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Highlights—October 25, 2014

  • I, Cringely:

    How to fix IBM. By Robert X. Cringely. Excerpts: Early in his tenure as CEO, Sam Palmisano made changes that created IBM’s problems today. IBM customers are buying fewer products and services. Revenue has dropped each quarter for the past ten. Sam’s changes alienated IBM customers, many of whom are ending what has been in many cases a multi-decade relationship. No amount of earnings promises, no amount of financial engineering, will fix this problem.

    IBM forgot the most important part of running a business. While shareholder value is important, it is customers that make business possible.

    Under Sam’s leadership IBM began to cut quality, cut corners, and under-deliver on its commitments. IBM squeezed every penny out of every deal without regard to the impact it would have on customers. And those customers have paid dearly. The reputation IBM earned over a century was ruined in a few short years. ...

    IBM’s Global Services have seen the worst cost cuts and the most layoffs. These cuts have hurt IBM customers. Many contracts have been cancelled and sales lost. IBM is no longer considered to be a trusted supplier by many of its customers.

    To fix IBM it needs to invest in Global Services and in its people. Yes, there are already quality improvement programs and automation projects, but these efforts are new, few, and small. Their focus is at the account level, not the organization. Most of the problems are at the leadership level, where profit has been the only priority. Global Services is in crisis and IBM needs to get serious about fixing this organization.

    IBM is hemorrhaging talent on a global scale across all divisions. It cannot retain good people. IBMers, as they call themselves, are underpaid, neglected, and have been abused for years. Most of IBM’s 400,000+ employees are no longer working for the company. Their jobs have become nightmares. They are prevented from doing good work. They know IBM is neglecting its customers, but they are powerless to do anything. The best they can do is to try to survive until reason returns to IBM’s leadership, if ever. ...

    Global Services is horribly inefficient. There is very little automation. The business information systems are poor. IBM has too many people managing accounts and too few servicing them. Global Services is in serious need of a business process redesign and better information systems. For the last 10 years all IBM has done is replace skilled American labor with cheap offshore labor. IBM’s workforce of 400,000 workers looks impressive. Ask IBM how many of them have minimal education and have worked for IBM for less than 3 years? That huge workforce is now a hollow shell of a once great company. ...

    IBM’s current management approach has crushed the life from most of the software companies it has purchased. Software is not a business you can carve into pieces and scatter all over the world. Software works best when there is a short and tight communications link between the customer and a dedicated product development team. Product development needs to understand the needs and directions of the customers, it needs to be empowered to design new products and versions that will increase its value to the market, and it needs to be enabled to produce those products and versions quickly and efficiently. ...

    The Respect Problem – Today in IBM “Respect for the individual” is dead. So is “Superlative customer service.” Every decision made by IBM for the last 10 years has been to find ways to spend nothing, do as little as possible, and get to $20 EPS. IBM’s workforce is operating in survival mode. They have no voice, no means to make IBM better, and they are certainly not going to stick their necks out. IBM is squandering its greatest resource and most of its best minds. Most of IBM’s businesses are declining. As business declines IBM cuts staff. Quality and services get worse and business declines even more. Execution gets worse. Every day customers trust and respect IBM less. They buy less. IBM needs to break this cycle of insanity. They need to start treating their employees better and mobilize them to save the company.

    The Leadership Problem – IBM has no vision, none, nada, zip. CEO Ginni Rometty and her cadre have no clue how to fix what’s wrong with IBM. And even if they did, they are too tainted by the current state of the company – a state they created. IBM executives are for the most part in a state of paralysis. They don’t know what to do. They know their business has serious problems. Even if they knew what to do they’re afraid to act. Ginni and the $20 EPS target had most of the senior executives frozen from doing anything. This type of management style can be fatal for business. The CEO should be helping each division become more successful. Because $20 EPS has been the only goal, IBM’s senior leaders have become unable to manage their businesses. ...

    Here’s why current management can’t do the job. If the current VP-level managers at IBM (the only level, by the way, that’s allowed to even see the budget) take action to spend some of the profit to fix their businesses, they’ll be in hot water with Ginni Rometty and IBM’s culture of blame simply for trying to do something. Just watch: Ginni’s plan to save the company will involve further cuts. You can’t cut your way to prosperity. If they take action and the fix doesn’t work, then they’ll be punished for trying. So the only obvious option current management seems to have is stand by and watch Ginni and the finance department kill their divisions. ...

    Thankfully IBM gave up on its 2015 goal of $20 EPS. Unfortunately IBM still plans to continue cutting staff to reach prosperity, which is insane. By now it should be painfully obvious this is destructive to the company. IBM needs to step back and be honest with itself and its shareholders. It needs to set reasonable budgets and financial expectations. It needs to spend more on its people and on improvements. IBM needs to regroup and repair the company. For the next three to five years IBM should plan on turning in lower, but still good profits. If they do this by 2020 they could again be a business juggernaut.

    Selected reader comments follow:

    • While the software division has been profitable, the other shoe is about to drop.

      The annual Big Data (or whatever buzz term they are using this year) is next week and attendance numbers are way down according to a vendor friend who attends the event. My Cognos support renewal came in at a 20% increase this year. IBM says that is because they simplified the licensing model and added functionality. BS This is on top of large increases every year since IBM bought Cognos. That is one way to gain short-term profit while implementing a customer elimination strategy.

      We passed on IBM SPSS for SAS. It was a great decision. SAS gets customer service, IBM does not.

      The bleeding will continue.

    • The fundamental problem is that there is no mechanism for punishing the executives who make “shareholder value” focused decisions. These executives take golden parachutes and jump the ship with a pot of gold made in the den of gamblers, called “the Wall Street”!
    • Spot on I have been here 15 years I’ve never seen such despondency people have little hope they will even keep their jobs for the next month
    • There is one place left for massive headcount cuts in IBM…the executive ranks. It’s time to rid the company of the overpaid ‘yes-men’ that don’t recognize value and are more interested in pleasing those above them and looking for the next promotion than in protecting the people below them, energizing them to do their best work, and knocking roadblocks out of the way from doing real accomplishments.
    • As was said before, fire half the execs. Including the top three tiers. Do this right now, and put that savings into hiring real developers and testers. People who understand production environments, availability, and quality.

      Think about real productivity. Most tools in use have followed the failed client server model, you have to be connected to do anything. This is a real problem for the road warriors that are the customer facing bodies. Hotel and airport connectivity is just not substantial enough to use these “tools.” This had real productivity costs, and hurts morale when worker bees are dinged for not getting mindless admin done when it is impossible to do so.

      More real technical staff is an urgent requirement, both to support sales but also to support customers trying to implement software/hardware.

      Recognize that not all technical staff are interchangeable parts.

      Remember who pays the bills. It is not IBM execs. It is not stock holders. It is customers, and if they are not happy they don’t pay their bills, they do not buy the second license of the product (that second license is where real money is made, as you do not have to spend to make that sale), they cost more in support, etc.

      The grandest strategy often fails when the sergeants that have to implement it run up against tactical reality. And sometimes the strategy has to be abandoned, especially when it is crafted by first lieutenants who have never implemented anything.

      An ongoing successful company has to balance between the needs of existing customers and systems, and what looks promising for the future. It has to reward both the grinders and the brilliant fireflies – because it takes both to produce long term value and income for all involved.

  • New York Times:

    Morning Agenda: IBM’s Ugly Truth. By Sydney Ember. Excerpts: Virginia M. Rometty, IBM’s chief executive, has “talked a good game about focusing on ‘shareholder value,’” Andrew Ross Sorkin writes in the DealBook Column. Even Warren E. Buffett, who has long held an aversion to technology companies, has invested in IBM. But these “shareholder friendly” maneuvers have been masking an ugly truth. “IBM’s success in recent years has been tied more to financial engineering than actual performance,” Mr. Sorkin writes. This became apparent on Monday morning when the company announced its earnings, missing analysts’ expectations by a wide margin. The stock fell more than 7 percent, to $169.10, by the end of the day, below the average price Mr. Buffett paid since he started buying the stock in 2011.

    Since 2000, IBM spent some $108 billion on its own shares, according to its most recent annual report. It also paid out $30 billion in dividends. To help finance this share-buying spree, IBM loaded up on debt. While the company spent $138 billion on its shares and dividend payments, it spent just $59 billion on its own business through capital expenditures and $32 billion on acquisitions. “All of which is to say that IBM has arguably been spending its money on the wrong things: shareholders, rather than building its own business,” Mr. Sorkin writes.

    “The buybacks and dividend payments have managed to keep activists and vocal hedge-fund investors at bay ‒ at least so far. But if IBM’s performance doesn’t turn around, and soon, Ms. Rometty may face a mini-mutiny,” he adds. “The question for Ms. Rometty is whether she can figure out how to turn around IBM — not just its numbers, but also the company itself.”

  • BusinessWeek:

    IBM Is in Even Worse Shape Than It Seemed. By Nick Summers. Excerpts: Like a driver obeying the commands of a GPS system even as passengers shout that the car is clearly headed toward a ditch, IBM’s chief executive officer, Ginni Rometty, has followed the profit “roadmap” laid out by her predecessor. The company was going to reach $20 in adjusted earnings per share by 2015, damn it, even as nine straight quarters of sinking revenue made that an increasingly untenable feat of financial engineering. IBM laid off workers, fiddled with its tax rate, took on debt, and bought back a staggering number of its own shares to make the math work, even as all that left the company less able to compete with the likes of Amazon.com and Google in cloud computing.

    Today Rometty finally abandoned “Roadmap 2015,” announcing that IBM cannot hit the target after all. IBM also said it will pay a chipmaker called GlobalFoundries $1.5 billion to take its chip division off its hands, while also taking a $4.7 billion charge. And IBM reported its third-quarter results—a 10th consecutive period of falling sales, marked by weaker performance in growth markets. “We are disappointed in our performance,” Rometty said in a statement. “We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry.” In response, shares of IBM were down more than 7 percent on Monday morning, Oct. 20.

    I wrote, for a May 22 Bloomberg Businessweek cover story, about Rometty’s nearly impossible task of reinventing IBM for the era of cloud computing while handcuffed by the “Roadmap.” IBM is 103 years old and has survived upheavals in the technology industry before—selling mainframes, then personal computers, then getting into the consulting game. Rometty will tell anyone who listens that the changes demanded of IBM today are as great as they’ve ever been. One question is whether IBM has the technical chops to compete with Amazon and others: After losing a lucrative CIA cloud project to the upstart, IBM had to acquire a small competitor, SoftLayer, to competently provide the services its customers are now demanding. The arrival of cheap cloud computing means that corporations don’t need IBM’s big, expensive mainframes. And even if IBM does catch up, the cloud might be such a thin-margined industry that it can’t sustain the profit margins IBM had been telling investors to expect. Until today.

    This morning’s sell off is the worst in four years for IBM, Bloomberg News reported. “IBM needs to find success and growth in the cloud through organic and acquisitive means,” Daniel Ives, an analyst at FBR Capital Markets, told BN. “Otherwise there could be some darker days ahead for the tech giant and its investors.” In other words: Focus not on financials but on making stuff people will pay money for, or else.

    Selected reader comments follow:

    • IBM executives have been ignoring their own technical experts for years, investing more and more in marketing rather than actual product development. How long until stockholders demand Ginni's head on a platter is the real question.
    • It is neither accurate nor fair to put this all on Rometty — Palmisano deserves a big helping of blame as does Gerstner.

      All of them have failed multiple times in actually monetizing the R&D investments of the past three decades, infusing a culture of innovation into a firm that once was able to capitalize on new products, and most importantly NOT "growing by cutting" — it is hard to emphasize the demoralization that cutbacks bring to even the most resilient employees.

      Earning growth absolutely HAS TO COME from expanding into new markets, increasing "top line" revenues and being the kind of innovative firm that attracts talented employees.

      If Rometty learned anything from Palmisano it should be that IBM does best when it SELLS MORE THAN ITS COMPETITORS, if the mix of software, services and hardware is such that clients see the value the revenue is impressive. Conversely when the value is NOT apparent clients flee and revenue falls.

      This might sound like sort of advice that one could learn from "Chance Gardner" in Being There but apparently all the inbred Ivy League MBAs that typically serve on Big Blue's Board and inhabit the fancy office suites of the firm's far flung enterprise need to spend less time on "roadmaps" and more time looking at what clients are spending money on.

    • If she is replaced by another one just like her, it won't make any difference. The entire management paradigm must be changed, and about the only way to do this is total reconstitution/replacement of the cadre management, including the board. This seems most unlikely short of massive chapter 11 downsizing, and as exemplified by GMC this may not occur even then. IBM like GMC seems to have reached the end of its corporate lifespan.
    • All of you tens of thousands of IBMers out there — are any of you happy at your work? IBM abuses its employees endlessly. It lost its way when it went outside of the company to get Gerstner. Gerstner immediately destroyed the culture at IBM, developed ever so careful over almost a century. Now, its competition treats its employees even better than they expect to be treated, with simple perks like free food, posh bus commuting, gyms, etc. IBM's competition realizes that when people have a great environment they WANT to work. When they can see tangible results, not just a paycheck, for what they do they will actually work way too much. At IBM the employees work hard too, but under a cloud of fear and intimidation — the old Silicon Valley mushroom management philosophy.

      IBM will not be able to turn itself around and will gradually sink into the sunset, to be sold or bought up piece meal. Not because it can't come with a winning business plan, but because there is not a single employee at IBM that would not jump to almost any one of its competitors without a second thought if given the opportunity. IBM will never be able to recapture a culture that will allow it to attract and retain the employees it needs to take it into the future.

    • It's awesome when the cheap labor cheerleaders take it on the nose. Thanks IBM, for replacing American workers with H-1B slaves and outsourcing jobs as well. How's that strategy working out for you?
    • I concur with the conclusion sentence: "Focus not on financials but on making stuff people will pay money for, or else."

      Instead of laying off people to cut the "expense" of human capital, they should invest in their people and create a culture of innovation at IBM. In this fast-paced industry, only the firms that continuously innovate are the ones that will be in the game for the long haul. To create "disruptive innovations" you need the right people with the right ambition and drive to make IBM once again a great company.

    • Anybody who watched quarter after quarter of revenue declines while expecting the $20 target to happen must believe in magic.
    • IBM has made one mistake after the other starting with having contracted a PC operating system with Bill Gates to discontinuing its PC business segment. Small minds in a big company equate to stupid decisions. Had IBM continued on with its development of an operating system for its PC there would be no Microsoft today and IBM would likely be the worlds largest software company. Had IBM stayed in the PC business and taken it more seriously they would probably be the world's leader in hand held devises, laptops, notebooks, desktops etc etc etc and Apple would have gone broke years ago. Had IBM acquired Bell Labs when it had the opportunity, IBM would be the worlds undisputed technology leader and innovator today. Small minds, greed, a fear of the unknown, more greed and stupidity equate to extinction.
    • Dropping Roadmap 2015 should be the final exclamation point for IBM to get its act together. I think this signals once and for all that management understands the two most important challenges, in order of precedence:
      • Fix structural management issues that inhibit bottom up initiative, innovation, and delivery. Give the company back to technology engineers, taking it away from financial engineers...and treat the star employees well.
      • Product development: build organic products that companies and people want.

      I know for a fact that IBM has the capability. I'm still betting it has the political will. If I have a doubt, it's with Ginni. It's time to step up or move on.

    • IBMs downfall began when the decided to pay Bill Gates for software he did not own! They were clueless then and are still clueless now!

      Your employees will not put out 110% when they know any day now they may loose their job. Besides employees cant put out even 80% when they are constantly busy updating their Resume and looking for a better employer. Contrast that with Google employees and others who love their company!

    • I am sure that the hundreds of thousands of American workers laid off by IBM over the years are relishing this with uncommon joy
    • They are indeed laughing their arses off, couldn't happen to a nicer bunch of goon management.
    • Maybe if they didn't run roughshod over their employees and stop treating their engineers like factory workers, they might have some success. They always lead the way in eliminating employee benefits like defined pension plans.
    • Her head, and that of several of her top management team, should have been chopped off long ago when it really mattered. Most of her minions, and Ginny herself, add no value, don't listen to employees, and refuse to acknowledge the changing marketplace in which they compete. Goodbye Ginny and take Bill Busby and the rest of your incompetent team with you.
    • Don't worry, everyone. Her parachute is golden. She will make more on the way out than most elderly Americans have made in their lifetimes. Ain't capitalism grand?
    • They'll make it up by not giving raises or bonuses to regulars this year and giving the execs the money instead. That'll incentivize them to do even better next year.
    • Amazed no one's mentioned Robert Cringely's book on IBM, which came out a few months ago. Now that the stock has finally taken a hit, maybe Wall Street folks will read it.
    • I see IBM in action every single day in a variety of contexts. I have worked with IBM teams on many projects. They have never seemed more disorganized and unfocused as they do today. I have had multiple friends join and quit in less than a year because of how poorly the company seems to run. It is lacking project management, accountability, and customer focus. IBM will undo all the recovery it experienced previously if something doesn't change soon, shrinking to a shadow of its former self.
    • This is what happens when the employee population fears for their jobs on a weekly basis. IBM management has completely destroyed morale and employee engagement with their actions over the past 10-15 years. I was there for over two decades and witnessed the decay from within. I knew the end was near so I found another gig and never looked back. I still talk to some of my former coworkers and the stories they tell me are worthy of the Dilbert series. Everyone is frozen in place with the attitude of 'why should I bust my arse on this deal/project/whatever, since I will probably get laid off anyway.' Enough said!
    • Well, the god given truth is in...IBM's financial engineering strategy, executed over the last 12 to 15 years was a complete and utter failure. You can just imagine what TJ Watson Sr. and TJ Watson Jr are thinking now? Looks like another regime change is all but certain.
    • As a former IBMer (worked their 12 years, ending about 4 years ago), I can describe first-hand many of the horrible decisions that IBM made, both internally against employees as well as externally against clients. My last year there they put a bunch of sales folks in my division on a bonus plan that essentially was short-funded, so they knew they wouldn't have to pay out as much, and the sales team knew it. Meantime, they laid off support staff because they knew that in order to make money the sales team would pick up the slack and work more. Then came the record earnings—which they bragged about—simultaneously with promotion and salary freezes. Were they really expecting people to not realize that the senior executives—paid in stock, unlike everyone else who didn't receive stock—were lining their pockets while the regular workers had to work more?

      Also, IBM acts like a firm, only promoting to executive ranks through internal resources. Essentially, they have no infusion of outside talent at all. Meantime, the promotions are based on who you know, and are not merit-based (regardless of what anyone says). So they dangle the carrot (like at law firms), the difference being that at law firms you have a chance at making partner if you are a rain maker. Just a terrible way to freeze a bad culture in place.

      Sadly, there are a number of former colleagues who are still there. Why, I have no idea. It's a bad company with bad executives who make bad decisions for bad reasons.

    • IBM has always screwed things up. They had a huge lead in the develop of the PC, but executives were of the mindset that centralized power must have centralized computing. Lotus was an early spreadsheet that could still be in competition with Microsoft, but no. OS/2—still couldn't get enough bugs out of it before Microsoft brought out Windows. IBM could have been as big as it is now, plus Dell, HP, Microsoft, and Oracle, if it had played its cards right. What these successful competitor all have in common is they were started by very strong technical founders.

      IBM has an army of bean counters making decisions without any understanding how the products can solve customers problems because the bean counters have not used IBM's products to solve problems similar to their customers'.

    • Any customer of IBM saw this coming...they are arrogant and absurdly difficult to do business with. You know going into to any RFP with IBM as a participant that they will be the most expensive, beg for a second chance to be more competitive (that is, still most expensive, but by a little less) and then cause the most headaches when it's time to write up a contract. When you have an antagonistic, unrealistic relationship with customers, you lose touch with the market. Like Oracle, the only time anyone does business with them is when they have no choice. Unlike Oracle, there are many more alternatives available now.
    • Could not happen to more deserving corporate "leadership". Unfortunately, the American rank-n-file engineers that are still left at IBM will also suffer, through no fault of their own.

      My company's CIO outsourced our infrastructure to IBM in 2009 (after receiving a nice fat bonus of course). Since then, the mean time to get a server racked and built ballooned from a couple weeks to almost a year. You cannot get an American engineer on the phone when you call for support. Even worse, the bureaucracy and red tape needed to get *anything* done has skyrocketed. Of course, my company's senior leadership won't hear any of that, and the CIO (now thankfully on his way out) actually told our staff to "stop complaining about IBM" point blank at one of our IT town hall meetings. Basically, you could either shut up, join the cheerleading staff, or find another place to work.

      Poor customer service, serial outsourcing/layoffs, late entry into cloud/hosting, lousy SW products (Notes, Sametime, Tivoli); No wonder IBM is foundering. Used to be a great American company. What a shame.

  • Wall Street Journal:

    IBM Woes Point to a Fresh Overhaul. CEO Disappointed With Results; Revenue Declines for 10th Straight Quarter. By Don Clark. Excerpts: International Business Machines Corp. , two decades after successfully shifting its focus to software and computer services from hardware, is showing signs of needing another overhaul. ...

    On Monday, the computing and software giant abandoned a longtime earnings target, reported sharply lower third-quarter profit on a surprising 4% downturn in sales, and said it would divest semiconductor operations that underpin much of its remaining computer business. ...

    “Our results this quarter were disappointing,” IBM Chief Executive Virginia Rometty said after disclosing the weakness in services and software and a large write-down to divest the semiconductor unit. “We’ve got to reinvent ourself like we’ve done in prior generations.”

    It was IBM’s 10th consecutive quarter of flat or declining sales. The results stood in contrast to Apple Inc., which on Monday posted a 13% profit increase on strong September sales of its larger-screen iPhones.

    The Armonk, N.Y., technology giant said it no longer expects to earn at least $20 a share next year, a forecast it has maintained for five years and under two chief executives. IBM didn’t offer an estimate for next year, saying it would offer a new outlook in January.

    Selected reader comments follow:

    • "Under the deal with Globalfoundries, IBM will pay the semiconductor company $1.5 billion to take over chip manufacturing operations..." So the business was managed to the point it had a negative value? What's IBM leadership doing exactly? Talk about destroying shareholder value...
    • Marketplace or just poor management from Rometty. Of course, previous CEO probably milked all the expense items he could from outsourcing tens of thousands of jobs to India and Eastern Europe leaving her cupboard bare.
    • No sympathy for IBM at all. Kinda ironic that the company with the worst employee abuse (401k benefits match paid only yearly, trainees take pay cuts) is doing poorly.
    • IBM with its massive share buyback program to support its' earnings target is a perfect example of the grand illusion of economic recovery perpetrated by the Fed and their phony QE program. Shares of IBM and the stock market in general have much further to fall in order to reflect economic reality.
    • I remember an old finance professor from the 1980s who always warned about share buy backs. Her take: if a company has nothing better to do with its money -- no new products, new businesses, R&D or even smart acquisitions -- then maybe it's time for new leadership.
    • Leadership is not paid to bet on the direction of their stock price. Buybacks are, in my view, a negative leading indicator that signals no other productive uses of capital are available. In our world that seems to prefer financial engineering over hard work, I think that view is contrary to the market...but it is my view.
    • A few years ago, Apple decided that chips were essential to its future, so they bought a chip design/engineering company and ever since, their Ax chips have been considered central to their product strategy.

      IBM is getting rid of its technology. The Intel servers, and now the chips. I wonder how long before is only a services company with no technology to sell.

      Is it true that Rometty's only quarter of positive news was her first? Very sad.

    • Rometty never had a chance.

      For the previous decade before she was appointed CEO, IBM had been trimming the 'fat'. All back office work had been moved to lower cost centers regardless of the impact on getting business done. Outsourcing started to onshore lower cost and lower quality staff as a way to retain margins. As contracts ended, customer renegotiated lower prices forcing lower margins. Repeat the cycle enough times you have a death spiral.

      IBM focused on their core customers only. How much money could they suck out of their existing client base, providing steep discounts. IBM never focused on building relationships in their SMB space.

      IBM played accounting tricks and didn't reinvest in products. If a product was mature, it meant less cost in maintaining and enhancing while enjoying a slowly declining revenue stream.

      By the time Rometty got in control, it was BAU only there was nothing left to cut. There's more, but you get the idea.

    • Rometty started in a bad position. Lacked the ability to turn things around because she lacked the resources (people) who were capable of turning things around. (Big Data? Just toss money at it.)

      Watson? A solution looking for a problem.

      Bigger problem... IBMers arrogance. (But that's another story.)

      The biggest problem is inertia. IBM will have to revamp their culture from the ground up. And that's something I don't think that Rometty and her senior execs have the ability to make happen.

      Full disclosure. I escaped the 'Borg.

    • When you read all these comments you see only negatives on IBM and Rometty. She has had almost 3 years to make things better at IBM and has failed convincingly. When is the Board of Directors going to take some action? Is anybody at the helm or is the ship going down with the crew?

      IBM needs to bring lots of fresh blood and inject some out of the box thinking into their strategy for them to survive. Selling their chip foundries is one of their worst moves.

  • New York Times:

    Weak Results at IBM as Its Strategy Shifts. By Steve Lohr. Excerpts: After IBM reported surprisingly weak quarterly profits and sales Monday morning, Virginia M. Rometty did something most unusual for an IBM chief executive. She joined the conference call with analysts, and forcefully made the case for investing heavily in new fields that promise growth in the future, despite a near-term financial setback. ...

    But Ms. Rometty insisted that IBM’s “very bold moves” since she became chief executive nearly two years ago — multibillion-dollar spending programs for data analysis software and skills, cloud computing and Watson artificial intelligence technology — were the right ones. “The strategy is correct,” she said. “Now it’s our speed of execution that needs to improve.”

  • Barrons:

    IBM CEO Rometty Hints to CNBC About Layoffs; ‘We Are Playing to Win’. By Tiernan Ray. Excerpts: CNBC‘s David Faber interviewed IBM CEO Ginni Rometty a short while ago.

    Faber noted it was a “difficult day” for IBM, to which she nodded her assent. In the conversation, she implies there will be layoffs, when pressed by Faber on the matter. Here’s a rough transcript of the Q&A: ...

    Ginni Rometty: The third quarter earnings were disappointing, we saw some slowdowns in service productivity and in software. But we had another announcement which was all about taking this company to the future. We are transforming, we are reinventing the company. You just need to look to the results. Again in this quarter, they [the strategic initiatives] accelerated. We are reorganizing this company around analytics, around cloud, around social, local, mobile. Take a look at cloud, revenue growth was greater than 50%, again. This point about us continuing to move this company to higher value is what it’s all about. The divestiture to Globalfoundries is part of that. This year we will have divested $7 billion of revenue. But it’s empty revenue.

    DF: Are there going to be layoffs?

    GR: We’ll announce some restructuring actions we’ll take. That will increase our speed and simplicity. I was with 30 of our biggest clients a few days ago. What they were talking about is the role IBM can uniquely play about being the navigator. When it comes to an enterprise, yo’ve got to emigrate them. We always said three things would make a difference on cloud: hybrid; data; security. All that is coming together now.

    Selected reader comments follow:

    • Sure lay off all employees here in the US and offshore every job. See how fast this ship sinks then. This company used to be quality driven…no longer.
    • If layoffs are necessary, so be it. But Rometty should be the first to go. The Board will be remiss in their fiduciary responsibility to the stockholders if that does not happen almost immediately
    • IBM needs to stop selling businesses that reduce revenue. Many technology companies are not profitable. All Wall Street cares about is revenue growth, and that’s the way it’s been since Rometty has been CEO, all while IBM has been focused on profit and share buybacks. When what you are doing doesn’t work, stop doing it!
    • Please lay me off Ginny. I am ready for life outside the infested IBM workplace. Infested with delusional grandiose ideas that will never materialize.
    • IBM’s earnings and revenue report was yet another disaster brought on by this stupid, stupid notion of abandoning everything for profits!!!! The company’s financial engineering efforts have put the company in dire straights. Should be a college class case study on what NOT to do if you want to grow revenue, employee satisfaction and client satisfaction….
    • Same old story at IBM, layoffs,layoffs…They have no other tricks. When Gertsner came in he grew the company, the regime since him only knows how to cut...bad business practices.
    • IBM has simply lost its edge. It is no longer the innovator or a world class leader. It only lumbers along. The company had it all; talent, vision, and execution, but now the business model centers around layoffs and technology acquisitions to fulfill its obligation to shareholders. I left IBM because it no longer valued their employees or their contributions. They merely became disposable assets. I guess that is what happens to large companies driven by the greed of its big shareholder and board members. Good luck to those who remain employees of this once fine company.
    • It is sad to see IBM under the misguidance of Gini..who apparently caters to Warren Buffet. IBM under her lack of leadership has contracted.. and continues to falter. In truth, the SEC should not allow a company to buy back stock when the purpose is to elevate per share earnings without other purpose. If you think about it the “financial engineering” people speak of is really a sort of Ponzi Scheme. To say that Gini did not create this mess is to ignore that she was Palmisano’s right hand girl for a long time before taking over as CEO...she helped engineer the current disaster.

      It is my hope that IBM shares drop out the bottom. IBM management has to begin caring about growing the business more than engineering the stock price. Warren Buffets idea to ”languish” the stock price to allow repurchase only works if there is revenue to back it up. With no vision, no real design. IBM will do worse...my question is...when will someone fire Rometty?

  • Seeking Alpha:

    IBM's 2014 guidance well below consensus; services backlog -7%. By Eric Jhonsa. Excerpts: After badly missing Q3 EPS estimates (in spite of backing out the losses of its soon-to-be-sold chip unit), IBM guided on its Q3 CC for 2014 EPS from continuing ops. to be down 2%-4% Y/Y. That implies a range of $15.97-$16.30, soundly below a $17.87 consensus. ...

    IBM's closely-watched services backlog fell 7% Y/Y in Q3 to $128B, a much sharper drop than Q2's 1%; the company declares it saw "insufficient" services productivity. Also worrying investors: Gross margin fell 90 bps to 49.2%, ending a long string of Y/Y gains.

  • Poughkeepsie Journal:

    East Fishkill jobs to be preserved in IBM sale. Excerpts: IBM employees in East Fishkill will work for GlobalFoundries in a agreement to be announced Monday, and all manufacturing jobs there will be retained in a multi-year deal between the state and the companies, a source involved in the discussions told Gannett's Albany Bureau on Sunday night.

    IBM and GlobalFoundries announced the mega sale that will have a far-reaching impact on IBM's massive footprint through the Hudson Valley and across New York.

  • Seeking Alpha:

    IBM: A Zombie Just In Time For Halloween. Excerpts: It was with a morbid sense of interest that I read through the simply awful third-quarter results from IBM on Monday morning. Indeed, having heard of some "major news" that would be announced along with the earnings, I had hopes of some great new European acquisition (could it finally be the purchase of SAP everyone had joked about for years?), along with yet another quarter of flatness in revenue and earnings. Instead, I read an account of what essentially seems to be the walking dead, a zombie of a $100B company taking shots to the body but continuing to meander on, finding a scrap of flesh here and there but largely heading aimlessly toward a bleak future.
  • Washington Post opinion:

    IBM’s big blues. By Harold Meyerson. Excerpts: Big Blue’s got the blues. On Monday, IBM’s stock tumbled by 7 percent after it unveiled a dismal quarterly earnings report that showed a 4 percent drop in revenue — the 10th consecutive quarter of flat or declining sales. Revealing these mournful numbers, the company also announced it would abandon a policy that set it apart from all other firms: the 2010 pledge from then-CEO Sam Palmisano to raise the earnings per share of its stock to $20 by 2015.

    Selected reader comments follow:

    • The IBM you imagined you knew died about 20 years ago. Today's organization has no interest in anything but services...but services provided poorly by contractors and out of it's Indian service organization.

      And they've delivered so poorly in their Global Services divisions, that companies in long term contracts will be moving away from IBM as fast as their legal legs will let them. IBM will be selling it's hosting services because there's nobody left stupid enough to sign a contract with them.

    • Spot on. IBM began outsourcing work for our company to India around 2009. These resources were about a quarter of the cost of American programmers, but they delivered about a quarter of the quality. We are no longer an IBM shop. IBM reported nice profits -- until the contracts for company's like ours ran out and were not renewed. And on top of it - many American jobs were lost.
    • The part of the story that I have not seen reported is this- like many other companies, IBM moved its compensation system for Palmisano and its senior executives (500+) to stock options. Everyone in a senior leadership position was incented to maintain a growing stock price. Live by EPS, die by EPS. Companies can not take their eyes off the ball of, well you know, markets, products and services, competition, customers, innovation, things like that.
    • All the IBM strategy did/does is create short term wealth for shareholders and executives. While making all these moves, IBM was abandoning it's research and development efforts, manufacturing, customer service, etc. If any company can prove that outsourcing and focusing on the short term at the expense of the long is a losing strategy, it's IBM. Watson (Sr. and Jr.) would be furious.
    • The kleptocrats who control corporations now regard stockholders with the same contempt they've always had for employees. The goal is to keep them in the dark and give them just enough money to keep them from leaving. There is no incentive to protect the long-term value and profitability of the corporation--it's all about executives extracting as much wealth as they can before they move on.
    • I live in a city where IBM used to have about 9,000 employees in the early 1990s. Since then there have been almost quarterly waves of layoffs, particularly severe after every announcement of less than ideal financial results. Fewer than 3,000 are left. A friend recently was laid off after 17 years with IBM.

      Nobody young I know wants to work for IBM and all the older people are just counting the days until they can get out and away from the constant fear of layoffs. A young guy I know, perhaps the best IT guy I have ever met, was offered a job at IBM. He turned it down because he did not want to spend his life wondering every quarter whether he was going to lose his job.

      IBM so totally screwed up its employees it seems to be in a death spiral. Nobody good wants to work there and those who do work there (at lease those I know locally) are practically paralyzed by fear. I would not wish employment at IBM on my worst enemy.

  • I, Cringely:

    Ginni comes to her senses, but too late for IBM? By Robert X. Cringely. Excerpts: This week, of all weeks, with IBM seemingly melting-down, you’d think I’d be writing about it and I have been, just not here. You can read two columns on IBM I published over at forbes.com, here and here. They are first day and second day analyses of IBM’s earnings announcement and sale of its chip division to GlobalFoundries. I could publish them here three days from now but by then nobody will care so instead I’ll just give you the links.

    One thing I can do here is consider the way IBM CEO Ginni Rometty is spinning this story. She was all over the news on Monday repudiating the 2015 earnings target set by her predecessor Sam Palmisano and more or less claiming to be a victim — along with the rest of IBM — of Sam’s bad management. Well she isn’t a victim. Ginni was an active participant in developing the Death March 2015 strategy. And as CEO — now CEO and chairman — it’s laughable to contend, as Ginni apparently does, that she has been somehow bound by Sam’s bad plan. ...

    Ginni Rometty is in trouble along with the rest of IBM. She’s leading a failed strategy laid out in gruesome detail in my IBM book (link at right — buy a bunch, please) and appears to have little or no idea what to do next. Having finally repudiated that crazy 2015 earnings target, the market will allow Ginni to reinvest some of that money in trying to save IBM’s core businesses. But it isn’t at all clear she knows where to invest or even why. If that’s true, Ginni Rometty won’t survive much longer.

    Selected reader comments follow:

    • It sure seems that services companies are slashing payroll to meet numbers (IBM, HP, and others), so I suspect that IBM won’t be the only one with major personnel problems in the future.

      What I don’t really get is why IBM and others seem to think that experienced employees are easily replaceable by low paid employees who use a script to follow along. That might be fine for simple issues, but once the complexity level gets ratcheted up all of the people who could fix that sort of problem quickly are all gone.

      Unless, of course, that’s the entire point: more billable hours.

    • My biggest issue as a DE at IBM is fighting through the layers of Directors and Vice Presidents to get anything done. The quantity this executive dead wood here is truly astounding. Their real expertise is playing the internal system and stripping cost. They deal in frameworks and concepts – very rarely reality. Many a VP does not even have the power to give a raise to retain people. I found this out when I received a few percent upon reaching DE. I hear it is the same for IBM Fellows.

      The real smart staff leave way ahead of making DE as renumeration is so poor or the bureaucracy drives them off – I was surprised that I made it – but it is all about playing the system of hoops. Directors and VPs do not even have to jump these hoops – they get promoted as ‘good old boys’.

      When I see Ginni recognizing this and starting to fire some of these loudmouth executives off – I will believe the company is turning around.

    • Amen. As a retired Distinguished Engineer myself I totally agree. I personally stayed there too long (36 years) and when I went solo I quintupled my net worth in 3 years and had much more fun.

      I’ll add that managers and executives are a protected species and the employees who don’t brown nose and tell customers the truth are the endangered ones. As they say in the consulting business, Ginny is “part of the furniture” and she had a hand in causing the problem throughout her career. It’s time for a true cleansing and not led by another con man like the cookie monster. If the company is to survive, they need a true leader, not a financial engineer come publicity hound like Gerstner.

      BTW, the current top technical types are suspect as well. I remember to this day when Irving B. quietly told me “Remember, it’s who you know, not what you know, or many of them are just politicians disguised in “techie skins”. We need to clean house there as well.

    • I left as an STSM, the process of becoming a DE was a process fraught with ass kissing and brown nosing. It’s long been said that IBM lost its technical soul when Nick Donofrio retired. All that’s left are SVP’s desperate to save their nichedoms. John Kelly doesn’t even come close, his only purpose is to justify Research’s existence making promises on what the future will bring. Ginny has drunk John’s Watson Kool Aid recipe.
    • I left as an Executive Architect, profession lead for my business group, and Chief Engineer of a $1.2 billion dollar account. For all that work, I was rewarded with raises in my last three years of $0, $110/month, and $0. To go along with almost nothing as a bonus. When I left, and I chose to leave, I wasn’t RA’d, a point of pride of mine. I was $35k below the mid-range of a band 10. I suppose I could have pushed for DE, but as the comment said…it was a process that was far to daunting for the reward.

      When I got certified, I was told the rewards were coming…just wait!

      Then I was told to get senior certified, and the rewards would come…just wait!

      Then I was told to hold on until I got my promotion to band 10, and boy, the rewards would start pouring in!

      Then I was told if I could just make it DE, THEN I would be rewarded for all my hard work.

      Instead, I updated me resume, interviewed with almost every big name tech company out there, left, and was VERY richly rewarded on the outside.

      I left to become a director elsewhere, and I’m now at the VP level. I’m also now fairly compensated against the market place. I’ve had more fun in the past thee years since leaving, and have learned more than I could ever have at IBM.

      My ONLY concern with IBM now is that I still have a lot of friends there, and I really want them to have fun again. I want for them what I have. I’ve heard from most of them this past week…everyone of them have their parachute strapped on, and are ready to jump. If you think there was a brain drain before, just wait…some hugely talented folks with serious chops are out there interviewing as I write this.

    • You hit the nail on the head with the excessive layers of management. When I retired as a Senior Software Engineer doing product architecture I had more layers above me than there were when Akers left. The worst effect of this was nobody would take calculated risks to develop new products as a potential failure meant the end of some executives career. The result is the new product and technology pipelines have stagnated to the point it will take years to get them restarted.
    • They have finally succeeded in turning it around. Only problem is that it’s now pointed straight down. For years from within I watched as their “trimming” amounted to random slashing and cutting. There was NEVER an apparent direction to make thing more efficient, run better or work smarter. Each quarter was simply a lifeboat drill, whom can you live without? Each 3rd, 4th or 5th line was given a number and everyone underneath had to contribute a similar amount.

      Higher ups were judged on x US bodies vs x Global bodies. Moving responsibilities from A to B would disturb the ratio of US vs Global bodies that they were being measured upon. No training, no education, no focus on combining inefficiencies, everyone was so protective of “their territory” that it simply came down to how many had to be excluded from the boat. Once the boats became somewhat spacious, they were replaced with smaller ones. Rinse, lather, repeat.

      Add in a pathetic, time consuming and entirely laughable capital acquisition process and HR bots to make sure no one strayed outside the lines and the stage was set. Accomplish nothing, but heaven forbid do not make any waves outside the box or question decisions being made.

      Failure to comply stamped RA in a column of a spreadsheet. $125 will arrive long before it ever climbs back to $200 if that is even possible at this stage. Keep writing Bob, maybe the sun will shine again someday.

    • IBM management really disdains anyone who questions their motives or directions. IBM management with ask techies for their honest technical opinion and do else wise if it adds to their own net $$ screwing the techies. After awhile a lot of technical folk left IBM. Management didn’t ask for their advice or even supported them; sometimes holding them in contempt. No wonder IBM is where they are now.
    • Give trexibmer the award for ‘hitting the nail on the head.’ I witnessed quite vividly the tragedy unfolding with the technical labor arbitrage and exited stage left. Sadly IBM never arbitraged the Directors, VPs or GMs, they instead multiplied like rabbits. IMHO, history will show that it was Lou who set the stage but it was Sammy who pulled the fatal trigger for the company with his roadmaps. Ginni just gets to go down w/the ship – even if she had turned on a dime day-one of her tenure, it was probably too little, too late at that point.
    • Interesting article and comments. Anybody who’s been with IBM the last decade has witnessed a company which has COMPLETELY lost it’s soul. When you’ve lived it – quarter by quarter x a number of years – the mistakes being made, the arrogance and the ignorance at the senior levels, the lack of good human resource management (speaking from the Professional Services perspective, where ultimately your product is your people) has been breathtaking.

      What is amazing is how long the ‘financial engineering’ approach has worked. Served Palmisano very well, and Rometty has ridden it until there is no more juice left in the tomato. Now she recognizes this and is passing the blame. Sorry, you ARE part of the problem Ginny.

      This company needs a lobotomy from head to toe. And those inside (and those who’ve recently left) know that. But there is too much arrogance to effect the change needed. Cost-cut yourself into oblivion IBM. Just too bad so many good people have had to suffer because of the greed and arrogance from the top.

    • Rometty put up a video about the results. Most of the responses were bland platitudes from the staff who have little real to say other than echo her words and perhaps get a little attention from above. Normally with these you see the occasional kick-ass comment and you get an internal ‘like’ system – a bit like FaceBook likes.

      So, one Canadian guy writes a response along the lines of ‘you are the captain. I am just a stoker’. He then goes on to say her message told him nothing other than ‘just follow the captain’. He then goes on to say he has ‘zero faith in IBM leaders. He trusts them as far as he can kick a moose’. Followed on by how he does worry for his customers. He then goes on to talk about how IBM has disabled its technical staff by under investment and idiots at the center dictating

      This guy gets 266 likes. That does not sound a lot – but you are lucky to see 10 likes on a particularly brave post. He even managed to get a number of people to comment and stick their necks out.

      One brave guy – where the culture is now one where the most skilled serfs mean nothing.

      I hope he and the 266 people who liked that are still in IBM by Xmas. Time will tell. The fact is the company is gutted and increasingly our teams are made a mockery of by client tech staff in key meetings who know more than we do. It is nothing to do with education – there is plenty of foil-ware and virtual courses. It is because we get no hands on anymore – you have to show the dog the rabbit. Hands on is supposed to be done in India by cheap labor. So, the immediate response in past few days – offshore more aggressively and cut costs further. The hollow suits in command know no other way.

    • She speaks to staff and customers as if they were toddlers in kindergarten.
    • About GR and whatever she said or implied about “blame” for this mess… Both she and Sam are equally culpable. When she was appointed, she was quoted as saying that direction would not change, since she was part of the team that put that direction in place. And only last quarter she reaffirmed this ludicrous roadmap. Now the big turnaround, which could not have been more poorly handled. At least the roadmap is dead. That all being said, Palmisano is also deeply complicit. But what does he care? Maybe $150 vs. $200 million payout?
    • It breaks my heart after 40 yrs to see the changes in IBM. They forgot their strength was their people. They slash and cut people with no regard. They continually add executives who provide little value and resource action the hands on workers. The people who are still there live in fear if they will be gone next quarter. Respect for the individual is long gone. They have forgotten what has made them successful in the past.

      They need to get back to the basics and resource action should be applied to the layers and layers of management. Turning the Queen Mary around is a huge challenge. I just hope it is still possible. I think it is very sad. There was a day many years ago when people were proud to say they worked at IBM. Now they just ask do you know anyone who is hiring? The employees live in fear of losing their jobs. People in that state cannot be productive. I am sentimental and I hope they can recover.

    • I saw the train coming and got off the tracks after 15 years as an employee (after 25 as a customer). I was proud when I got to carry an IBM business card. I’m not a slacker; I did well there – PBC 2+ or 1 every year, the last 7 in a row at 1. But I couldn’t stand in front of customers any more an present idle promises I knew there was nothing behind but PowerPoint and smart engineers with no budgets.

      @crow, there are and were amazing people and ideas there, but they are either leaving, were exiled to Lenovo, or are hanging on in quiet desperation and depression, waiting for retirement or a package offer. I moved on, and I’m proud of my business card again, but I am saddened at what used to be and what could have been, and the friends left behind. I think IBM may survive, but as a very different company, selling other people’s stuff and ideas.

      @Bob, thanks for the book, it was a riveting read having lived a great deal of it. Some things became clearer when I saw the bigger picture of what was going on 6-8 years ago when I started seeing the cracks opening., about the time abandoned the “innovation” buzzword and all those asterisks (which they apparently sold in bulk to Walmart).

    • Of course this is largely true. IBM is essentially a hedge fund. It buys non strategic hot companies and guts them of cash and IP for 2 years until the employment contracts of the former owners expire. Then they cast them away. IBM figures that if one acquisition out of four pan out they’re OK. Even if they’re successful, they’ll be rebranded into oblivion anyway and merged into the Software Group Borg or the Tivoli Borg or the Security Borg or the Websphere Borg. And now seemingly the Cloud Borg.

      In the two years it takes to vampirize each acquisition, almost nothing is invested in them to improve them or keep them current. And why should they when 50 startups will do the work for you in the next 2-5 years. Of those 50, 45 will disappear and the 5 remaining will be in a beauty pageant where IBM, Oracle, Microsoft, HP, etc are all looking to buy.

      If IBM fired every single non executive US employee and re-incorporated in Abu Dhabi, who would be shocked? Again, why not? It’s not really a company anymore in the classic sense of the world. It’s a few hundred attorneys and accountants.

    • Staff in IBM India have such a high turnover that some of my counterparts there are considered ‘senior’ in the team when they’ve been there for more than 6 months (it takes 12-18 months to see every aspect of this customer’s environment. Due to the customer’s requirement for background checks etc they might not actually get logins or be allowed to touch the customer systems for the first 3 months they are there. The cost of replacing these people every 3-6 months is not factored into the costs other than changing the requirement that they give 3 months notice when resigning – we’ve had people resign 15 days after starting.

      What we get is often very junior people starting with IBM (fresh out of a college) and get a few months of experience and then jump ship once they’ve got some experience to another company that will pay double for the same work they are doing at IBM.

      I’ve been dragged into a Cloud proposal project for my customer because ‘they need a Windows guy’ – the project has no funding so they are pulling in people from normal support roles to help design and build the solution being proposed. Instead of working out what particular skillset they need from the ‘Windows guy’ and perhaps getting the right skills for the job they’ve pulled a name out of a hat and I’m it.

      And this seems to be happening on just about every account – teams cobbled together and told to spend at least 20% of their time working on Cloud proposals (essentially people reinventing the same things over and over.) Manager told me “The work you do now is a dead end, there is no future in it. Cloud is the future…”

      I’ve got a very good relationship with my customer and one of their recent comments was “Why should we trust IBM with these new technologies when you aren’t delivering the expected service on our existing technology?”

    • A lot of people have left for Deloitte or smaller boutique companies. No raises, bonus, reduced benefits, hostile/toxic workplace, fragmented culture and no cohesive feeling among teams. Everyone feels like a subcontractor billing IBM. You sink or swim. The folks at the top are taking what they can (i.e. looting the coffers) and screw the little people. I half expect Rometty to say on one of her broadcasts “only the little people pay taxes”.
    • I forgot to add: IBM management neither leads nor manages employees. The only time they’re really engaged is for planning a resource action. Everything is centralized so you’re just another cog easily replaced.

  • Albany Times-Union:

    IBM fabs in NY, Vermont go to GlobalFoundries. By Larry Rulison. Excerpts: GlobalFoundries will take over IBM’s fabs in Dutchess County and Vermont and get IBM’s semiconductor workforce as part of the deal the two companies announced Monday.

    GlobalFoundries will take over IBM’s fabs in Dutchess County and Vermont and get IBM’s semiconductor workforce as part of the deal the two companies announced Monday.

    More than 5,000 IBM employees from New York and Vermont will become GlobalFoundries employees, although the companies would not say how many are in New York.

    However, some Vermont employees will be asked to move to Malta where GlobalFoundries operates ita Fab 8 factory. ...

    However, not everyone is celebrating, says Lee Conrad, national coordinator for Alliance@IBM, an IBM union organizing group formed by the CWA. IBM workers are not unionized but the group tracks layoffs and supports employee rights.

    “It is sad that IBM continues to shed business units and employees,” Conrad said. Instead of Big Blue it should be Little Blue.” ...

    The deal will cost IBM $4.7 billion, including $1.5 billion in cash to GlobalFoundries.

  • Poughkeepsie Journal:

    IBM stock's bad week: Bump? Slump? Nest eggs in danger? By Craig Wolf. Excerpts: What happened is important for investors and employees who depend on IBM's health for their livelihoods -- and for retirees whose nest egg may be heavily tied to IBM stock, which was long known for rock-solid growth. It's critical in Dutchess County, at last count with 7,000 IBM employees between the Poughkeepsie and East Fishkill plants, and home to many Big Blue retirees. ...

    Meanwhile, IBM's top insiders haven't been buying. They sold millions of dollars worth of shares earlier this year. According to summaries of insider sales filings, Ginni Rometty, the president, chairman and CEO, made four straight sales in 2014 to collect $11.4 million. There were no buys, not counting stock awards given as part of her compensation. ...

    Robert X. Cringely, longtime observer of the tech scene, in a Forbes article called "How to Fix IBM," wrote: "IBM is hemorrhaging talent on a global scale across all divisions. They cannot retain good people. IBMers, as they call themselves, are underpaid, neglected, and have been abused for years." ...

    David Stockman, posting in Seeking Alpha, ripped IBM's long strategy of stock buybacks, in which IBM buys its own shares on the open market to boost the value of remaining ones. He called it "a stock buyback contraption on steroids."

    "During the 31 quarters since the end of 2006, IBM has spent $111 billion on share buybacks and another $23 billion on dividends. But during the same time, IBM posted profits of only $107 billion," he said.

  • Poughkeepsie Journal:

    Worker groups say IBM 'roadmap' did damage. By Craig Wolf. Excerpts: A workers' group says IBM Corp.'s "Roadmap" to $20 in earnings per share of stock did plenty of damage to the company as well as its workforce. ...

    The company finally "admitted Roadmap 2015, or as employees called, 'Roadkill 2015,' is a failure," said the statement forwarded by Alliance@IBM, a group backed by the Communications Workers of America union. It said "enormous damage has been done to employees and the company" because of cuts made to try to reach the profit goal. ...

    The statement said tens of thousands of employees have been terminated and that there have been pay and benefit cuts and lack of raises. Many workers have quit because of "toxic work environment," they said.

    They said "unreasonable cost cuts" are impacting daily business needs and claim "loss of customer confidence."

    The company plans more job cuts in the current quarter.

  • WRAL TechWire (Raleigh):

    Rank-and-file IBMers pay the price as Big Blue's reboot accelerates. By Rick Smith. Excerpts: One post made to the Alliance@IBM website on Monday captures quite well the disruption that continues to sweep through the ranks of IBMers, let alone among IBM shareholders:
    "Ginny said this morning in her depressing video to employees that we will simplify and streamline our company. Yup, we all know what that means. Buckle up and sign up, or bend over. Read those tea leaves, people. It s[...] to see your company crash this badly, but there is some gratification in knowing at least one of the causes is treating your employees so horribly an[d] underestimating the impact of the low morale you have brought upon yourself by those actions."
  • Wall Street Journal:

    IBM Poised to Go Where It’s Never Gone Before. By Kevin Kingsbury and Steven Russolillo. Excerpts: In the first 35 years of the S&P 500, International Business Machines Corp. was among the index’s 10 biggest firms by market capitalization. It’s been in and out of the top 10 since 1992, but has never fallen outside of the top 20.

    That streak is now in jeopardy.

    With its roughly $168 billion market cap, IBM now ranks as the 19th biggest company in the S&P 500. Oracle Corp., and its $167 billion market cap, is right behind, followed by Merck Co. and Intel Corp, which each have market caps of about $155 billion. ...

    IBM has reported falling revenue for 10 straight quarters and on Monday acknowledged it won’t meet a key profit goal, a development that prompted the latest leg lower for the stock. IBM also posted lower earnings in its third quarter and unveiled a deal that would see it pay Globalfoundries Inc. about $1.5 billion to take over IBM’s semiconductor operations and supply it with computer chips.

  • Forbes:

    How Big Blue Blew It: Inside IBM's Catastrophic Earnings Miss. By Robert X. Cringely. Excerpts: Today’s IBM earnings announcement said: “We are very disappointed.” What it should have said was: “We blew it.”

    While IBM and CEO Ginni Rometty express bewilderment to go with their disappointment, here’s what people actually doing the work at IBM tell me has been going on.

    The software group has been making its numbers mostly by increasing prices and through audits. They’ve been auditing customers and finding non-compliance, under-licensed software, then making quick sales to get customers back to 100 percent of software properly licensed. This is obviously not a business growth strategy.

    The heavy layoffs (called Resource Actions (RA’s) because at IBM people are not people but resources) last quarter broke the back of many of the sales support teams. Ginni mentioned sales efficiency problems on today’s earnings call. Getting price quotes is now a very slow and painful process inside IBM. Last quarter’s RA’s clearly hurt this quarter’s sales. ...

    IBM is losing a lot of business because its Global Services division is so poorly run. Customers of Global Services are unhappy and are not making new IT investments in IBM products and services as a result. IBM executives are painfully aware of the cause/effect, action/reaction relationship between Services and IBM sales to those customers. But they may well be too far into the problem for it to be easily corrected, so look for more of the same bad news in next quarter’s earnings and beyond.

  • Forbes:

    IBM Should Take A Strategy Lesson From Alibaba. By Panos Mourdoukoutas. Excerpts: For years, IBM's leaders didn’t take strategy lessons. They gave lessons, as the company’s strategy served as an example for others to follow.

    But with sales stagnating lately, it may be time for company leaders to get a strategy lesson — from an unlikely candidate: Jack Ma, founder of Alibaba Group.

    Here is the lesson from this fast growing company: customers first, employees second, shareholders third. ...

    What is new is that some American iconic companies, finding complacency and comfort in old glory, have forgotten who is the ultimate boss of capitalist enterprise — the customer, not the shortsighted shareholder.

    That seems to be the situation with IBM, in our opinion. The company’s leaders have been too busy trying to satisfy shareholders with buyback programs rather than pleasing customers by coming up with new products that beat the competition.

    Since 2000, IBM has been on a share-buyback and dividend pay-out spree, loading its balance sheet with debt. “While the company spent $138 billion on its shares and dividend payments, it spent just $59 billion on its own business through capital expenditures and $32 billion on acquisitions,” writes New York Times’ Andrew Ross Sorkin. “All of which is to say that IBM has arguably been spending money on the wrong things: shareholders, rather than building its own business.”

    Isn’t it paradoxical that Chinese entrepreneurs have to remind the American public that business building is a higher priority than pleasing shareholders?

  • Business Insider:

    Mark Cuban Slams IBM: It's 'No Longer A Tech Company. They Have No Vision.' By Julie Bort. Excerpts: Outspoken billionaire investor Mark Cuban told CNBC on Wednesday that he would "absolutely not invest in IBM".

    "IBM is no longer a tech company," Cuban told CNBC. "They have no vision. What they've evolved into is a company that does [arbitrage] on acquisitions. It's stock buybacks. Who is IBM anymore?"

    In the past, when you thought of computers or software services, you thought of "Big Blue," Cuban said.

    "But today, they specialize in financial engineering. They're no longer a tech company, they are an amalgamation of different companies that they are trying to arb[itrage] on Wall Street, and I'm not a fan of that at all," he says. ...

    IBM sent CNBC this statement in response to Cuban: "IBM will accelerate our growth strategy, creating a dedicated cloud business and specialized units to serve industries and professions being transformed by data and analytics. IBM will also continue to return money to shareholders, in addition to maintaining our commitment to R&D and to invest in our business. It is all part of our commitment to delivering higher value to our clients."

  • Seeking Alpha:

    Not Quite A Death Spiral But A Resounding Bayesian No To IBM As Odds Increase That Buffett Got It Wrong. By Jim Sloan. Excerpt: By now everybody except a recent arrival from Alpha Centauri knows about today's IBM earnings report and conference call. It was a dud. By that I do not mean it was a "miss" or a "bad quarter." These are things I can often accept more readily than most investors. It was worse than a miss. It was a cluster of new pieces of information which confirmed the negative case and every IBM investor's worst fears.
  • Seeking Alpha:

    International Business Machines' (IBM) CEO Ginni Rometty on Q3 2014 Results - Earnings Call Transcript.
  • The Register:

    Time to put the storage biz up for sale? By Chris Mellor. Excerpts: ll geographies were down. All IBM's business units were down with software revenues below expectations and insufficient productivity in services. The System and Technologies Group showed a 15 per cent revenue decline.

    Within that, storage revenues were down six per cent year-on-year. ...

    Is the storage business unit secretly up for sale, following in the footsteps of the the PC, server and microelectronics businesses? IBM is selling off significantly under-performing businesses it can't turn around into growth operations, and storage may now be in that category. ...

    Analysts on IBM's earnings call asked if these results represented a crisis at IBM. That point wasn't answered directly, but the implication was that it was not. Rometty, who was on the call after not being present on previous ones, said IBM was already investing in higher-growth areas, such as the cloud and software-defined systems, and growth in these areas was good.

  • Forbes:

    IBM's Rometty Was Dealt A Poor Hand In 2011. Too Bad She Didn't Fold Then. By Chuck Jones. Excerpts: IBM announced on Monday that it was backing off its $20 EPS goal in 2015. The $20 goal I believe was introduced at the 2010 analyst meeting with a detailed presentation (slide 42 has a good summary roadmap) on how EPS would increase from at least $11.35 in 2010 to at least $20 in 2015. As recently as the June 2014 quarter IBM was saying that its 2014 EPS would be at least $18 so one would feel comfortable that the company could get to $20 in 2015. ...

    IBM shares will be in the penalty box for at least a year if not longer. This is the price to pay for a slow to no growth company that did not own up to reality when giving guidance to the street. While Ginni Rometty was part of the management team when the original $20 goal was presented in a large way she inherited the albatross when she became CEO in 2012. She and the management team kept pushing every lever to keep the quarterly and yearly numbers on track until everything hit a wall.

  • Glassdoor IBM reviews. Selected reviews follow:
    • “Not my fathers IBM”

      Current Employee — Senior Engineer. I have been working at IBM full-time (more than 10 years). Pros: Large company, many divisions, opportunity to work just about anywhere in the world. Cons: Short sighted management, only looking at the next quarter and their bonus. Not a leader anymore in any field, a technology company that pays twitter shills more than electrical engineers. Advice to Senior Management: Stop the stock buy backs, invest in the company. Raise earnings per share the old fashioned way, by raising earnings.
    • “Not for the motivated, or those wanting to grow their career.”

      Former Employee — Senior Consultant in Herndon, VA. I worked at IBM full-time (more than 3 years). Pros: Name recognition looks good on resume. Cons: Lack of raises and bonuses. Advice to Senior Management: It's not like they care, so I am not going to bother.
    • “Smart people, great product”

      Current Employee — Watson in Littleton, MA. I have been working at IBM as an intern (less than an year).

      Pros: Watson is an incredibly interesting and intellectually challenging product. As a result, working on the Watson team feels like an academic environment where you can learn enormous amounts from your peers while building a world class product.

      Cons: The Watson team still has some of the pains of being a part of such a large company—difficult red tape to cut through, design decisions where a bad technology was chosen because it is developed in-house rather than using standard technologies, etc. That being said, much of the structure of the team and their approach is constantly changing for the better.

      Advice to Senior Management: The Watson team should be more cohesive and independent of the larger IBM culture. If IBM wants to attract top talent for Watson, they need to take hints from how the rest of the modern software world operates which is very different from the larger IBM culture.

    • “They used to have credibility but those days are gone.”

      Former Employee — Advisory Software Engineer in Ottawa, ON (Canada). I worked at IBM full-time (more than 5 years).

      Pros: Flexible hours and ability to work from home. I worked with some very intelligent and talented people. (Until they wised-up and found better employment.)


      • IBM is now a gigantic money-generating machine for its top executives and largest investors. Employees are treated like disposable parts. Relentless focus on earnings growths has broken the company.
      • Raises and bonuses are rare.
      • Low job security. Employees may be let go regardless of absolute job performance. (Hello stacked ranking)
      • Career advancement is difficult unless you don't mind being a spineless yes-man. They are looking for overseers, not leaders.
      • Morale could not be lower.
      • The company likes to talk about innovation but rarely invests in it.
      • Demands, responsibilities, and obligations increase while teams are reduced and salaries stagnate.
      • Products are falling behind in technology and quality.
      • Excessive processes are used in lieu of common sense.
    • Advice to Senior Management: Good luck on getting SammyP's $225M payout when you go. The company will have been gutted by that point.

    • “Company going down hill”

      Former Employee — Anonymous Employee I worked at IBM full-time (more than 10 years). Pros: Used to be the people you worked with but as layoffs have increased and benefits reduced there are few pros to list. Cons: Poor work-life balance. They promote flexible work schedules but in truth you have none. You are expected to work at all hours of the day and if you want to take a holiday or vacation you are penalized. Advice to Senior Management: The company has lost its luster and people skills. Extensive training on people management is extremely necessary to turn the tide.
    • “IBM can't get out of its own way”

      Current Employee — Anonymous Employee. I have been working at IBM full-time (more than an year).

      Pros: I have to say I have never worked anywhere with as much support infrastructure as IBM. The company is really good at understanding markets and pulling together solutions that meet particular needs. IBM Sales School is one of the best and equips people very well for sales roles. There are a tremendous number of really good people at IBM and many of them are very good at what they do.

      Cons: I found the infighting too much to bear. As soon as an opportunity is identified people come out of the woodwork to get their fingers in the pie — especially from under-performing parts of the business. There are lots of people at IBM who are so-called experts with very little evidence to support that claim. I ran into a number of managers that seemed to be in their roles by virtue of longevity rather than any real management skill.

      Advice to Senior Management: My one bit of advice is to do more to preserve acquired companies. IBM seems to suck the life of out of acquired companies and they wind up falling short of what was envisioned. IBM somehow, perhaps by design, makes life difficult for acquired personnel to the extent that many of the people who made those companies an attractive purchase struggle to find a reason to stick around.

    • “Good on resume, but that's it.”

      Former Employee — Band 8 Consultant. I worked at IBM full-time (more than 3 years).

      Cons: No raises, no bonuses, constant fear of layoff, very low morale. While there are a few good managers, for the most part IBM really does stand for "I'm By Myself". You are in competition with everyone to have a good rating (which gets downgraded by default at the end of the year when the partners meet).

      If you are on the bench between projects, watch out, as layoffs are now rolling layoffs. A lot of skilled, educated and experienced workers are being laid off in favor of offshoring and hiring of people with zero industry or IT skills.

      I had to pay for my own training, and take vacation time to do it, because there are no training budgets.

      IBM doesn't even leverage their own software internally (except Lotus Notes) and all the projects I were on were lacking innovation or learning experiences.

      The flexible schedules no longer exist — when I started I could put in 40 hours Mon-Thurs and take Friday off. Now you are expected to bill min 44 hours a week to projects, spend Mon-Fri at remote client sites no matter how far away, plus travel time, and still find time to do internal required training that is usually fairly useless. All totaled I was easily entering 70 hours a week into the timekeeping system.

      Advice to Senior Management: Respect and concern for employees from the top down, investment in those employees, training to keep employees on the cutting edge and innovation (without the recently announced 10% pay cut [training surcharge].) You can't get into cloud, mobile apps years after other companies are so well established and call it innovation, and you can't expect to truly compete with them especially when you can't implement these things properly internally first.

    • “Good place to work”

      Former Employee — Consultant in New York, NY. I worked at IBM full-time (more than 3 years). Pros: Major clients, latest technologies, travel, perks, regular promotions, neat offices, great co-workers (formed life long friendships), innovation, new challenges all the time. Cons: Long hours, no work life balance, uptight senior personnel, untouchable upper management. Some internal politics as well but nothing that is unusual.
    • “Used to be a great company, now a shadow of its former self.”

      Former Employee — Sales Specialist in London, England (UK). I worked at IBM full-time (more than 10 years). Pros: Variety of roles, some good people. Cons: Everyone thinks they are the boss, and so nothing really gets done. Advice to Senior Management: Get rid of dead wood managers.
    • “Welcome to a new world run by robots”

      Current Employee — Senior Consultant in Washington, DC. I have been working at IBM full-time (more than an year).

      Pros: IBM as a legacy technology culture is one of the all time greats. Unfortunately, they have been going through an identity crisis for the past 40 years, and it isn't getting any better. Instead of inventing the future, they seem to want to copy other people's innovative business ideas, all the while filing new patent after patent on stuff they never product-ize. That said, they have a lot of brilliant people and a lot of opportunities across the map.

      Cons: Putting up with the robots that run the show, and the sales/business development people they report to. They waste a lot of employees time with stupid useless extra-curricular stuff. They are clearly in decline in terms of technical leadership.

      Advice to Senior Management: Understand that people in their 20s and 30s have an entirely different career arc that people in their 50s and 60s. Trying to treat a technologist with 40 years of experience the same as a kid who just graduated with a CS degree is an enormous mistake. The company is too big. Break it up into several smaller companies—the synergy is no longer working for you.

    • “Great place for any transitional point of your career”

      Current Employee — Anonymous Employee.


      • Established systems
      • Capable of providing you with an acceptable package compared to most non-international companies in the region
      • You can gain vast information just by relying on internal material.
      • Gives you a chance to be well read.


      • The established systems could lead to longer painful bureaucratic processes
      • Local team is not keen on upgrading existing employees.
      • Packages always seem to be one step behind competitive counterpart international companies
      • Social life is at 0%. People here are just international business machines, in the name of cost cutting.

      Advice to Senior Management: Fix competitive renumeration. Stop hiding behind processes to effect proper renumeration Improve social aspect of the organization.

    • “IBM is a solid company but has moved away from what made it great...its people.”

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

      Pros: Lots of career options, tons of education, work from home.

      Cons: Very long hours—t is very difficult to get away from your work and take vacation. There is a lot of focus on internal activities and upward reporting. Micromanagement is everywhere.

      Advice to Senior Management: Focus on the people and work life balance and the rest will take care of itself.

    • “Horrible experience”

      Current Employee — Consultant. I have been working at IBM full-time (more than 3 years).

      Pros: Diversity, well-known brand, fairly laid back environment.

      Cons: An extremely mismanaged organization with years of declining revenue under Ginni Rometty's "leadership". Expect to spend most of your working day making sure that you are compliant to a large number of different internal procedures. Management tends to believe that this is what gives IBM the competitive advantage. If you are a "consultant", expect to spend months and months doing internal admin and eLearnings far way from any project — not a great place to get exposure to interesting work or to build any useful skills. For anyone considering a career in consulting, be very careful and explore your options!

      There is never any money to do anything. Trainings are being scrapped, travel is being forbidden. Expense reimbursement is slow and complicated. Salaries are low and increases and bonuses are long gone. Even simple office supplies are often in shortage — and this is IBM in Western Europe!

      They say you get to work with the latest technology and the brightest people. All the top performers have left. Expect to receive a used, empty, five year old laptop as your equipment, and extremely time consuming procedures to get the applications you need — nowhere near any leading technology.

      The "management" has no ambition to understand their business or drive it in the right direction. Instead they a spend most of their time creating and promoting blog posts or videos containing very little substance.

      The fact is, IBM will never ever survive. Everything is based on short-term penny pinching thinking — creating a very uninspiring working environment.

      If you have any ambitions whatsoever, do not join IBM. There is no happiness or positive energy, only people trying to get out. You will regret it. More importantly, there is a real danger that you will be trapped, having acquired few new skills after a couple of years in IBM, hence making it very hard to move to any other respectable employer.

      Advice to Senior Management: IBM is like Titanic; going towards a gigantic iceberg. Soon there will be nothing left to manage. Open your eyes, listen to your people. The software and "solutions" of yesterday will not save you tomorrow.

      IBM could be a great place to work; sadly it is not.

    • “Bought when company bought in 2002, feels like a body shop, disconnected from corporate mainstream.”

      Current Employee — Senior Consultant in Washington, DC. I have been working at IBM full-time (more than 10 years).

      Pros: Lots of opportunity if you're willing to put in the hours, follow their policies and practices, and get a little bit lucky selling business and working for and with good people, of whom there are plenty. Decent benefits. Lots of resources, but can be difficult to locate, access, and utilize.

      Cons: Living with no raise in the last six years because I'm not rated in the top 5% of performers. Performance rated by people who know nothing about you and have very limited input and criteria. Promotions available but require tedious documentation, changing criteria, evaluation by people who again know nothing about you, other than what you put on your personal sales document soliciting a promotion, and have sales expectations, which is not where I or many want to go. No pension any more and 401K contribution diminishing.

      Advice to Senior Management: If your intent is to foster and nurture a culture of self-serving employees, whose first concern is themselves rather than the client or the company, in all ways and at all times, then you are doing just fine. Personally, I didn't grow up and have not lived my life to be self-serving, but to contribute, earn my reasonable share, and be part of something bigger than myself with purposes bigger than myself. That's not what I see your management style inculcating; rather, the exact opposite. I'll be leaving before too long; good luck with that style, be surprised at what it yields.

    • “Bait & Switch Pros—Job descriptions are not as advertised. Too many chiefs in S&D leadership”

      Current Employee —Senior IT Architect in San Jose, CA.

      Pros: Quite a bit of great hardware and software products that you can access and learn to increase your skills. If you can work independently, SWG, Lab Services, S&D, GBS, STG groups can be rewarding for those who like to get their technical expertise.

      Learn the politics and find your contacts with the "real skills" to get things done. Be visible about your accomplishments or others will take the credit. If you are client facing, get enough technical knowledge "behind the story" to advise the client on how the client on how the technology will work in their environment. Ask more than one person and get an understanding of what groups do and what IBM services are available to you or you will drown. Plenty of ways to "play with the technology" but you have to be a self-starter.

      Cons: A lot of managers and executives who strategically place themselves at meetings and do nothing. The famous "do you need help" is always communicated. If you ask, they pass the buck and deflect.

      Everybody thinks they need to be at every meeting and most do their email after their 5-10 minute intro of themselves. Backstabbers, bad-mouthing certain roles/people, ridiculous amounts of large presentations to tell the story with very little on the technology itself being the star. Ridiculous amounts of admin overhead and internal meetings for nothing to "trick" senior executives that lower level managers and sales managers are working.

      The advancement opportunities are "fake". Managers love to tell you to get certified, but most of the time you get nothing. The managers get the kudos for their teams being certified not those going through certification. Raises...what?!!???!!! Industry certifications should be just acceptable and for client facing roles, more acceptable to allow for advancement.

      Too many people and roles stepping on one another in the S&D part of the world. The client team is unnecessary overhead and too many sales executives most of which provide little to no value. Too many of them don't really want to change and keep up with the times and not open to new ideas and innovations.

      Advice to Senior Management: Cloud and mobile solutions could rise in sales if more development support and the technical professionals were actually technical and not sales people with a technical title. Sales executives who don't understand what they do force them to be sales people or ban them from clients making it hard to get real demos. Advice to move tech sales to SWG or another group and not S&D. where they can develop real demos and POCs.

      The sales team should be a Sale Lead and a Technology Architect/Officer for all the technologies. They should be able to get brand reps, services, technical professionals, etc., to "get it done". Provide an outlet/deal portal to write a deal without brand reps/sales reps.

      Sales leads, brand reps and client execs are the biggest roadblocks with their "I don't make any money off cloud and SaaS" or that product/service mentality. Seen many software and cloud initiatives requested by the client dropped because it is not in their product base or because the client didn't speak to the Exec or Sale Lead first. To circumvent this, allow people to "own it, do it, done" and reduce the layers needed to get to the actual resource. If I can create a mobile apps, why do I need to have the CTP who doesn't know how to develop a mobile app? Why can't I go to a resource directly or do it myself. Too many layers and baton passing to get to the right resource.

      Flatten the sales organization and stop making sales process so convoluted.

      For advancement, make external certifications carry just as much weight as IBM certifications. For client facing jobs, industry certifications carry more weight in many cases. Give fair raises.

    • “Worst technology company I have worked for in my 25 year career”

      Former Employee #8212; Technical Solution Specialist in London, England (UK). I worked at IBM full-time (more than an year).

      Pros: Large company with a lot of career avenues to go down if you don't mind the cons (see below). High amount of 'life' in the 'work/life' balance (because of the cons...see below).


      • Highly bureaucratic company where staff are measured on their conformance to internal procedures and not measured on their ability (at least in software group sales).
      • Poor pay with limited ability to gain annual raises that meet salaries of smaller technology companies.
      • 80% of employees focus is driven to be internal and not external on their customers where it should be.
      • Very low innovation compared with the movers-and-shakers in the technology world right now.
      • Very difficult to actually get anything done with any speed due to the bureaucratic culture.

      Advice to Senior Management: Move with the times. You are fast becoming outdated, if it hasn't happened already.

    • “IBM is a great place to start your career

      ” Current Employee #8212; Consultant in Houston, TX. I have been working at IBM full-time (more than an year).

      Pros: Strong support and training available, smart colleagues, (relatively) stable company, always a challenge around the corner. IBM treats its entry level employees fairly well, and the health care offered is fantastic.

      Cons: Like others have said, as a consultant prepare to work long hours with clients that may not hold IBM in the highest regard. Also, in the near two years I've worked here, the company's financial performance has been declining. That has definitely reduced morale around the office, and the feeling by those around me is "why try hard this year, there are no bonuses anyway."

      Advice to Senior Management: With improved financial performance overall, it would be a better place to work. I know that's not an easy ask.

    • “Employed at IBM for 8 years”

      Current Employee — Consultant I have been working at IBM full-time (more than 8 years).

      Pros: IBM is still respected as a name.


      • Constant cost cutting makes it hard to do your job
      • You are on your own — no money to support your efforts.
      • Bare bones benefits — no raises for several years — travel allowances sub par.
      • Management changes every 6 months.

      Advice to Senior Management:

      • Let the changes you made 6 months ago have some time to work, quit changing the landscape constantly.
      • Cuts have been so deep, we have to start replacing losses.
      • Means test travel — make it possible for those who travel a lot to live at an average level instead of sub par.
      • Reduce the number of VP's — the reporting structure looks like a bowl of spaghetti.
    • “Fair”

      Current Employee — Anonymous Employee.


      • Work-life balance usually better than my previous jobs.
      • Some interesting projects using advanced tools/technology.
      • Met some very intelligent and good people.
    • Cons:

      • Overselling and then not able to meet timelines adds pressure on the consultants who actually do the work.
      • Does not seem to have a strategic direction. Upper management just wants to make their quota.
      • Getting to attend training/conferences is virtually impossible.

      Advice to Senior Management:

      • Provide better training and skill advancement opportunities. I was turned down to go to very valuable training
      • Provide better advancement opportunities for junior consultants(usually right out of college). Almost all of them leave because of the work they are assigned or no career growth foreseen.
      • Compensate appropriately. I was given no bonus even with Very good ratings and 100+% utilization. That is very discouraging.
    • "Once Great, Now Be Careful”

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

      Pros: Once a great company, but now living on past laurels. Pay is pretty good and benefits are average to good. Pays a bit more than lip service to the idea of work/life balance.

      Cons: Totally focused on their 2015 road map, which is now a chain around their necks. With a lack of new revenue, everything is focused on reducing costs. That means continual layoffs, a move to low-paid contract workers, very few salary increases, and such a focus on cost controls that you need a VP to sign off on minor expenses and most employees have been buying their own office supplies for years.

    • “Only good for graduates. If you are not — run as fast as you can!

      ” Former Employee — Service Delivery Manager in Brno (Czech Republic). I worked at IBM full-time (more than 3 years).

      Pros: Met many nice people, made some good friendships. Excellent experience for your first job, but then run far, far away!

      Cons: Very poor salaries, management is truly pitiful, management standards are lowered each year. During five years working there, all benefits were canceled, one by one. Even meal vouchers, which are unofficial standard benefit in Czech Republic. Instead of Christmas bonus, employees were given fruit in cardboard boxes. I know this is hard to believe, but unfortunately it is the truth. Instead of promoting long time employees, new ones are being hired and given much larger salaries — doesn't make any sense.

      Advice to Senior Management: Please do something about people managers and show your "lower level" employees that you care about them.

  • Alliance for Retired Americans Friday Alerts. This weeks headlines include:
    • Social Security Benefits will Increase by 1.7% in 2015
    • Most Americans Would Pay More to Fix Social Security's Finances, Improve Benefits
    • Possible Scenarios if the GOP Runs the Senate Include the Paul Ryan Budget
    • Justice Ginsburg Writes a Blistering Dissent against Texas Voter ID Law
    • AFSCME Holds Convention in Raleigh; California Alliance Hosts one in Buena Park
New on the Alliance@IBM Site

A Message from the Alliance@IBM

After months of public outcry, employee outrage and pressure on social media by the IBM Global Union Alliance, CEO of IBM Ginni Rometty, has at last "abandoned Roadmap 2015", the plan to deliver $20 earnings per share by next year.

While IBM focused on out of touch “Roadmap” goals, enormous damage has been done to both employees and the company:

  • Tens of thousands of employee’ have been terminated in “resource actions” around the world.
  • Pay cuts, benefit cuts and lack of pay rises have severely impacted employees’ livelihood.
  • Business units and employees have been sold to other companies, and in one case, IBM paid to have a unit taken over by Global Foundries.
  • Unreasonable cost cutting has affected the daily worklife needs of employees.
  • Employees have quit in large numbers due to a toxic work environment.
  • Work has been off-shored, decimating employee population in countries such as the USA and Australia.
  • Customers have lost confidence in the company. IBM employee morale is rock bottom.

Although “Roadmap 2015” has been abandoned, job cuts, pay cuts and a toxic work environment mean that the pain is likely to continue for IBM employees. Head of UNI ICTS Alan Tate said “The IBM Global Union Alliance strongly opposed Roadmap 2015, and we will continue to fight against job cuts and detrimental actions against IBM employees.

It’s time IBM executives listen to their employees and the unions, before this once great company is lost to executive greed and incompetence.”

Brought to you by Alliance@IBM; CWA Local 1701; Member, IBM Global Union Alliance; www.allianceibm.org

Job Cut Reports

  • Comment 10/21/14:

    It's funny if real senior managers really read this page or heck did something innovative like speak with their own employees then this ongoing debacle could be avoided. I'm a non manager band 9 consultant who gets to work with a lot of partners, associate partners, DEs, DPEs etc and if they were allowed to post here I assure you they'd post the same as many of you. Their frustrations are the same.

    In fairness though I've been to the U.S. to work with my American colleagues five times in the last 12 years. Each time it's clear: the U.S. situation is worse and getting worse and each time it's clear you guys don't recognise it.

    Also I think the next stage after hitting roadkill 2015 would have been to break up the company for profit (of Buffet and the directors, not you). That's probably still the plan. Best of luck from your friends in AP.

    To those who say sack middle managers that's an illusion. For starters they really don't exist in most places anymore, except by label only because all basic bean counting and resource management is offshored and all project, people managers and partners since roadmap 2015 have the same or higher utilization targets than us plebes.

    Best yet, all IBM related project and people management time is counted as non productive or disallowed in cost cases to disincentivise proper management of employees yet have scapegoats ready if things go wrong. Also calling someone a manager or having large numbers of unnecessary people managers is a union busting method used in the U.S. IBM has so many "manager" titles because managers cannot be in a union by law even though the roles are not really as such. -BlueRover-

  • Comment 10/21/14:

    3Q was bad, but 4Q may be worse. Beyond the weakness in the marketplace Ginni referenced in the earnings call, her employees are going to be lacking motivation. They announced to the world they're cutting variable pay (again), setting aside $600m to fund firings (again), and that we're empty calories. Of course, those firings will come just in time to avoid paying 401k matches, and, they go that much deeper since X and the Technology Group are out of play. -Anon2-
  • Comment 10/21/14:

    Another "workforce rebalancing" coming:
    ...Additionally, as we execute some of our plans to drive simplification and accelerate productivity in our business, we expect to take a workforce rebalancing charge in the fourth quarter. We are starting to work through our plans, but at this point we'd expect to take a charge of up to $600 million. We have also had a dramatic move in currencies, and we've taken into account an impact based on current spot rates."
  • Comment 10/20/14:

    Wonder how long he'll hold onto his IBM stock? Investor Warren Buffett may suffer a $1 billion loss due to plummeting IBM stock. Company Berkshire Hathaway, of which Buffett is CEO, currently has 70,173,978 IBM shares The news comes just weeks after Berkshire Hathaway lost millions on supermarket chain Tesco. -Anon-
  • Comment 10/20/14:

    In some defense of Ginni: it's not all her fault. The IBM culture eroded under Gerstner, was on life support under Palmisano (Junior CEO at best), and now has just about died with Rometty. Ever onward to oblivion I'm afraid International Business Machines. UNLESS you folks UNIONIZE RIGHT NOW! IBM needs real rank and file direction since current IBM executives are a greedy, wealthy, but a BIG joke as far as IBM leadership and direction is concerned. -da_facts-
  • Comment 10/20/14:

    RAs most likely to come before December 15, 2014, so that IBM can avoid having to match 401K contributions. Nothing personal, just business. -Anonymous- Alliance reply: "Just" business? Nothing "just" about it. IBM has been sacrificing their workers and their workers' benefits for some time now. It shouldn't be any surprise to any IBMers still with the company.
  • Comment 10/20/14:

    It's all about corporate greed and corruption. Rometty has taken over $35 million out since taking the helm; insiders in just the past year have taken out over $50 million according to their Form 4 filings. IBM needs a union or there will no longer be a IBM with this type of greed and corruption. -ANA-
  • Comment 10/20/14:

    Wow, IBM is really tanking. For Ginny to abandon Roadmap 2015 indicates some serious organizational problems. Anyone who is still employed at IBM better be scared, after this news I can assure you there will be an RA blood-bath this coming fall, so get out while you can. Most of all, I wonder how many employees were sacrificed for the sake of $20 EPS? By now I'm pretty sure that the casualty count is in the tens of thousands, probably more if you count all the contractors and international workers who were laid-off. In the end, all IBMer's are casualties in Ginny's failed cause. -Just another RA casualty-
  • Comment 10/20/14:

    So our "leadership team" has finally acknowledged what the rank and file has been saying for years. The 2015 roadmap is unsustainable. Do you suppose there is any hope that our "leaders" will start listening to those who are closest to our customers? They could start by a significant resource action of the excessive number of middle managers and V.P.'s instead of the workers. -Alliance member-
  • Comment 10/20/14:

    Ginny said this morning in her depressing video to employees that we will simplify and streamline our company. Yup, we all know what that means. Buckle up and sign up, or bend over. Read those tea leaves, people. It sucks to see your company crash this badly, but there is some gratification in knowing at least one of the causes is treating your employees so horribly an underestimating the impact of the low morale you have brought upon yourself by those actions. -ReadTheTeaLeaves-
  • Comment 10/20/14:

    In case anyone thought that IBM's official decommit of the 2015 EPS Roadmap would allow them to bring back some sanity back to resource management, they wasted no time booking additional "productivity" gains in the outlook (rhymes with resource actions). Later, they mentioned a $600M provision for 4Q. Here we go again. -Anon2-
  • Comment 10/21/14:

    The IBM CEO is a good example of "empty calories". Time to shed her and her cronies. What have they done besides financially engineering IBM right into the ground? Roadkill 2015 finally comes to an end. And the idiot who started it? Will he be fired and placed on a pedestal of stupidity as an example to others? -Anonymous-

    Alliance reply: Former IBM CEO (and Rometty's mentor)Sam Palmisano initiated Roadmap 2015. He's retired and long ago insulated from any "firing" suggestions. Any other ideas? How about focusing on the workers getting organized? Never mind 'time to shed her and her cronies'. Focus on the workers. Organize them. We can help.

  • Comment 10/21/14:

    It amazes me to see the level of discourse as key events happen, then it quiets down until the next event. With IBM's 3rd Qtr results and their stated goals of reduction, again, of headcount, there should be enough people signing up for a union. Of course they haven't as they just like to squawk on the Internet instead of doing something positive for themselves. Only thought that I can think of for this strange behavior is that the average length of service for an employee has gone from a average of 15 years to 3-5 years. The older employees long gone, the newer employees think they can survive or move to another company. -Thefielder-
  • Comment 10/21/14

    : I haven't seen anyone pick up on this comment in the earnings call yesterday by CFO Martin Schroeter. What he's in IBM-speak is that IBM hasn't used off-shoring as much as other companies, and they're going to step it up now:
    "From a culture perspective around the shift to — around the shift to global delivery centers, quite frankly we've not been as aggressive here as others have been. So we think we have an opportunity — we have an opportunity move more that work to where we can put it into a more common platform. So yes, the overall — yes the overall headcount is coming down and yes, we will be moving more aggressively into the global delivery centers, but again we have not been as aggressive as others and then the other thing I point out is that reduction in overall headcount also allows us now to think about how we simplify our business and some of what you heard in my prepared remarks were around trying to simplify the business."
  • Comment 10/21/14:

    -IBMUnionYES- Actually, we're told regularly to give any small deals to business partners to focus on the big ones. I agree, it's a mistake. I believe it's done to facilitate moving *all* deals to partners and get rid of the sales and tech sales force, to as large an extent possible. If we had done what Apple had done, and continue to make the best keyboards, printers, PCs, laptops, other 'business machines' in the world, instead of selling them off, who knows, IBM may have survived. -LowMorale-
  • Comment 10/22/14:

    @-dafacts- Partners and APs used to have power but they simply don't have power anymore. It's been stripped away from them since 2010 — which is the time the slide started to occur. Power is now vested in the offshore delivery centers. All the partners and dpes do now is sell deals for these centers and take the blame when they can't deliver.

    Eighteen years ago when I joined IBM band 8s would have 400-600 people easy reporting to them. But now that's not the case. The biggest reason for the collapse is simple. The denuding of the technical capability of the company in terms of front line consultants who can actually deliver. Sacking of consultants, or selling their roles to Manpower, and even partners while on client engagements which led to massive losses of faith and airing of dirty linen in front of clients. In many cases this has been done to people on cams engagements - so that puts the lie to the strategy the top brass put out there. -BlueRover-

  • Comment 10/22/14:

    Billionaire investor Mark Cuban told CNBC on Wednesday he believes IBM is now a financial engineering company, not a tech company anymore. Couldn't have said it better myself. -RAtired-
  • Comment 10/22/14:

    -Mike- "Jack Ma at Alibaba" does have it right with "customers first, employees second, shareholders third". Great article you posted the link to. At IBM, it's been "IBM execs first, shareholders second, and have we forgotten anyone' Nope..." You will never succeed when you bring the hatred of your employees upon yourselves. They are the ones out there in the trenches with your customers. And if your customers aren't truly your focus, as they never were despite the ridiculous 3-3-9 propaganda, you're really screwed. Your company might lose 13% of it's value in mere days. Someone ask the band to get on deck and play. Those of you who hope to remain on board would be foolish to not find a lifeboat. That lifeboat is the Alliance. -HelpYourself-
  • Comment 10/22/14:

    Whats wrong with IBM today' Louis Gerstner at IBM: $189 Million. In 2002 Louis Gerstner stepped down as CEO of IBM. IBM paid him a severance package worth $189M. As a group, the 21 most highly compensated departing CEOs received $72.5 million in bonus payouts as part of their severance packages. IBM needs a union to stop this greed and corruption -ANA-
  • Comment 10/23/14:

    You know things are not good when brand executives are worried about tiny transactional software deals. So much pressure on Sales ... and quotas do not reflect reality ... then again, did they ever? This company cannot get out of its own way. The upper echelons of executive leadership needs to be shelled, from the top down. Then maybe IBM will get back to being an innovative company that is guided by engineering & sales vs. Finance & shareholders. Oh well, "BOHICA" ... -Cubicle Cannon Fodder-
  • Comment 10/23/14:

    IBM executives first, corporate profits second, to hell with IBM employees third. All of this started under Lou. He Laid off 100,000's of IBMers at the same time he hires a chef for himself at $1,000,0000 per year. Sam and Rometty are the same corrupt and greedy people. Without a union to protect workers rights, IBMers will continue to loose jobs, wages, and benefits . Wake up IBM employees join the union to protect your families. With these executives in charge, you have no other option but to join the union. -ANA-
  • Comment 10/24/14:

    The vampires (as Cringley calls them) struck in August. Right in the middle of 3Q. http://finance.yahoo.com/q/it?s=IBM+Insider+Transactions -Blue Knight-
  • Comment 10/24/14:

    It's amusing to me that it's almost a full work week later, and I've been on many of the usual strategy calls that we have to start a new quarter, at every level of management up through exec level. Not one 'leader' has had a motivational thing to say. It's all downcast reflection on the horror of 3Q. They all know it will get worse, because nobody has a strategy or motivational thing to say.

    I'm getting bombarded with canceled client meeting notifications and amusingly, hammered by demands from every level of management to participate in the employee charitable contributions (ECC) program. Don't they realize people haven't had raises in years, making less money due to inflation, and concerned about their impending firings? *This* is what they are worried about and spending energy on and pestering demoralized employees about!?! Ship adrift in Dilbertland. -ShipGoingDown-

  • Comment 10/24/14:

    Employee Charitable Contributions (ECC) are basically you donating some of your salary to IBM marketing. By all means give generously, but do it outside of IBM. -MarketingBudget-
  • Comment 10/24/14:

    Of course nobody has a strategy or motivational things to say, -ShipGoingDown-. For starters, they got rid of people like *me*, who struggled for decades in what was far more an obedience school environment than a place that championed innovation. The corporate innovation belief really should have read "obedience that matters" all those years. In the meantime, younger people who who couldn't innovate their way out of a paper bash shell bag were retained to exchange buzzwords like "going forward" while imagining that doing so constituted innovating. Forget it. It needs to burn to the ground before renewal is possible. -watching-the-shares-sink-
  • Comment 10/24/14:

    For those no longer in IBM, or industry types or press following along with this soap opera, here is a glimpse of 'business as usual' inside IBM. This morning there was an important internal webcast on our new Internet of Things on the cloud offering. Nobody was savvy enough, and the internal tools are so decrepit, that they couldn't even get the webcast started and working. So it turned into a cluster-* of sending out the slides, or trying to. Then the primary speaker wasn't even on the call; who knows where he was, probably looking for a new job somewhere.

    This happens time after time. The internal 'cloud' meeting crashes continually, and can't scale when more than a few people join. The audio over 'cloud' is horrendous, so people are told to 'dial in'. The internal infrastructure people need to do their jobs, starting with that horrible piece of you know what called Notes, is counter-productive. Unionize and demand better working conditions, if you plan on being around! -LowMorale-

  • Comment 10/24/14:

    I'm convinced that the primary reason IBM announced the end of the Roadmap is so executive comp for 2015 won't be build around $20/share. From what we've seen on insider trading, the real money isn't in salary, or even bonus, it's in option prices. -Anon2-
  • Comment 10/24/14:

    -LowMorale-, What you are witnessing is the degradation of the infrastructure and support organization caused by lack of funding and investment. In other words, the IBM house is falling in on itself due to neglect. -Anonymous-
  • Comment 10/24/14:

    About IBM cloud offerings: IBM has been lost in the fog for years. They can't even rise to the low level cumulus level, let alone the cumulonimbus or cirrus levels. Too late to the dance IBM: you are an elephant for sure and you see mice all around! And you should be frightened to death now. No strategy. No vision. No leadership. WE ALL KNOW what it means: RAs. Join the Alliance and TRY TO DO SOMETHING about it! -UncleWeatherbee-
  • Comment 10/26/14:

    It is indeed intriguing that Ginni sold her stock at the opportune moment a month ago and made a killing. My gut told me that IBM earnings are headed for disaster and I sold my stock too...at 192. Today it's at 162. So Yay! -StockGap-
  • Comment 10/26/14:

    Ginni's stock sale record is interesting. Remember that in January she told us all that there were not bonuses (except for 1's). She then immediately sold $7,000,000 of stock (zero cost basis) and took home over $3,000,000 after setting aside for taxes. To put that in context, that's more than any non-executive will earn in a 30 year IBM career in one move, after calling for joint sacrifice. They just don't teach leadership skills like that. -Don'tForget-
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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