Don’t get me wrong. I retired from IBM and I loved my career there. I have fond memories of IBM, but I am very concerned as I watch competitors like Microsoft or AWS. While IBMs competitors enjoy double digit sales growth, IBMs sales growth has been in the single digits. Can a company grow that depends heavily on acquisitions for sales growth rather than organically growing from its own products that it invents/creates/sells/supports. How long will the board members and major shareholders accept status quo before they start looking at takeover bids from other corporations?
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@DR. You may be right, but IBM would almost certainly need conditions around the “enterprise” power boxes as they have a successful SAP and Oracle practice built there. Would IBM throw that into the mix to exit power? I’m sure the conditions could be worked out as Lenovo worked out their issues when IBM sold Intel servers to them. If power is on the block, I suspect storage and for that matter cloud can’t be far behind. So what then happens with the remaining Z, and its hosting and services. I think they would get rolled into consulting
@dn
I will not be surprised to hear that IBM is selling the POWER line to the Indians (HCL).
The next 2 quarters are already baked. Why do I say that?
3rd q will have spill over from 2nd q miss so even if 3rd is weak, the spillover will goose it
4th q will most likely get the benefit of spend it or lose it. Customers will spend it
There is yet another side issue that will help 4th and extend into 1st and that’s the cost take out taking place right now. IBM needs to harvest 1 billion in savings quite quickly since earnings are not growing. It is a repeat of their old play (out with legacy because you can hire in India for 1/3 the cost). The “next step” program is just the first iteration. There will be more pushes to get the remaining retirement eligibility folks to pull the rip cord.
- Pip
@OP if next 2 earnings aren’t good ibm will be broken up into several smaller companies
IBM did this to themselves
This statement is far from the truth: " the board allowed Ginni to spend a fortune on share buy back instead of investing in new business like cloud. ".
IBM spent years and money trying to achieve an in house "cloud development solution". It was a complete failure.
The effort became an Indian tribe space.
IBM business model is a classic cash cow with little bit of growth head fake. The board have long accepted this. For example, the board allowed Ginni to spend a fortune on share buy back instead of investing in new business like cloud. This is in addition to very high dividend.
There is nothing wrong with this approach. The problem is, IBM has been on cash cow mode for so long, it lost all ability to innovate. As you well know, there is no growth without innovation.
The IBM that exist today is as intended by the board.