment 04/14/14:

    When I was at IBM, I guess I never realized how many companies used IBM as an industry bellwether, copying everything they did, including their offshore "business" model. It's really sad to see, and be a part of other companies hellbent on circling the drain like IBM did. I used to believe that if you were an honest capitalist, you'd eventually get to where you wanted to be through hard work. IBM and many other companies have betrayed that honesty, and turned their back on the very people who helped build them up. We need to unionize EVERYTHING and take our country back. - Fed_Up_American-
  • Comment 04/14/14:

    A long but worthwhile read on 'Corporate Malfeasance & the Myth of Shareholder Value.' A short excerpt to peak your interest: "The business-knowledge elite manipulates the behavior of large corporations, enriching themselves (money managers and institutional investors, securities analysts and bankers, and corporate executives) by skimming profits from the pension reserves of workers and from the investments of the lumpen bourgeoisie." Full paper here: http://scholar.harvard.edu/files/dobbin/files/2005_ppst_corpmal_zorn_0.pdf -Won't get fooled again-
  • Comment 04/14/14:

    21 years with IBM, and left on my own accord for a much better job with much better pay and benefits. I have lots of connections in the Hudson Valley and have heard of 2 recent instances where NY employees were transferred to another state (CT) and were immediately RA'd upon reassignment. The obvious inference is that this is being done to reduce/avoid reporting these actions. Anyone else heard of this? I would have never thought IBM would stoop this low, but nothing surprises me anymore when it comes to this once great but now pathetic company. - Happy To Be Gone From POK-
  • Comment 04/14/14:

    Got RA'd today after 14 years in SWG. Was told I was part of the 2nd wave of cuts that started in 1Q. I was really tired of the constant cuts and got a decent package so I'm happy. Goodbye IBM. - Canned in Canada-
  • Comment 04/15/14:

    IBM doesn't want to employ us. RAs, forced commercial/travel work, the retirement 2014 initiative, no variable pay in 2014, dropping appraisals, forcing PBC 3 by quota, etc. All of these initiatives have made for a miserably demoralizing work environment, and IBM knows it. They don't want to fix it. THEY WANT IT THIS WAY! -Anonymous-
  • Comment 04/15/14:

    Just FYI, the previous rumor that the growth-driven profit sharing bonuses that Ginny said would go to PBC 1's was not paid out on April 15. No, this is not some inconsiderate person whining about their bonus while people get laid off, I'm just reporting it because it's important here to provide information about our devious company.

    I'd actually welcome a package myself, I work hard because that's the ethic I was taught by may parents and the military, and I'm not a butt-kisser. I'm anything but, and have been called on the carpet more than a few times for saying it like it is, to both my management and our customers. I'm in my mid-50's and just biding my time.

    I don't see anyone around me putting in the effort they used to back around 2001, when we were all very energized. I certainly don't work as hard as I used to and it's taking a toll on my conscience. I just don't want to deal with switching and starting over with another company at this point. So, I'll bide my time a little longer and see what shakes out. -MoraleInTheToilet-

  • Comment 04/15/14:

    To -Morale in the Toilet-, IBM executives have lost all respect for their employees. Sam Ginny and Lou are corrupt greedy executives. As long as their is no union, this greed and corruption will continue. Join the union so the younger IBM employees will not have to deal with this corruption latter in their careers. -ANA-
  • Comment 04/15/14:

    -@Happy To Be Gone From POK- My wife was just RA'd from POK on 3/31 and the reason given is that she does not have an office in NY. We bought a retirement home out of state last year and after getting two levels of management approval for her to work from home permanently, we sold our NY home and moved. Ironically, right after we bought the other house, I was RA'd in June. No one knew about the new house then but they sure were jealous that I had a plan. To everyone, have a fallback plan for when IBM comes gunning for you. And they will! -Gone For Good-
  • Comment 04/16/14:

    People here occasionally wonder if it would be a good idea to request being included in the next RA. I suspect the wisdom of doing so varies greatly by organization and your relationship with your manager. Last year, I told my boss that I was in a position to retire and would hate for someone less fortunate to get RA'd when I would probably be leaving soon, anyway. Well, she must have thought it was a good idea, since SHE RAtired in the next round, as did one of the other 1st lines in our group. The funny thing is, both of them were immediately replaced by non-managers. It might have worked out well for all involved, but it's hard to explain how managers are surplus when they're backfilled. It's just another example of how poorly the RA process is managed. -RAtired-

    Alliance reply: Without a union contract, IBMers in the US can expect much more "poorly managed" processes than just RA's. IBM "manages" RA's for IBM's benefit, not the employee. The sooner IBMers realize that IBM will continue to abuse and mismanage their workers, the sooner IBM workers can organize and change that paradigm. Get busy fighting for your jobs, or get busy losing them.

  • Comment 04/16/14:

    Ginni made $14 million in 2013 yet RAs continue. Ginni, Lou, and Sam are all three corrupt and greedy executives. Without a union, this type of corruption and greed will continue to both employees and retires will continue to loose benefits, have no salary increases, and RAs will continue. The PBC program is a shame in IBM. Join the union to stop this corruption. -ANA-
  • Comment 04/17/14:

    Not only is the erosion of the company becoming obvious to the street and customers, but internally it feels like the infrastructure is crumbling rapidly. There are huge technical problems on about every internal webcast I try to join. Where is all of the great virtual, elastic, extreme scaling goodness that we tout? Not eating our own dog food? No skilled employees to maintain and equipment/software decaying? Not to mention case after case of egregious security problems. The impactonline.com site that we are asking customers to use has huge security problems, and they will be putting personal information and their schedules on there. The mobile app for last year's Impact conference was a laughing stock, just horrible. -Anony-
  • Comment 04/17/14:

    Earnings fell; what a shock or not. Just as an example, I was RA'd 2/28. However, I was on a large project at the time where the customer liked me to the point of extending my contract. I was billing the customer over 48 hours per week and this most likely would have extended through September with the possibility through the end of the year. Since I was on a DOU to an AMS account, my division did not even consider this and went ahead with the RA. Now does that sound like good management? It just goes to show you that the customer is not even considered and the bad management that exist within IBM now. -AnonPM-
  • Comment 04/18/14:

    GBS hiring totally frozen. No new hires until at least 3Q. Doesn't include some of the delivery centers (i.e. Baton Rouge). Any exceptions need to go through a painful process to get approval. -Anon-
  • Comment 04/18/14:

    I have a simple question. Has anyone or any group challenged the PBC system as discriminatory? After the latest inquisition I sat down with a friend who is a senior executive in HR at a fortune 100 corporation and described the yearly bloodletting we go thru, as well as shared my PBC's for 2014. My friend was shocked at what I told her, and was especially curious as to how IBM was able to deal with the disparate impact caused from such a process. In fact, she was sure that this was an issue based on the resource action process I described. Has anyone looked into this? Is there any way to request the government run a study on IBM?s PBC system? I think all of us would do anything to get rid of this horrid, unfair, unjust, yearly inquisition! -IBMer in search of Justice-

    Alliance reply: Simply put, the answer is no. Why? Because IBM can break their own rules any time they want to. The Federal government has absolutely NO SAY about what IBM does with their own policies. The best way you have to "get rid of this horrid, unfair, unjustly, yearly inquisition" is to form a union and fight for a collective bargaining agreement.

    All IBMers in the US are "At Will Employees" and have no say about how IBM conducts its employee policies; which include the PBC system, the salary system, the workplace conditions, the benefits (if any) and the circumstances involving RA's.

    The labor laws generally vary from state to state; but even so, they are stacked in favor of corporations and business...NOT the worker or employee. If you know of others you work with that also don't know this information, it would be a good idea if you informed them. It would even be a better idea if you and other IBMers currently employed, joined the Alliance and organized throughout the company locations in the US.

    With the a majority of IBMers, we could bargain for a legally binding contract that would most definitely include protections against discrimination by IBM on many levels, legally. Are you willing to do that? For more information on "At Will Employee" status and other questions, see this page: http://www.endicottalliance.org/allianceibmsimplefactsheet.htm

  • Comment 04/18/14

    : HR appeals regarding PBC issues will no longer result in a "Panel Review". HR case managers now handle the appeals, and it would now take an act of God to actually get beyond them to a Panel Appeal. This is because the systemic downgrading of PBCs across target IBM organizations is a business strategy. HR knows that if these cases go to "Panel Review", fairness will prevail. This isn't about fairness. It's about contorting the PBC system into a tool used to advance a corporate business strategy. More 2's and 3's means more attrition, more forced RAs and inferior severance packages, meaning cost savings. Is it legal to screw employees this way? Of course, it is! I must say that I now envy both of my parents who were government workers and had unions protecting their interests. -Anon-
  • Comment 04/18/14:

    Re: the -IBMer in search of Justice- comment. Amazing once again, that there are IBM employees that *think* IBM's PBC system can be "studied" by the feds or even a State government for wrong doing of some kind. Seriously? No government labor laws cover company-created rules and systems. Why is this fact so misunderstood among IBMers? This is not the first time I've seen this question on this web site's comments sections. I personally think Alliance's patience with questions like this is way over and above what they should be. I wonder how many IBM workers actually are this uninformed? wow. - BlueEyedBlindness-

    Alliance reply: We have continued to answer questions, as best we can, regardless of whether they have been asked many times before. Not being informed of labor laws and being an At Will Employee, is the exact reason why Alliance continues to answer these questions without judging anyone. We never intend to insult anyone or be condescending to get our point across. This why Alliance@IBM exists: to inform and provide an alternative to the propaganda, lies and abuse that IBM dishes out to their employees on a daily basis. Thank you for your support.

  • Comment 04/18/14:

    To -IBMer in search of justice. Dear IBMer, There is no longer any justice in IBM. The new IBM is run by corrupt greedy executives and three CEOs (Lou, Sam, and Ginny WHO only care about themselves and the quarterly profits. You and everyone else at IBM is an at will employee, and executives at IBM can do whatever they want to screw the employees when it comes to raises promotions, benefits, pensions, and retirement benefits and RAs. Without a union contract this will continue. Join the Union. -ANA-

IBM Retiree Issues Comments

  • Comment 04/13/14:

    I've been reading the comments about Towers Watson, Extend health, Pay flex, etc. I started my ordeal about Sept/Oct 2013 and I finally got most all of it "fixed" through numerous phone calls and emails. It was a horror but I can hopefully reclaim all the monies set aside for my medical reimbursements. The program was very poorly set up and to get it to work for me took much yelling and insults both ways. Both IBM and TW should be ashamed. Lucky to be living in Puerto Rico. I didn't need to go through TW for my health insurance. -Vernn-
  • Comment 04/15/14:

    Does anyone have any advise as to whether to cash out (PRP) money. IBM only gives you 45 days from your RA date to decide. Or is it best to leave it and collect monthly when I decide to use lifetime option. -Over55-
  • Comment 04/16/14:

    To Over55 with PRP money. Leave it where it is. Do not cash out, do not move it to any other investment. (it is in the best place, where it is) My sister had this same question, after much investigation, realized it best left alone, until age she can draw on it. -RA 2010 retired-
  • Comment 04/17/14:

    I am currently on a bridge to retirement coming off of a Fall 2013 RA. As I retire this year I will be 52 with 30 years of service. For folks that are heading into retirement IBM is currently assigning (if one would like) a Fidelity Retirement Rep to help in navigating through the decision points. The rep reiterated the "party line" that because I am not 55 although I have 30 years of service I am NOT entitled to IBM Retiree Benefits or the FHA account (~$25-30K) that was saved for me from 2002 thru 2012. My RA date was fall 2012; bridge ends fall 2013; then retired status begins.

    When I asked the Rep that despite the "IBM rule" on this whether their decision was purely "aged based" that one who is 55 with 15 years in service can use the FHA account and have access to group benefits and me with 30 years of service, but age 52 cannot. They indicated that it is "aged based" on the recorded line. My question to all is whether there is an appeal process or an external process to protest this "age based" bias with hopes in overturning? I realize this may be wishful thinking but wondered whether anyone has gone done a similar path before I begin my trek. :-) -RAd_Bridged_Retired_in_2014-

  • Comment 04/17/14:

    -RA 2010 retired- Unless IBM follows Verizon's lead and sells off the PRP to an insurance company, essentially "de-risking" it and skirting ERISA provisions and PBGC and then you can lose at least a part of the PRP you were promised to get or collect. -ItCanHappen-
  • Comment 04/17/14:

    If you are over 55 you can take or rollover your PRP without any penalties. Currently it is only returning 1.1% interest. Historically this is the lowest ever yearly fixed return. An IRA is a viable option to get a potentially higher APR. -anonymous-
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