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6, 2000 April, 2000

Highlights—October 11, 2014

  • Seeking Alpha:

    IBM Should Be Avoided At These Levels. Excerpt: On a fundamental basis, IBM does not appear to be in a comfortable financial position. The relationship between revenue growth and earnings growth should be somewhat parallel, but instead, revenues have been steadily declining, while earnings growth has been realized. That is an unsustainable business model, and although IBM is considered to be a bellwether, it has uniquely experienced multiple contraction, while almost every other stock in the Dow Jones industrial average has experienced multiple expansion. That suggests that large money has been selling IBM, even as other money has flown into the Dow Jones Industrial Average in recent years. Given the floundering nature of the longer-term chart pattern for IBM, we would further suggest that there are no immediate buy or sell signals, and consider IBM to be an avoid appropriately.
  • Yahoo! Finance:

    Amid buyback backlash, what else can slow-growing companies do? By Michael Santoli. Excerpts: At some point in the latest phase of the half-decade-long corporate stock-buyback binge, general opinion of the practice turned from approval to exasperation. The strain of commentary toward heavy stock repurchasers has gone from, “Well, at least they won’t do much harm,” to “Stop eating yourselves alive and do something to feed the rest of the world.”

    As the economic cycle and bull market have matured, the dependence of many companies on heavy share buybacks — often funded through lots of debt — is increasingly being assailed as sapping needed capital investment, padding executive compensation and possibly destroying capital by overpaying for their own equity. ...

    A recent Harvard Business Review article boiled all this down to a determination that companies are exacerbating income and wealth inequality through buyback-centric policies that direct cash to the shareholder class rather than into productive, job-generating efforts. ...

    Then there are the post-growth blue chips who need to substitute financial shuffling for true profit progress. Consider International Business Machines Inc. (IBM), an aggressive buyback player for years. Its business is quite mature, and it has been selling or shrinking capital-intensive divisions. Investors don’t want to see Big Blue placing big-money bets on expanding its own capacity or buying into brand-new businesses.

    The company repurchased an average of $14 billion in shares annually from 2010 through 2013, materially shrinking its supply of stock. Over that span, its net income grew only 4% in total (not per year – in total), yet earnings per share in 2013 were 14.4% above 2010 levels. ...

    Yet it’s noteworthy that Bed Bath and IBM share prices have been pronounced laggards. Both are essentially flat over the past two and a half years, while the S&P 500 has climbed more than 40%. With their buybacks, these mature companies have essentially fought the sellers to a stalemate but have gained little lasting advantage.

    Selected reader comments follow:

    • "The official line on share repurchases from companies was always that it represented a prudent use of excess cash"...well, as someone who has worked for nearly 40 years for one of the companies mentioned in this article, and who can tell you first hand that 99% of the employees (at least the US employees) in that company have had no raises, but several pay cuts, in the last 10 years, our company is not doing all these buybacks because they have "excess cash". They are doing it simply to cover the fact that they are not making a profit anywhere, period, but are determined to keep this cloaked and drive up the EPS number, all to make Wall Street happy and to get our corporate "leaders" their big bonuses.
    • Let me guess. Did you work in Itty Bitty Machines or I'm By Myself? I used to work there. I saw this #$%$ coming in 2006 and it made life so difficult for everyone. I was hoping Ginny would change this, but she was put on the hot seat from day one. I remember in 2010 that actual money-making products were cancelled because of the lack of investment capital, while the repurchase binge and acquisitions were out of control.
    • Many, if not most, of the buyback programs are nothing but a shell game to enrich the corporate executives. For the past few years, IBM execs have been consumed with their 2015 roadmap program. i.e. Increase EPS. They use this as the justification for huge bonuses and stock option grants, although revenue growth and innovation have been nonexistent. Sure they couch the improved EPS as "shareholder value", but that is just the smoke screen.
    • It's all just driven by short term greed on the part of our business leaders and the wealthy. Get as MUCH as I can for me NOW and get OUT, and to hell with anyone else. The REAL problem is the INSANE extremes that a once simple "Work harder, get more" system has now gone to. This "economic game" we ALL play no longer has realistic boundaries, a level playing field, or referees.
    • The problem with many of these buybacks is they are not actually using company cash reserves but instead are being financed. While rates are extremely low financing still dilutes the total value of the cash reserves more than just the repurchase stock price. Add the interest onto the often higher average buyback price and you are wasting money that would be better spent returning directly to stockholders or to invest in new business.

      As far as the comment about stockholders not wanting IBM to place big money bets on new business or capacity that is garbage. A stagnate company like IBM needs to make big money bets to stay in business. If you look at it's history the only reason IBM is still around today are the big money bets that resulted in the IBM 360 computer systems in the 60's and the move to return to services in the 90's. At both of these junctures IBM was close to going bankrupt and without those bold moves would have become a footnote in history. I'm sad to say IBM of today is at one of those junctures again but the board doesn't see it and continue to believe financial engineering will allow the company to survive.

  • Financial Times:

    IBM plans artificial intelligence push. By Richard Waters. Excerpts: IBM is set to give a concerted push on Wednesday to the artificial intelligence system it is relying on to help revive its flagging growth and give it a new edge over rivals in the computing industry.

    The US tech company plans to officially open a base for the system, known as Watson, in New York’s Silicon Alley neighbourhood and show off a range of examples in which the technology is already being applied in industries like finance, healthcare and retailing.

    However, its slow start in commercialising the technology and the complexity of applying it in practical business situations has drawn skepticism from some AI experts.

    “Watson won Jeopardy, but does it know it won,” said Oren Etzioni, head of an AI research effort funded by Microsoft co-founder Paul Allen. “Would you let Watson be your doctor?” The technology was “a stunning PR success”, he said, but: “If you take it any further, it falls flat on its face.”

  • eWeek:

    IBM Opens Watson Headquarters in NYC Amid New Cognitive Milestones. By Darryl K. Taft. Excerpts: As IBM moves its Watson cognitive computing technology into its new home in New York City's Silicon Alley, the company announced significant milestones fueling adoption of Watson and cognitive computing cloud capabilities on a global scale. ...

    "Watson is bringing forward a new era of computing enabling organizations around the globe to launch new businesses, redefine markets and transform industries," said Mike Rhodin, senior vice president of the IBM Watson Group, in a statement. "Watson is fueling a new market and ecosystem of clients, partners, developers, venture capitalists, universities and students. The next great innovations will come from people who are able to make connections that others don't see, and Watson is making that possible." ...

    IBM is investing more than $1 billion in the Watson Group, focusing on research and development and bringing cloud-delivered cognitive applications and services to market. This includes $100 million earmarked for direct investment to support IBM's ecosystem of startups and businesses building cognitive apps made with Watson.

  • Glassdoor IBM reviews. Selected reviews follow:
    • “OK”

      Current Employee — IT Architect in Detroit, MI. I have been working at IBM full-time (more than 10 years)

      Pros: Many job types with easy opportunities to move within. Almost like finding a new job. And you can get away from a bad manager that way.

      Cons: Good competitive, starting salary, but in a few years new hires will make more money than you unless you give your life to the company. You can have good life/work balance but that won't get you any money. Management overly controlled by bean counters and the bottom line. I worked in one division once where cost saving directives included taking out your own office trash bins. That's how ridiculous it can get. Each year more and more benefits are taken away so the company can show profitability. Too many employees complain but do little about it.

      Advice to Senior Management: Better core values.

    •  

      “A once great company, still offering a great variety of opportunity, but not the place to work it once was”

      Current Employee — Sales Specialist in London, England (UK). I have been working at IBM full-time (more than 10 years). Pros: Reputation of IBM. Variety of possible jobs and customers to work with. Great community of people across the world. Cons: People management has deteriorated greatly over the last 10 years. Advice to Senior Management: Focus on a real strategy, not the infamous E/R target. Get back to people management. Get back to "respect for the individual".
    • “Misguided and massive time wasting”

      Former Employee — Serf in Austin, TX. I worked at IBM full-time (more than 10 years).

      Pros: Solid employer Leader in technology and innovation.

      Cons:

      • Time wasted on days and days of meetings with people using that to justify their own jobs.
      • Too much middle management
      • Too many MBAs
      • Too many program to "help you do your job better" - invented by those same MBAs
      • How many companies do you know that have a dozen or more layers of management between you and the top people. They were mean and lean in the early 2000's (turning the elephant period) but they have bloated into a massive money wasting entity.

      Advice to Senior Management:

      • Get rid of redundant middle management.
      • Get rid of redundant programs across the brands
      • When you ask your employees what they think or would change - don't get them training because they just aren't seeing the Big Picture. We have lived in this industry and we know a few things.
    • “The Business Equivalent of the Borg!”

      Former Employee — Information Developer in London, England (UK). I worked at IBM full-time (less than an year).

      Pros: A large company does provide a level of stability.

      Cons: IBM grows by identifying new innovations and then buying the smaller companies that made them. They're so large that they can continue to do this.

      The biggest problem is that you end up with a few hundred emails every day, most of which are people NOT adding any useful information to a topic, but saying that they agree totally with the email, and how fantastic it is! This isn't the way to run projects; most IT firms I'd worked for previously (including Sun Microsystems) would only want you to "reply to all" in the event that you had some technical information that was relevant to the email, and NOT because you were trying to have your name made known to everybody.

    • “Good pay, poor environment”

      Current Employee — Product Development Engineer in Williston, VT. I have been working at IBM full-time (more than an year). Pros: The starting salary for a recent college graduate was unmatched by other companies. Lots of opportunities to learn and get patents. Work is challenging, my first line manager was great. Cons: Environment is awful. Employees have no motivation due to poor company direction (ASICs/Hardware). No one knows if we're going to have jobs, which leads to little desire to do anything more than 40 hours a week. What a shame. Advice to Senior Management: Get any employee funding for advanced education. Encourage employees.
    • “Not the same IBM that I joined 18 years ago. Would NOT recommend.”

      Current Employee — Managing Consultant. I have been working at IBM full-time (more than 10 years).

      Pros: Purported support for work life balance, equal treatment of women and minorities (one of the first companies to hire black, female, executives). Current CEO is a woman. Expanding globally. Challenging work (for some).

      Cons: The organization that I work for has devolved from one that used to value being a team player, being someone who mentors his peers, being someone who is willing to travel and to establish and maintain long term relationships with clients, to a sweat shop where the only metric that counts for anything is utilization. Our department came in at 106% last quarter, yet, because we had predicted 108%, suddenly everyone is Chicken Little and "The sky is falling."

      Benefits such as working leave of absence (once guaranteed) are being eliminated, and, getting replacements for work essential items (laptops) takes over three months...during which your very existence is threatened because you cannot make utilization targets without usable equipment.

      I have recently opted for a permanent part time position, so that I can keep my benefits, and only have to work a 40-50 hour week. Kinda sad that this is considered part time; they only pay me for 32. But, my colleagues, many of whom will be dead by age 50 (at this pace) are being told to work 60-65 hours a week, minimum, else risk being categorized as low performers.

      My frustration is furthered compounded when I realize that three of IBM's best years, in its 100 year history, were at the height of the recession. Opportunists...IBM spent those three years swooping up companies in distress...selling some, and using the profits to expand into emerging economies. While a smart business move...it has virtually destroyed the North American skeletal crew that remains. We know we are on the short list. In 2012, many were predicting a 68% reduction in the North American workforce by 2015...and, many bragged when they were able to eliminate what they considered "non-essential" positions.

      One of my friends who left had numerous IBM patents and used to be #3 on Sam Palmisano's speed dial. He's alright now....but, when you discourage folks like that...well...you eventually get what you deserve. Soon enough, they'll be shed of me. My wife can't wait. And, though scared about what's next for me...I'm starting to agree with her.

      Advice to Senior Management: If you continue along this path, you will continue to waste money and time, and will continue to lose client good will. I strongly suggest that you listen to those who are touting a more proactive, collaborative relationship with your clients...many of whom are now opting for Indian Service Companies (instead of IBM) who understand the value of collaboration and establishing long term, lasting relationships. Change your evaluation model if you want to retain top talent. A good performer should not fall into the category of "3," simply because someone has to get a three that year, and his/her peers are working themselves into early graves.

    • “Challenging and A Great Learning Experience”

      Current Employee — Anonymous Employee in London, England (UK). I have been working at IBM full-time (more than 10 years).

      Pros: Excellent place to gain experience on a wide range of consulting engagements. Very performance driven company with some solid executive management of the balance sheet. Very focused on providing innovative solutions to clients. Good training and development opportunities.

      Cons: Employees don't really matter, you are clearly a cost item and managed appropriately. Very bureaucratic — process drives everything.

    • “Heartbreaking”

      Current Employee — Director. I have been working at IBM full-time (more than 10 years). Pros: Tons of cutting edge research. Amazing people and culture. Top brand name. Diversification of products and services. Cons: Poor senior leadership. Financials over business. Lacking of strong partnership with clients. HR not aligned to business. Advice to Senior Management: Focus on clients for god sake!!! Look across the portfolio not just cloud, analytics...invest ahead of the growth curve and get rid off that a non sustainable scenario with the financial roadmaps, that are killing this iconic corporation.
    • “Culture and pay has changed over the past decades for the worse”

      Current Employee — Server Administrator in East Fishkill, NY. I have been working at IBM full-time (more than 10 years). Pros: Good benefits. Cutting edge IT research. Lots of on-line training but not paid classroom training. Cons: Too much work for little staff. Cut in pay, cut in bonuses, layoffs every year. Upper management concerned with stock price and dividends not employees. Very difficult to move within the company. Advice to Senior Management: Pay employees better. Hire needed staff.
    • “Great experience in the past. Lately, not much different than most large companies”

      Former Employee — I/T I worked at IBM full-time (more than 10 years).

      Pros: Great people, exposure to large systems, processes. Working in a global environment is an incredible perspective in today's world. There are still some great managers. Lots of potential to work with new technology, and lots of free education. It is a great way to gain quick exposure to this. Also, some parts of the business allow for work-at-home options, which is fantastic. Pay (at least used to be) higher than average. Though that may be changing.

      Cons: This is a large tops-down corporate culture that no longer values people challenging the system. Layoffs are a way of life and long ago I stopped trying to figure out why some people stayed while others were let go. This is a constant dark cloud hanging over most people's head. Long gone are the days of full employment where they would find you a job as long as you were a good employee. Some areas of the business expect long hours and if you are supporting countries in different time zones then you will be attending some very late and very early meetings. If you have a lot of experience and years behind you, then this may not be the place to start.

      Advice to Senior Management: View people as your most valuable resource. stop outsourcing and listen to your employees. Allow for people to intelligently challenge things without fear of jeopardizing their job.

    • “Good for start in IT sector”

      Current Employee — TSCM Administrator in Brno (Czech Republic). I have been working at IBM full-time (more than an year).

      Pros: It is good experience working in international environment There are many possibilities for improving skills. IBM certifications and courses. You may to work from home office. Friendly atmosphere.

      Cons: Really absurdly long hiring and cost freezes. You can proceed in your career, but without corresponding financial satisfaction. Never-ending up-skilling without any reward from IBM side. There are no rewards at end of the year anymore. No motivation for employees. Many teams works really understaffed.

      Advice to Senior Management: Stop saving money on your skilled employees and give them satisfaction for improving their skills and work. Consider value of employees, also unbalanced salary. Give your employees some motivation !!!

    • “Big Blue is not so great”

      Current Employee — Inside Sales in Dallas, TX. I have been working at IBM full-time (more than 3 years). Pros: Flexible work schedule. Air conditioned offices. Cons: Dishonest managers; no raises; no development, just pressure.
    • “Going downhill on the backs of employees to meet profit targets with declining revenues”

      Current Employee — Technical Solutions Manager in Dallas, TX. I have been working at IBM full-time (more than 10 years).

      Pros: Big IT Services, Computer & Software company. IBM used to be one of the top ten companies to work for until doubling profits every five years became more important than investing in IBM employees. They still allow employees to work from home in some jobs and that can be a real plus if you don't have to travel a lot. They have some promising technologies if they can bring them to market cost effectively.

      Cons: What haven't they taken away? Pensions, raises, commissions, work-life balance, no layoff policy, education matching program, lifetime medical coverage upon retirement, opinion surveys...add that to ever increasing healthcare costs and some retirees forced to look at ObamaCare.

      Advice to Senior Management: Employees may be hanging on because they haven't figured out where to go but the best ones are leaving as they see no loyalty on the part of IBM Management and the compensation plan has fallen far behind inflation. As some say, IBM is on the Roadmap to Hell in terms of doubling profits twice in ten years. As a result of giving the shaft to employees to meet the profit plan, employees have little motivation to excel as the rewards for doing so are no longer at IBM. IBM used to be one of the top companies to work for. At one time, a long time ago, I think IBM was even the number one company to work for. IBM hasn't made the top 100 companies to work for list in several years.

    • “Most Innovative Company Today”

      Current Employee — Senior Managing Consultant in Salt Lake City, UT.

      Pros: This is by far the most innovative company you will find. This is where many of the best come from Silicon Valley when they are ready for a life — and they bring all of that brain power and experience with them.

      Cons: You will always be pushed to work more and get our of balance. It is not hard to push back if you are smart about it.

      Advice to Senior Management: Upper management is great. Middle management is the challenge. Those that have thrived in the march to 2015 are your greatest obstacle to retaining the top talent you need in the new growth areas.

    • “Great opportunities for those starting careers; difficult for those of us brought up elsewhere”

      . Former Employee — Senior IT Architect.

      Pros: Great training ground. Respected name.

      Cons: Compensation is geared to sales personnel. Do not expect any 'regular' merit increases if you are above 50% of your 'band'. Profit associated bonuses were cancelled this year and do not appear to be on the horizon due to a goal to reach $20/share by 2015. Changing positions within the company can be prevented by management if they cannot backfill due to hiring freezes. You are also expected to take verbal harassment by other companies

      Advice to Senior Management: Make sure that you are able to support a service before you sell it.

    • “Mixed Feelings”

      Current Employee — Storage Engineer in Boulder, CO. I have been working at IBM full-time (more than an year). Pros: IBM is a BIG company. This means every department is different. My experience was decent. Started my IT career here. IBM will always be around in some form. As of right now it is taking a new form and has some growing pains (as in restructuring pains). Cons: IBM is on a rocky road at the moment. Advice to Senior Management: Advice to those in-charge of deciding cuts and hiring: Get a new strategy. The current strategy is not working.
    • “StoredIQ after my three years as VP Channels & Strategic Partners was acquired by IBM.”

      Former Employee — Vice President Channels & Strategic Partners in San Diego, CA. I worked at IBM full-time (more than 3 years).

      Pros: Prior to acquisition by IBM, StoredIQ was a small company that you were able to where many hats, make decisions and make things happen with out the politics and bureaucracy.

      Cons: When IBM acquired StoredIQ we became lost in the politics and bureaucracy of the 12 Billion dollar company. Great people at IBM, but there was little room for the channel leadership to fit into the greater IBM Channel organization.

      Advice to Senior Management: Value the Entrepreneurial spirit and experience that the executives from the acquired company would bring to IBM.

    • “Performance Assessments and Contributions Issues”

      Current Employee — Software Engineer in Austin, TX. I have been working at IBM full-time (more than 5 years).

      Pros: Originally? Training, education, paid certification, bonuses, profit sharing, effective team meetings, clear communication through the management chains.

      Cons: Now? Absolutely none of the above. Everyone is burned out, hiring freezes, no education budgets, no certification budgets, minimal growth profit sharing, no band promotions, cross team collaboration is dismal, etc.

      Advice to Senior Management: Don't forget your employees! Even if you don't have a budget to give promotions or provide incentives, at least take time to genuinely consult with your employees, ask what sort of issues their seeing, and actually do something about it. Don't say something is going to happen and then it doesn't. Hold to your word. Some of us that actually bust our butt to pick up weight for other people would actually be content with receiving additional training rather than getting a paid incentive, but even that doesn't happen. Our customers are getting ahead of the curve and some of our support areas cannot even keep up!

    • “Very interesting project work with a very large, bureaucratic company”

      Former Employee — Senior Consultant. I worked at IBM full-time (more than an year).

      Pros: Great name recognition; IBM is a very well respected brand across the board. As a result, you'll get exposure to client work with top players across various industries.

      Cons: For those looking to do pure strategy consulting work, this is the wrong firm (no matter what the recruiters tell you). There's so many organizational changes it's hard to keep up. And the company is so big, you can feel "lost", and moves to other opportunities are rare and complicated. It's also VERY hierarchical and bureaucratic; I know of several who had their hands slapped for having the nerve to ask a question of a high level manager or partner (exact words were "if you knew what their position is, you'd know not to bother them with a question about our little team". That says a lot right there. Also, in a case of irony, the technology supplied for IBMers is subpar, and the movement of information throughout the company is slow and archaic.

      Advice to Senior Management: Improve internal infrastructure. Stop over promising and under staffing projects just to win them—unless you're willing to have partners chip in to help meet deadlines.

    • “Software Engineer”

      Current Employee — Advisory Software Engineer in Austin, TX. I have been working at IBM full-time (more than 5 years). Pros: Pleasant work environment; schedule flexibility. It's nice to work with engineers from all around the world. Possibility to work either from office or from home. Learning opportunities allowing employees for education and self development. Innovation in a lot of fields. Cons: Job stability is under big stress. The company spends a lot of efforts and focus on the financial growth of the company leaving the employees' interest behind.
    • “Mixed but ultimately employees are worked into the ground. Too few resources, too many hours, no raises...”

      Former Employee — Project Manager.

      Pros: Benefits are great. Colleagues are nice. Work from home opportunity.

      Cons: Expected to work too many hours (60+ regularly). Too few resources, too many hours, no raises, expected to do your own job plus+; clients are always unhappy due to IBM processes and too few resources to keep projects on track. Frequent layoffs (2-3 year) even while still hiring. Management structure terrible — always have two managers with conflicting priorities.

      Advice to Senior Management: Focus has changed to penny pinching and you are losing credibility with your clients and employees. You desire good talent but keep driving them away due to long hours, no raises, and overwhelming requests from HR Managers in their efforts to compete themselves which decrease ability to keeping the client account priorities met. Hiring/RA practices to cut costs are digging a reputation hole and costing you money in long run. You lay off good people in one department only to hire again (often same people as contractors) in another department. Need to take a better holistic approach.

  • Alliance for Retired Americans Friday Alerts. This weeks headlines include:
    • Astronomical Prices of Some Cancer Drugs Hit Vulnerable Patients Hard
    • Americans United’s “Put the Middle Class First” Bus Tour Kicks Off
    • Wealthiest Giving Less to Charity, while Poor and Middle-class Increase Donations
    • Share your story about an Experience with the Social Security Administration
    • Nursing Home Ratings System to Get More Accurate Data
    • Hospitals Fined for Readmissions
  • Atlanta Journal-Constitution:

    Perdue ‘proud’ of outsourcing past, blames Washington for jobs lost. By Chris Joyner. Excerpts: U.S. Senate candidate David Perdue said Monday he is proud of outsourcing he has done in his career as a corporate executive, pushing blame for lost jobs back on Washington.

    Perdue, a former CEO for Dollar General and Republican nominee to replace retiring Sen. Saxby Chambliss, was stung by his own words last week in an article on Politico.com. The Washington political news website quoted Perdue from a 2005 deposition where he said he “spent most of my career” outsourcing.

    “Defend it? I’m proud of it,” he said in a press stop at The White House restaurant in Buckhead. “This is a part of American business, part of any business. Outsourcing is the procurement of products and services to help your business run. People do that all day.” ...

    “In the deposition, David Perdue explains, in his own words, that he would summarize his business experience as mostly spent outsourcing jobs overseas to places like China and Mexico,” said Nunn spokesman Nathan Click. “That’s a far different explanation than what he’s been trying to convince Georgia of during this election and it’s not the kind of experience we need in Washington.”

    This month Perdue received the endorsement of a key business group, the National Federation of Independent Business. In remarks made at the endorsement, Perdue put his record at Dollar General squarely up against his opponent’s, who he said had offered no “ideas on how to get people working again in America.”

  • Huffington Post:

    Unlike Walmart, Costco Has No Plans To Cut Employee Health Benefits. By Jillian Berman. Excerpts: Unlike Walmart, Costco has no plans to trim health-care benefits for workers any time soon, according to one top executive. Richard Galanti, the company’s chief financial officer, affirmed the wholesale club’s commitment to providing health coverage for employees during Wednesday’s earnings call.

    While acknowledging that health-care costs in the U.S. have been rising in recent years, Galanti also said the company isn't going to make workers suffer as a result: "We haven't and aren't going to make major changes like cutting a bunch of people out of” health coverage.

    “That's an expensive cost to us, and we're proud of the ability to be able to do that," he added.

    In contrast, rival Walmart on Tuesday announced that it would eliminate health benefits for part-time employees working less than an average of 30 hours a week -- or about 30,000 workers. Walmart followed several other companies, including Target and Trader Joe’s, who cut benefits for part-time workers months ago, noting that the workers could now get affordable plans under Obamacare.

    Costco is widely praised for the way it treats its workers, and the decision to keep health benefits will likely solidify that reputation. The company provides health coverage for employees working an average of at least 23 hours a week or more and pays better than many competitors. Executives argue this policy of keeping employees well-paid and happy drives growth not only at its warehouse clubs, but in the economy more broadly. ...

    On Wednesday, Costco reported that sales at stores open more than a year, an important retail metric, grew 6 percent in the U.S. By contrast, Walmart’s warehouse chain, Sam’s Club, saw flat same-store sales in its latest quarter.

  • New York Times:

    The Deficit Is Down, and Nobody Knows or Cares. By Paul Krugman. Excerpts: The CBO tells us that the federal deficit is way down — under 3 percent of GDP. And Jared Bernstein notes that Obama seems to get no credit.

    You may ask, what did you expect? But the truth is that a few years ago many pundits claimed that Obama would reap big political rewards by being the grownup, the responsible guy who Did What Had To Be Done. Worse, some reports said that the White House political staff believed this.

    It was, of course, nonsense on multiple levels. While pundits may like to script out elaborate psychodramas about voter perceptions, real perceptions bear no relationship to their scripts — in fact, a majority think the deficit has gone up on Obama’s watch, while only a small minority know that it’s down.

    And the deficit scolds themselves are unappeasable — nothing that doesn’t involve severely damage Social Security and/or Medicare will satisfy them. Why, it’s almost as if shredding the safety net, not reducing the deficit, was their real goal.

  • Washington Post:

    How workers lost the power struggle — and their pay raises. By Harold Meyerson. Excerpts: The extinction of the American raise — dead as a dodo, by every empirical measure — has become a truth universally acknowledged. Even Republican House Speaker John Boehner, not a fellow often glimpsed on the barricades with protesting workers, pronounced that “wages are stagnant” in his comments on the most recent employment figures. ...

    Fully documenting the reasons the United States has experienced this epochal upward redistribution of wealth and income requires a look at institutional economics as well as macroeconomics. The distribution of income is a function not just of global forces but also of social and institutional power. And over the past four decades, U.S. workers have suffered a loss of power that may exceed even their loss of income. ...

    By the ’90s, most corporate chief executives had their pay linked to the value of their stock, which many of them were able to boost by having their companies buy back outstanding shares, causing the value of the remaining shares to rise. Over the past decade, under pressure from “activist investors” and with the understanding that boosting share value would send CEO pay soaring, the corporations on the S&P 500 list of the largest publicly traded companies have devoted more than 90 percent of their profits to buying back their own shares and paying dividends to shareholders.

    That hasn’t left much for wage ­increases.

    While macroeconomic conditions surely explain some of the problems that have befallen U.S. workers, the institutional changes to American business — above all, the rise of investor power and the decline of worker power — are central to the tale. The case of the vanishing American raise can’t be solved without them.

New on the Alliance@IBM Site

Job Cut Reports

  • Comment 10/07/14:

    Please be advised in Australia this week there will be a large contractor cut likely to hit on Friday possibly up to 1/3 of the work force for GTS SO delivery. It has been reported to the DPE community that this is due to a large short fall in projected revenue in Q4. We have been told that there will be further cuts during Q4 and this is just the start. We are to begin looking at how we have "Go Slow" delaying and deferring customer revenue generating RFS and BAU work into next year. -AUSDPE-
  • Comment 10/08/14:

    Overheard at RTP: Building 205 is going to be torn down. If true this is really sad. IBM going to great lengths to cut costs. With x86 gone it's quiet at RTP. -anonymous-
  • Comment 10/08/14:

    The "2 Indians for 1 American" thing is all about headcount. Department size and project teams are measured in headcounts, not salaries. A few years back, the rule was that if you had approval to hire one headcount, you could hire one American engineer, or two Indians, or three Chinese. And we were encouraged (in many cases, compelled) to go for Indian or Chinese engineers. -16YearsAndCounting-
  • Comment 10/09/14:

    All STG design and manufacturing employees must complete a CAMSS skills questionnaire this month. 5 will get you 10 that within the next 6 months, STG will see the same 10% pay cut nonsense they're seeing in GTS because we're not properly trained. -KindofBlue-
  • Comment 10/09/14:

    I've been a member for over a decade. Paid the dues, tried to get IBMers to sign up and have gotten more from Alliance than they have from me. Never was I concerned that the numbers were too low to join. And never did I hear ANY IBMers, when I was trying to get them to join, ask "How many members you got so far?" Any IBMer that asks that question is NOT seriously considering anything except mocking Alliance. I say join Alliance and fight for a union, or just Shut Up and take an RA or a paycut or a furlough or a benefit loss or any abuse that IBM management can dish out. Or just quit IBM and go work at Wal-Mart if you don't want to stand up to the FUD that IBM continues to spread about unions and a written agreement to make your work life better. Go on. Get out of here or join the union. Quit the interrogation and false interest. That pisses me off. -membertoo-
  • Comment 10/10/14:

    To MEMBERTOO: 100% agree. Thanks. I do not understand all these IBMers who continue to stick their heads in the sand about the greed of IBM headquarters and what they have done to a once-honorable company. They are blind and deaf to what their inaction on behalf of the union is doing to all of us who are not executives.

    It rankles to think that many of these people are Americans who have forgotten what we are supposed to be standing for and still accept the tripe of Milton Friedman's economics (a fallacious and dangerous redefinition of "free market") when his theories have proven so destructive to the promise of America and have only encouraged the rapacious IBM Board and executives.

    It's a crude stretch to make this analogy, but I think of Martin Niemoeller: "and then they came for me...." I laugh when I think that Friedman himself probably agreed with Niemoeller but never thought that his theories were the very antithesis of what Niemoeller was saying. -Fed Up-

  • Comment 10/10/14:

    DE's and STSM leaving on droves everywhere in STG. Those remaining are frequently popping up in new organizations. Looks strange. I should divest from all IBM stock in preparation for for 2015. I suspect it's going to take a hard fall. -Anonymous Coward-
  • Comment 10/11/14:

    Just an FYI, IBM trimmed the fat on us USA-Based sub-k / contractors a few weeks ago. It was a total slaughter. I was cut even though we had a budget for 3 more people and numerous external and internal customers. IBM is definitely cutting every which way they can. If you are a contractor, GET OUT NOW! If you are a full-time IBM employee, you better start looking for a new job or get your fellows to join Alliance en masse. Now that a ton of contractors are gone, who do you think will be next? Good luck! ~ -Ex-IBM-Contractor-

IBM Retiree Issues

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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