
IBM to cut thousands of jobs as coronavirus plays out - samfisher83
https://www.foxbusiness.com/markets/ibm-cuts-thousands-of-jobs-report
======
PhilipA
Removing headcount and still maintaining the dividend will make it hard to
hire in the future. It sets a clear signal where the priorities are.

~~~
smabie
IBM absolutely needs the 5% dividend to survive, especially now. Without the
dividend, IBM gets kicked out of all the high dividend ETFs and investors dump
them on mass. Moreover, I imagine a substantial part of an employees comp is
options or RSUs.

~~~
noad
So we are driving company decision making based on the needs of synthetic fake
financial instruments? Is there any other way to run a company that is more
stupid than striving to fulfill the needs of someone else's derivative
product?

I cannot imagine a worse basis on which to steer a company. It makes zero
sense. Using a random number generator to pick every decision would result in
better results than what we are currently doing.

An example of a company that has completely succumbed to Wall Street is Texas
Instruments. They are (or used to be) a tech company. They used to have
research. They used to create new products.

But in the past few years they have started committing to "returning 100% of
free cash flow to investors" (quoting their own earnings release) via stock
buybacks and dividends. They actually put it down in writing: we are committed
to NOT reinvesting in employees, NOT doing R&D, NOT creating new products. In
every earnings call about how they are still committed to getting all the cash
into stock buybacks and dividends. That's it. That's the whole company now.

Wall Street loves Texas Instruments. The shiny bucket of treasure known as
stock buybacks + equity based compensation is irresistible. This is going to
keep happening until we make it stop happening.

~~~
windexh8er
From startups to stalwarts - this is the norm. Wall Street / Investors first.
Infinite and ridiculous QoQ / YoY growth expectations and a lot of really dumb
approaches to achieve this. And executive pay that's way out of line. I just
read "The Infinite Game" [0] and while a lot of the book rehashes many oft
heard stories amidst well known companies and people as examples it makes the
clear point that given our hyper focus on short term profits we pay the price
in the long run. I don't disagree and I've been in roughly eight different
tech companies over the last 12 years. From startups to companies that do more
than a billion annually. They're all doing the same thing. The executives
can't even hear themselves admit it, which is the really interesting part.

Case in point I was on a call where an executive stated: "We're moving to a
subscription model in our product because, to go public, that's what Wall
Street is going to want to see". Not because that's where customer demand is,
or because it makes sense for the business. But this short sighted rationale
to meet a short term goal inorganically. Wall Street and VCs are very much no
different than the influencer marketing crowd. They just happen to pretend and
purport they're good at growing business, when the real MO is lining pockets.

[0] [https://www.goodreads.com/book/show/38390751-the-infinite-
ga...](https://www.goodreads.com/book/show/38390751-the-infinite-game)

~~~
pm90
What can you do? Wall St has become incredibly efficient in “nudging” execs
into doing what Wall St wants: by influencing the stock price, on which
executive compensation is based. Only founders or execs who have more than
just a financial interest in the company would buckle the trend.

I have thought about this a bit. Why doesn’t the Bay Area have it’s own stock
market/index? It seems incredibly stupid to let financial control over all the
innovation that’s happening in the Bay be in the hands of NYCs financial
markets. To some extent VCs offer that alternative financial market that
doesn’t exist but it’s only for startup funding and such.

~~~
josephjrobison
Hopefully Carta will be able to shake things up and help solve this?
[https://www.ft.com/content/d52b0487-b13c-4bae-
bf27-770518ff0...](https://www.ft.com/content/d52b0487-b13c-4bae-
bf27-770518ff083d)

There is also LTSE by Eric Reis -
[https://www.vox.com/recode/2019/5/22/18629621/long-term-
stoc...](https://www.vox.com/recode/2019/5/22/18629621/long-term-stock-
exchange-explainer-capitalism-quarterly-earnings)

Curious how this will play out.

------
hiram112
IBM is notorious for both offshoring jobs to places like India and also
heavily abusing the H1B visa, both themselves and through body-shops like
Wipro and Infosys. They have more employees in India than in the US.

IBM once told its laid off US employees that if they wanted to keep their
jobs, they should move to India and take the prevailing wage there:

"It's more of a vehicle for people who want to expand their life experience by
working somewhere else..."

This is when their CEO made $20M last year.

I think any company that is currently laying off US employees should
immediately have all their H1B, L1, etc. visas revoked and use banned for the
next decade. This would be trivial to implement, especially in states like
California where the company is required to notify the state before layoffs.

I also have absolutely no faith that Redhat won't turn into a shell of itself
eventually - all the US and EU R&D moved to India, replaced by sales and
lawyers using Oracle's business model.

* [https://www.nytimes.com/2017/09/28/technology/ibm-india.html](https://www.nytimes.com/2017/09/28/technology/ibm-india.html)

* [https://www.businessinsider.com/2009/2/ibm-to-north-american...](https://www.businessinsider.com/2009/2/ibm-to-north-american-employees-to-keep-your-job-move-to-india-ibm?op=1)

------
gumby
Cutting headcount rather than dividend isn’t a good look.

But this makes sense now that IBM has become a body shop. I doubt the cuts
will come in what remains of research, manufacturing, or design. Likely all in
“services” and its sales teams.

~~~
Consultant32452
Yeah, to me this just signals IBM's customers cut all their contractors as
part of their own layoffs. IBM doesn't have anything for these people to do in
house, so it has to cut them.

~~~
halfastack
An interesting POV. I certainly hope that's true. Is IBM reputation good in
the contractor space? As in, are their services largely viewed as dependable
and good value?

------
analognoise
"IBM finds another excuse to layoff senior staff members":

[https://features.propublica.org/ibm/ibm-age-
discrimination-a...](https://features.propublica.org/ibm/ibm-age-
discrimination-american-workers/)

------
hestefisk
Outside of big iron mainframe contracts for governments and banks who buys IBM
these days? Excluding Red Hat, I would say they are largely managing
themselves into obsolescence.

~~~
scribu
They do have IBM Watson, which has seen some uptake. [1]

Not sure how much success they're having with their other cloud offerings,
tho.

[1]: [https://enlyft.com/tech/products/ibm-
watson](https://enlyft.com/tech/products/ibm-watson)

Edit: Added source

~~~
jbsimpson
What uptake is it having? I've only ever seen it used as a marketing device.

~~~
scribu
Added source to my initial comment.

~~~
chid
I doubt that this source is very accurate. The "List of the top companies
using IBM Watson" is very odd.

You get better information from their annual report.

------
shadowpawn
Last time I worked with IBM folks I was shocked at how high on the expense hog
those folks lived. Sure they got a $$$ contract from their client but the
amount of money they were giving to the IBM folks in expense claims was
criminal.

------
torgian
Clearly coronavirus is a great excuse to let workers go. I doubt there’s going
to be much hiring going on once this plays out, at least not with current
wagee

~~~
Befterriager
For as long as I can remember, IBM has always been cutting thousands of jobs
every other month.

~~~
freehunter
Yeah you can copy and paste this story and these comments at least once a
quarter. Same story “IBM lays off thousands” same comment “IBM isn’t even a
company and this will surely be the death of them”. Literally ever since I
first heard the letters IBM I’ve heard these same headlines and comments.

And yet my clients keep buying IBM products and hiring IBM consultants. There
is a huge enterprise world outside of Silicon Valley that HN is completely
unaware of.

~~~
iamback
I second that. And every time the sentiment of most commentators is pure
vitriolic. I really don't get it. Unless it's coming from laid-off workers -
which I can understand and empathize. But I highly doubt it. My understanding
is that people here just hate IBM because it's old and out of fashion mostly
mirroring the same valley sentiment towards anything and anyone on the older
side of the road.

The amount of misconceptions that are passing in a lot of these comments for
facts is astounding. Many pretend that they don't know that IBM is one of the
major PaaS and IaaS cloud providers. Others pretend that they ignore all the
R&D done in IBM. Others still ignore the fact that IBM is one of the most open
source friendly companies out there. And others still forget that it is
probably the oldest IT company around that has reinvented itself more times
than Elon has begged for public attention.

Anyway. Each with his own opinion. Luckily business out there has it's own as
well and places its money on it.

With that I'm not trying to absolve C-suite from their responsibilities or
their shitty management that will leave thousands of good workers high and
dry. This is a different issue altogether but like I said the hate in these
comments have nothing to do with it.

------
raesene9
Unlike a lot of companies IBM'ers use
[https://www.thelayoff.com/international-business-
machines](https://www.thelayoff.com/international-business-machines) quite a
bit and there's a lot of activity in there over the last day or so related to
this set of "resource actions".

------
beezle
The previous CEO did a horrible job. The workforce morale, not good for quite
some time, fell further. Rather than try to leverage the deep and unqiue
assets/IP of IBM, she sold off many, then made a poor attempt to chase the
same type of "cloud" stuff as Amazon, Microsoft and Google.

------
dijit
Hopefully RedHat remains mostly unscathed. :(

~~~
dralley
Red Hat employee:

There's been no layoffs and I don't expect any. RH managed to avoid layoffs in
2008 as well. A hiring freeze is in place for most departments but there are
still some positions which are actively hiring.

I can't say I'm surprised that IBM is having layoffs, though.

------
DodgyEggplant
They spent billions on buy backs. At some point [1] ~80% of their market
value. Really a shame

[1] [https://www.fool.com/investing/general/2016/04/25/after-
fork...](https://www.fool.com/investing/general/2016/04/25/after-forking-
out-110-billion-on-stock-buybacks-ib.aspx)

~~~
throwaway287391
I don't know how this whole buyback thing works really, but could they not
just do a "sellback" of some of the shares they still own if they now need the
cash? (Of course they might have to do so at a bit of a loss.)

~~~
findthewords
In theory, yes, they could protect their workers' job security with a stock
offering.

They are incentivised to protect the interests of their shareholders.

Unions are set up to (N/A in USA) protect the workers.

~~~
throwaway287391
Agreed, but then it seems to me that the buybacks are kind of besides the
point, and the real underlying issue is that they don't care about their
workers (and/or aren't incentivized to), no? In terms of future flexibility /
robustness to unforeseen emergencies, sitting on a big pile of your own stock
doesn't seem that different to me from sitting on a big pile of cash, except
in terms of the risk profile. (In contrast to paying a dividend, where they
really can't recoup the cash if they need it.) I could easily be missing
something though...

~~~
zb
They’re not ‘sitting on’ a pile of stock; it gets bought back and cancelled. A
company can issue more stock any time it likes, so in that sense every company
is ‘sitting on’ an infinite pile of its own stock all the time.

~~~
snuxoll
A company doesn't _have_ to destroy the shares they buy back, they can opt to
retain them and use them for employee compensation or later reoffer them.

------
jtdev
Why isn’t Watson driving profit at IBM? Is Watson still little more than a
“man behind the curtains” marketing tool?

~~~
blantonl
Because IBM Watson is essentially a billion dollar bet on 90% shell scripts
sed'ing and awk'ing datasets.

It was a sales and marketing ploy to sell global services contracts

~~~
pengaru
Can you provide some actual evidence to back your inflammatory, dismissive
claims?

There is zero mention of sed or awk at [0]. And looking at one of the
references [1], it's pretty clearly more involved than sh+sed+awk. Is Apache
UIMA [2] 90% sh+sed+awk? At a glance, it doesn't appear to be.

[0]
[https://en.wikipedia.org/wiki/Watson_(computer)#Software](https://en.wikipedia.org/wiki/Watson_\(computer\)#Software)

[1]
[https://www.aaai.org/Magazine/Watson/watson.php](https://www.aaai.org/Magazine/Watson/watson.php)

[2] [https://uima.apache.org/](https://uima.apache.org/)

------
dang
A later thread:
[https://news.ycombinator.com/item?id=23273960](https://news.ycombinator.com/item?id=23273960)

------
0az
I will note that internships are still going on. Everybody also gets their
housing stipend in cash.

------
JackPoach
IBM has been dead for years. This is the inevitable end.

~~~
stagger87
What is your definition of dead? IBM still profits 10+ billion annually and
has 300k+ employees.

Why is this layoff (compared to the other hundreds they have done over the
decades) the inevitable end?

------
markvdb
Could you please upgrade the link to point to a respectable news outlet? Two
obvious candidates:

\- [https://www.bloomberg.com/news/articles/2020-05-21/ibm-is-
la...](https://www.bloomberg.com/news/articles/2020-05-21/ibm-is-latest-tech-
giant-to-cut-jobs-in-midst-of-pandemic)

\- [https://www.wsj.com/articles/ibm-announces-first-job-cuts-
un...](https://www.wsj.com/articles/ibm-announces-first-job-cuts-under-new-
chief-executive-11590113061) (paywalled,
[http://archive.is/imO4i](http://archive.is/imO4i) might help)

------
2OEH8eoCRo0
As somebody who has been stuck using IBM Clearcase or DOORS the end of IBM
can't come soon enough.

