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Ask HN: What's going on at IBM?
128 points by Riod on Feb 7, 2016 | hide | past | web | favorite | 74 comments
Company seems to be doing poorly (14 straight quarters of declining revenue) and according to markets. Would be good if someone with a grasp of how the company works could explain what's going wrong



I've been working at IBM for a couple of years now, started as a grad.

What you must be referring to is the stock price, which has dropped from 200 dollars a couple of years ago to like 120 these days.

I can't claim to understand this company, I think very few people can. There are 300,000 employees and more teams/products/departments than you can imagine. It's absolutely insane.

However, what I can say is the following: IBM is shifting it's strategy completely and that would've been very difficult to do without a drop in revenue and stock price. IBM is going from whatever it was before to a cloud-based company. All services and products will need to have some sort of cloud offering. I'm not sure if you can imagine what moving 300k employees worth of work to the cloud means. IBM has existed for like 100+ years now, this industry has not existed until a couple of years ago and, right now, all teams must re-evaluate their work and make the steps towards making this transition happen.

Many of the employees are stuck in their old ways, many people have been working at IBM their whole career (20-30-40 years) and it might be hard to adjust to so many new directives coming from the top. There's much bureaucracy and many old ways that need to be absolutely obliterated. Also, IBM doesn't have a great reputation for being cool or anything... almost everybody hates Lotus Notes, as an example.

This was sort of all over the place, I didn't spend a lot of time thinking about this. Please let me know if you have any specific questions...


They're not referring to the stock price, the revenue that IBM takes in has fallen for 14 straight quarters: http://www.marketwatch.com/story/ibm-reports-another-quarter...

The stock would actually have fallen much, much more but IBM has been performing continual stock buybacks to prop it up: http://247wallst.com/technology-3/2015/10/27/why-investors-d...

Some people think IBM is nothing more than a financial engineering firm now: http://dealbook.nytimes.com/2014/10/20/the-truth-hidden-by-i...


My personal experiences with IBM representatives in Eastern Europe were rather negative (IBM was a strategic partner of my company), concerning IBM BPM and Cloud hosting. Their people were not trying to be nice or helpful. You had to really push them to get anything done. I'd expect better service, more focus on documentation.

edit: I do however recognise how huge the company is and how dramatic and brave their decisions have been to redefine the business.


IBM always seems to be in the process of shifting it's strategy. When I was there around 2006/7, they were in the process of cutting down on R&D, reducing it's footprint in the hardware space, and generally moving towards services (presumably because the margins were very high). I would say it's a large company that's trying to find it's place in the world again. That's not to say they don't make a ton of money, but over the last 20 or so years they've been 'getting out of' a lot of businesses.


From the outside, that looks like a good summary. IBM found that services are price sensitive, and IBM's name goes only so far in holding off pricing pressure. The question is whether the new R&D efforts will get sufficient resources to build enough value to more the needle. It could be that IBM's move to services is a last move and that things like Watson won't get the resources to be competitive with Google, Microsoft, Apple and other players in deep learning and AI.


> IBM has existed for like 100+ years now

In its 105th year: https://en.wikipedia.org/wiki/Computing-Tabulating-Recording...

IBM still does punched card processing for the census, right?



> many people have been working at IBM their whole career (20-30-40 years)

The first huge layoffs at IBM were something like 25 years ago, presumably the people at least at the lower end of this scale would be used to things getting disrupted by now.


Watson is quite impressive from the outside atleast. It's sort of the opposite of the Palantir approach to unstructured data; which is to say Watson processes and outputs the conclusions as opposed to aiding humans. Is that getting any traction?


I wish I knew... As I said, there are very many people working here, it's very difficult to know much about all that. :) From what I know though, there is a lot of funding going into it and a lot of effort, I think it's currently no. 1 on the list for the executives. It did manage to get A LOT of attention with Jeopardy, but I haven't heard a lot of good stuff about it since. I mean, it's definitely laying lower than you would expect given how impressive it looked on TV.


IBMers had these nice quote about sun never down on IBM's wealth (a paraphrase). Also the story of the blind elephant caretaker.

I wish IBM not to die and manage to turn pressure into strength to develop new hardware and new ideas (I found the business software pretty .. lacking). It's one of the oldest companies in operations. And I'm a passeist.


Regarding some of the Buffett posts, he has been reading the IBM annual report for 50 years. Other major investments he owns, like Wells Fargo and BNSF, are major IBM customers. He once said Wells Fargo's largest expense is paid out to IBM each year.

Buffett's position is that IBM has succeeded in turnarounds throughout its 100+ year history. Also, their advantage is in the Public/Private hybrid cloud. Buffett also believes the cloud business is not a "Winner Take All" game.

Buffett also applauds what industry pundits have dubbed, IBM's "Financial engineering". IBM has financed share buybacks with debt. With interest rates and share prices at low-levels, he believes the buybacks are sound.

In my time, I remember when IBM jumped on the Linux and Java bandwagons with great success. I think most people respect the contributions they made with the Eclipse IDE for example.

It will be interesting to see what they do with Bluemix and AI. I still respect them as a technology company.


Blumix is late to the game and has to put it mildly road to do https://status.ng.bluemix.net/


When bluemix started out on day one, I didn't know what the heck was going on. When I look at that list now, I'm impressed with the cohesion of the services presented. I see bluemix, Twitter insights, weather insights, and a lot of other services that fit into the narrative IBM has pushed through the media. The services appear relevant, and I'd trust ibm to support and grow them instead of using the public as its sandbox.


yeah but look at the outages, provisioning of something is broken every other day. this has impacted my startup already multiple times, sadly.


I'm surprised no comments here mention containers. These are a great example of where IBM absolutely screwed itself. Most of the kernel features for containers and the initial release of LXC were done on IBM's dime. The two major developers (one focused on kernelspace, one on userspace) then left, at least one of them for Ubuntu, I believe. I know this because I was in touch with them and using LXC personally about 2009-2010 before the docker hype era.

As I comprehend it, the features were originally intended to allow fat mainframes to dole out tiny resource portions for distinct jobs. As it seems to have turned out, every CPU these days is the equivalent of a fat mainframe, and the greater challenge is around integrating this form of rapid SOA micro-provisioning in to developer workflow through tooling and education. I just upgraded this few year old Macbook Pro to run Docker 1.1.0: 200MB Linux ISO + Virtualbox + kludgey go wrapper = better solution than IBM ever provided. With a different management culture, they could have released this in 2010, pre-empting stable docker by 5+ years with a kernel commit history and adequate marketing funding.


IBM has transitioned into an enterprise services/consulting firm over the past 15 years or so. Their game plan is to get huge $$ contracts from Fortune 50 companies and government agencies, which is a long and costly process.

This kind of business is extremely hard to scale, compared to a true software or hardware company innovating and licensing/selling products. IBM does have a ton of resources behind Watson, but that's still basically an enterprise services contract sale, and not much of a cloud product.


I've been consulting in the federal gov for over 15 years and whenever I've heard about IBM contracts it's been bad. real bad. they've botched some reeeallly high priced federal contracts. sure they've made money, but their reputation in this space is down the tubes.

from my own dealings with their teams, they over complicate and over-process everything. They have lost many high $$ contracts in the past several years in the fed gov.


A "ton of resources" is relative. Compared to true technology players going after dominance in AI in general, or even in specialized areas like self-driving cars, IBM is not putting a lot of wood behind that arrow. I get the impression that IBM would like to find Watson only far enough to use it to sell services and integration at a higher price.


IBM had the contract to run most of the IT infrastructure for the State of Texas and subsequently lost it. I don't have any facts as to why, but rumor was it was an execution problem.


Does it mean its core revenues are more stable? Are enterprise customers moving away from it?


A lot of enterprise software work that I know about that IBM does are things like SAP integration (which was a great disaster in my home land - queensland, australia, have a google). You can see a lot of this sort of stuff moving to the cloud and off the shelf products replacing it, there is certainly consulting work to be had integrating products from this, but it would be easy to argue the amount of money for these things is a lot less.

Also in the past IBM had an integrated value stack of hardware and software they provided (AS/400 and so on), these are being replaced by commodity cloud based servers running linux or windows. So their consulting model is being disrupted. There's still money in it, but probably not the amount of money they're used to, same sort of thing is happening in Oracle I'd guess.


Accountants have taken over leadership roles, resulting in a corporate-wide prioritization of earnings-per-share promises over engineering and logistics.


Blech!!

It's too bad that companies like both IBM and Yahoo! didnt do a better job in capturing the startup market given the hoards of cash they both have.

Talk about 900 pound gorillas, they got their asses handed to them even though they could have funded every single startup in the valley over the last ten years and not put a dent in their reserves...

I'm curious to know why these companies with massive cash stockpiles seem to literally just sit on them.


It's always been controversial whether a company should be allowed to invest in new fields. Over the last 100 years a few people have even made the argument that it is illegal for a company to invest in a new fields. There were some lawsuits about this in the 20th Century, though the courts always sided with the corporations.

Still, the argument is interesting to consider. Suppose it is 1995 and Microsoft it at the peak of its power, so you invest in Microsoft stock. Then 14 years go by. Now it is 2009. Google is rising in power. You want to get your money out of Microsoft, so you can invest it in Google. Does Microsoft have a legal obligation to give you all that it can? Or can Microsoft create Bing? Microsoft then creates Bing and loses more than $1 billion on it. You feel frustrated. Microsoft could have given that money to its shareholders, so you would have more money to invest in Google. But instead the money was wasted on Bing.

On the more general level, the question is, when one industry is in decline, and another industry is rising, who is responsible for shifting capital from the dying industry to the growing industry? Should individual investors do it, or should corporations do it?

You could argue that IBM is following the philosophy that all money should be given to the shareholders, so that the shareholders can reinvest the money wherever they feel best.


This isnt what I asked at all.

If MSFT has BILLIONS in the bank - why do they literally sit on the money instead of investing heavily in GOOG when GOOG is born?

I am not saying a company should give the money they have in the bank back to their shareholders to invest - I am saying why dont they actively invest in startups VERY AGGRESSIVELY as opposed to sitting on the money entirely.

Also, I am literally only talking about one industry - tech - so I am expecting that those that are in tech beget tech startups....


The answer has nothing to do with any of that.

The answer is simple: companies are deferring their income tax payments in anticipation of an upcoming tax holiday year, which is the expectation given the decades' long history of past policy decisions. You don't want to be the CEO that paid a bunch in taxes when you could have just waited a few years and let the problem solve itself at no cost to your shareholders.


Because your question depends on MSFT being able to see into the future.

Second, if they did know that the Google business model would be successful they could just have copied it to out-google Google.


Surely this is what Bing was attempted to be


http://www.nytimes.com/2016/01/24/magazine/why-are-corporati...

Nobody knows why companies just sit on money instead of investing it or creating new jobs.


Investing in many startups requires a great deal of judgement and some due-diligence, far more than either IBM or Yahoo were capable... If direct investment were in-house scalable, institutional investors wouldn't invest in VC funds, but it's a very high-risk, somewhat hands-on activity to avoid throwing all money away.

It's not called a warchest for nothing, so although it might give competitors some pause, it does chap investors for not disbursing larger dividends or reinvesting in growth/m&a, and it additionally paints a larger bull's eye on them for capital extraction.


> though they could have funded every single startup

That is actually an interesting perspective.


From my lowly developer point of view.

Power may be a bit quicker than Intel, but it's unfamiliar to many. Nvidia is breaking new ground, it's sexy, accessible, and cheaper.

On the software side it's a similar story. Why use their unknown proprietary cloud stuff when I can just make use of the plethora python/julia/clojure/R stuff? AWS is fancy and ever expanding, Softlayer is a PITA.

IBM biz news http://finance.yahoo.com/q/h?s=ibm


> Why use their unknown proprietary cloud stuff

BlueMix is a branded version of Cloud Foundry, which is an opensource product owned and managed by an independent foundation.

Disclaimer: I work for Pivotal, another company that works on Cloud Foundry.


AWS does cater to enterprise customers, but do they have the same one point of contact style service that IBM has historically provided?


In my experience, yes.

The support I have received fromAWS has been literally stellar over anyone I've ever worked with.

Even now, my previous rep got promoted and moved on from account mgmt but if I send him a one-off question he gets it answered and taken care of immediately.

I have literally out of hundreds of calls and meetings with aws been disappointed with one call. That was when I accidentally changed my root account email address and I couldn't recall which email I had set it to, so I clicked the "contact customer service" link from the forgot password page and it connected me with the "Amazon.com" (shopping) customer service agent who apparently had no fucking clue what aws was.


Not completely the same, but I meet with regional aws staff a few times a year including product managers.


AWS enterprise customers get case managers as points of escalation and this is a generally accepted strategy for almost everyone in enterprise to the extent that I believe customers would be very concerned if this type of customer outreach model was not in place. This does not necessarily mean that this is the same thing as a services style engagement manager either.

Note that this does not mean that I think it's optimal, but I do mean that a vast majority of enterprises have a form of group-think culturally that makes this approach something that's demanded as a standard service offering that is no different than developers expecting APIs from a hosted service.


Yes, of course. If you are a company, you know your rep.


IBM has long seen itself not as a computer or electronics company but as a marketing company. Their approach to marketing is to have salesmen in branch offices selling to businesses. Long they sold business machines for routine business record keeping.

They are still trying to sell, sell something, via those branch offices to those businesses but they have run out of things to sell. And the sales culture is not good at thinking of good, new products/services to sell.


Robert Cringley has a recent book about the decline of IBM - http://www.cringely.com/2014/06/04/decline-fall-ibm/ - I found it pretty interesting. His thesis is that IBM's management has consistently goosed short-term profits by making cuts that hurt it long term. It off-shored technical work, under-invested in quality, tooling and automation, laid off older more experienced workers, etc. I don't have any first hand of experience of IBM, so I cannot vouch for how true Cringley's story is.


The problem with anything Cringeley writes is it is tainted by his baseless past claims that IBM will be laying off most of its workforce. He has been wrong every time. He'd be more interesting to read if he wasn't trying to act as some Nostradamus to IBM who keeps repainting the IBM death portrait each time his predictions don't turn into reality.


That book is not good. Its filled with factual errors, gross misstatements and pure speculation. It fits well with author's anti-outsourcing/immigration agenda.


It jelled with what I know anecdotally. Their Indian outsourcing is terrible, bad compensation, nothing close to Google or other tech companies in India. This is from a few years back.


Define "doing poorly".

IBM is down 17% percent in the last 6 months. (https://www.google.com/finance?q=ibm) As far as tech stocks go, that's not crisis-mode.

As far as newsworthyness, Watson and Bluemix have been making the press rounds.


Since its March 2013 high. Their revenues have been decreasing for 14 straight quarters


IBM has to change their business plan and focus on new technology.

When the IBM PC was made it started the PC Era that became the Post-Mainframe era. When mobile devices took off it became the Post-PC era and IBM had to sell its PC and Server lines and focus on services.

Now even if it is the Post-PC era PCs are still being used. IBM had to get rid of OS/2 and migrate to GNU/Linux.

Right now it is also the Cloud-Era and IBM has to work on Cloud technology.

When a company shifts technology like that it takes a while to find a way to turn a profit.

Apple went to the mobile technology market and it took off like a rocket. IBM had the Simon Smart Phone in the 1990s but couldn't market it.

IBM has a lot of technical debt in maintaining Mainframes and Minicomputers that are still in use. The Lotus products also are outdated and they tried to use OpenOffice.Org to make Lotus Symphony and it didn't take off.

IBM Opened up its Power technology: http://openpowerfoundation.org/

A lot of things have happened to technology that IBM suffered from losing money because the technology became outdated. IBM has to invent new technology to replace it.

IBM is focusing on services and the cloud right now. Sort of moving away from hardware because it is hard to earn money from hardware and moving to software and services instead.

Everything I used to know about IBM has changed, IBM has to reinvent themselves. The technology and markets have changed and IBM has to adapt.


One interesting thing is that Alliance@IBM- the organization that has been trying to unionize the company is giving up. I assume that the interested workers are now at Lenovo.

http://www.computerworld.com/article/3019552/it-industry/ibm...

Maybe they should focus on unionizing Amazon.


IBM is suffering the fate of OPEC countries, except with technology. IBM wasn't diversified. (Sure, IBM has lots of products, but it usually sold licenses to all these products in large bundles, rarely did anyone buy just DB2, rather, agreements purchased entire ecosystem of IBM software/hardware). IBM was built on a single golden goose "massive multi-million dollar agreements with Fortune 500 CTO's for thousands of licenses of IBM hardware/software". IBM solved big problems with big, expensive solutions. Nowadays, developers regularly make the purchasing decisions, not upper-management, so FOSS or Freemium products win out over expensive IBM software licenses. IBM hardware is largely dying out because the Cloud and x86 won the architecture wars and no one wants to develop for PowerPC or AIX. So the legacy IBM is dying on the table.

IBM is losing its old accounts and old business agreements faster than it can generate new revenue with Softlayer/Bluemix/Watson. IBM makes 4.5B from Cloud revenue. In contrast, total revenue in 2015 was 81.7B. So IBM revenue is going to be a bloodbath until Cloud revenue can catch up. Unfortunately, Cloud is a razor thin margin business, where Amazon, Microsoft, and Google are willing to sell at, or below cost to gain marketshare, which will likely continue to hurt IBM's cloud revenue at a time it needs it most. IBM is the underdog here, so it can not bring any of the other cloud giants to the table and make them end the price wars, so IBM cloud revenue is likely to remain anemic.

IBM also suffers from a number of management mistakes. IBM is way behind on automation and lacks the talent, so they've had to make acquisitions and "strategic partnerships" to buy it. IBM previously tried to outsource as much software and operations to China or India, and the unskilled labor available in those countries simply don't have the skill sets to do devops or any sort of basic automation. So you've got datacenters where people still ssh into each box and run commands by hand thousands of times because the skill level isn't there. But hey, a few quarters of lower labor expenses in exchange for long term growth is a great deal when you can just parachute out.

Other mistakes IBM has made includes massive buildup of debt and stock buybacks to inflate the stock price. As bad as the stock looks now, just consider how bad it would be if IBM hadn't spent 8B+ buying back stock. These buybacks have largely been financed by new corporate debt. IBM's market cap is nearly 40% less than only a few years ago. These buybacks hide a lot of the stock price damage (the stock would be worth about $75 instead of ~$130). In addition, buybacks are essentially returning money from the corporation to the shareholders, unwinding the assets. This means IBM management has no plans which could return a higher yield to investors than simply handing back their money -- not great for investor confidence or long term future for IBM.

Source: Employee.


IBM's trick was to recognise that nerds are bad at selling stuff. Even up to the 90s, sales + support + okay product > great product. Then nerds took over IT (the world?):

> Nowadays, developers regularly make the purchasing decisions

Oops. Suddenly, you can't just cover over product weaknesses with sales. I want a slick, downloadable, preferably OSS demo which I can evaluate (and fix), not a slick sales guy. They just lie.

> IBM is way behind on automation and lacks the talent, so they've had to make acquisitions and "strategic partnerships" to buy it.

... and then they constantly scare away that acquihired talent by e.g. not using `git`, but their own SCM called "Rational Team Concert" (which is worse than `svn`). Suddenly, the avg. day of a dev became 1/3 as productive and x5 as frustrating.

It isn't that they treat developers horribly, they just don't know how to please them. You end up with dev teams of barely average "enterprise" developers, who are put under pressure by flailing managers and executives to "deliver". So they simply add to the decades of technical debt. Now most products are "rotten" to the core in this way, so you need ever bigger support and manual test/QA teams. Release cycles elongate, features take months to develop in a fragile code base. Sales, assuming they weren't douchebags to begin, have nothing good to sell. So management "incentivises" them instead of investing that money in a good product. Thus, the cycle continues.

In this way, it's also insidious for your career unless you want to move out of tech (because IBM's general reputation is okay). If you want to stay in tech you really have to be keeping up with the outside world, otherwise you'll get a nasty shock in that interview when it turns out you don't know how to use `git`.


    > faster than it can generate new revenue with Watson
I evaluated the Watson public APIs a little while (a year?) ago, and found them close to useless, yet the amount of hype behind the brand is intense. I wonder what the disconnect is.


The speech transcription API is pretty great, but that's the only one I've dealt with in any capacity.


IBM is huge with hardware, software, global services and other biz units that makeup the entire picture. They try and put on this face of "were so advanced" with watson and buying companies to stay ahead but in the end it's old school management that fails the company. Global services is the majority of employees and middle management is so bad they couldn't distinguish good internal talent if it hit them in the head. It's all about supplanting highly skilled labor with offshore talent, your job is truly replaceable. I've seen $200+/hr rates get outsourced to multiple $25/hr unskilled labor. Ask any major company who has brought IBM in and you'll hear horror stories. If you're an employee of a Fortune 5xx company where IBM comes in to take over your I/T department, RUN!! They care about money, not people.

IBM is easily replaceable with hardware, software, and finance solutions and you have young I/T managers who could give a rats a$$ about the old sentiment "buy ibm and you can't go wrong". Google, facebook, amazon, yahoo have all shown you can build and scale solutions beyond anything that a mainframe can do and much cheaper. IBM keeps living in the past and the most messed up places of employment I've encountered.

agree with everything @afforess says.


Unfortunately, this is 100% true...


Does AWS approach enterprise sales the same way IBM does? I know IBM offers the one point of contact approach (contact your rep; she/he takes care of it).


Yes, this is one thing they do fairly well.


> So the legacy IBM is dying on the table

If it is dying, it will be a slow death. IBM spent decades entrenching itself in government and Fortune 500 enterprises.

The 23 year old Ruby-on-Rails coder sitting at his desk in his unicorn's open floorplan office in SoMa may not be aware of it, but there are a ton of IBM machines out there in the world right now, running programs written in JCL, Rexx, Cobol, PL/I, and Fortran.

The first z196 mainframe to roll out six years ago went to Citigroup ( http://www.informationweek.com/it-leadership/global-cio-ibms... ). With the pressure for increasing quarterly profits and other priorities, why would Citigroup decide to spend a fortune to upgrade their ancient legacy systems, hoping that there won't be too many bumps along the way? IBM makes it easy for them to keep their legacy systems around - it's much cheaper, and it works. The systems have worked for decades actually.

When JPMorgan Chase decided to start cutting down on their IBM usage twelve years ago and start doing more IT in house, they had to strike a deal with IBM to hire about 4000 IBM IT workers ( http://www-03.ibm.com/press/us/en/pressrelease/7294.wss ). Since JPMC just put up a job posting ( https://jpmchase.taleo.net/careersection/jobdetail.ftl?job=1... ) looking for someone with "Expert Skills in IBM-Z/OS COBOL, CICS, VSAM, JCL, MQ, DB2 SQL, Assembler and Stored Procedures", I'd guess some of those systems are still in place.

Note the location of the job. Tampa, Florida. Not exactly the center of what's young and hot in the tech world. More like the kind of place an IBM old timer might go to retire, before he decides he was bored and would like to stick his hand back in and get some work. This JPMC job ( https://jpmchase.taleo.net/careersection/jobdetail.ftl?job=1... ) looking for "Experience with z/OS ISPF, JCL, and JES2" is in Bangalore. Not the center of tech, but plenty of people out there are working on these mainframes and with languages listed in the job listings like JCL, REXX, Cobol etc. These jobs are all at a bank which tried to start weaning itself off IBM twelve years ago.

Governments and Fortune 500 companies have plenty of IBM mainframes out there running, often with code written half a century ago in PL/I or the like, running business processes which are still used, and they're not going away any time soon.


The problem is that being "the legacy vendor" is not a good place to be. Your margins can only get lower. You get a huge runway towards building alternatives, but building alternatives you will have to do.


IBM makes a lot of money selling ELAs (Enterprise License Agreements) to their customers. An ELA is like buying a bundle of IBM hardware, software and services. It's like buffet dining.

Big companies are no longer buying the buffet and are increasingly opting to go ala carte. Or alternatively, they are negotiating IBM down on prices for the buffet.

It's true that IBM is switching its focus to Cloud services and Watson. However, these are just new, unproven items on the buffet menu.


I remember Mr Buffet talking about how awesome IBM's pipeline for the next few years is. Also, this:

http://www.forbes.com/sites/panosmourdoukoutas/2015/11/17/wh...


Warren Buffet has often said he avoids investing in the tech sector because he does not like to own companies he does not understand. For the life of me, I can not fathom why he broke this cardinal rule with IBM.


IBM has run a very aggressive stock buyback scheme for the past few years. Even while their revenues have decreased for 14 straight quarters, they returned $50 billion to shareholders through stock buybacks. They paid for most of this by issuing new debt and manipulating their accounting.

Imagine what they could have accomplished if they invested this into R&D instead.

They've given a huge amount of wealth to their shareholders at the expense of future growth. They can't sustain this much longer.

Some charts illustrating this from 2014 - http://www.zerohedge.com/news/2014-04-17/great-stock-buyback...

And them manipulating their finances http://www.zerohedge.com/news/2015-04-20/ibm-reports-worst-s...


buffett also likes companies with a "moat", which (arguably) IBM's patent portfolio provides.

Also they can borrow at incredibly cheap rates, which makes them useful as a financial company. (like GE / GE Capital)


According to the CEO the declining revenues are not a bug, they are a feature. From http://www.cnbc.com/2015/11/03/ibm-ceo-said-sometimes-size-m... :

>"In my tenure, I've divested $8 billion of businesses," Rometty said. "The point was, they weren't about the future of where we were going."

>Rometty cited an example of a recent divestiture in hardware — making semiconductors. Now, only 10 percent of IBM is comprised of hardware.

see also their pdf on the same http://www.ibm.com/annualreport/2013/bin/assets/ibm_ghv_marc...


Something not mentioned here is their 'big push' into Design Thinking. IBM have snapped up ~14+ of the graduates from my college course (Visual Communications, IADT, Dublin) flown them out to Austin for a 3 month starter course and now have quiet a substantial design department here in Ireland.

More info: https://www.ibm.com/design/studio.shtml


IBM is still a strong company, but they are no longer in the position where they are market leaders in their product lines. Watson is the only new product to catch fire, otherwise they are competing and losing to Oracle and Microsoft. Softlayer is an alsoran. They bought cloudant instead of mongodb. The only thing they do well is consulting and even then they are expensive. They appear to be several years behind their competitors with little chance of catching up.


I'm surprised only one comment here mentions patents. IBM are filing patents as fast ever, and while they're trying to get into "the cloud" like everyone else, I get the impression that they're also still working on hardware R&D, as well as the AI research that goes into projects such as Watson.

Also they calculate the Wimbledon serve speeds, so they've got that going for them which is nice.


They're doing a bit of quantum computing research and patenting stuff left and right and it's making everyone in the field uncomfortable.


Over what time period? Like the last 2 years or longer or shorter? What specifically is the poor being asked about?


IBM is failing at devops. It needs to license developer versions of DB2, MQ, and Websphere at free so devs can containerize and spin up instances for unit tests on a whim. It needs to advocate a liquibase type solution too.

Fortune 500 IBM software is also dying because IBM has let DBAs running scripts by hand not version control be the source of truth.


Wasn't there something about Warren Buffet investing in IBM?


He'd invested $13bn in IBM stock as of his last shareholders letter - his largest stock position by cost.


I joined IBM Global Business Services (IBM's consulting division) in London a couple of years ago.

As others have said, IBM is so big that it can only really be understood as many different companies, all with slightly different cultures. There are plenty of people who are better qualified than me to discuss the overall strategy and financial picture, so I won't even try.

I can, however, give a few opinions about my 2+ years in GBS.

* There is a general lack of respect for technical skills. I was hired as a "Technical Consultant" but put through the same training as the business consultant grads, which is largely about project management / presentation skills. A lot of money is spent on this training, if you ask for funding to (e.g.) attend a developer conference, you are told to forget about it. Maintaining dev skills or learning new ones is to be done in your own time or as part of "giveback", which is the IBM name for extra work done on top of your day job.

* The leadership team is utterly obsessed with maximising billable hours. While this is understandable for a services business, it is taken to ridiculous extremes. People are under such pressure to be billable that they are forced into roles that are completely unsuitable for them, rather than spend a few days waiting for the right role. Training etc gets cancelled at short notice if billable targets are not met, especially in Q4. Last year the entire GBS UK workforce were banned from taking any vacation for several weeks in November and December. A spoof email from senior management was circulated, saying "Christmas is cancelled" which gives an idea of current morale.

* The annual appraisal (PBC) system is a popularity contest. The best way to game the system is to do "giveback" (see above) work for senior people and persuade them to write nice things about you. This is all well and good, but it means that performance in your main job role is actually secondary to how much eminence you can gain by doing odd jobs for senior management. Thankfully IBM has seen the light and retired the PBC process, so I'm looking forward to seeing how well the replacement works.

* I get the feeling that nobody really understands Watson. It seems like the senior execs are under a lot of pressure to buy into the hype and sell Watson to their clients. There is a lot of hand waving about using Watson in "virtual assistant" type of use cases, but I've seen very little of any substance.

* The bureaucracy can be incredibly painful. I once had to go through multiple layers of sign-off involving people in 2 different countries over several weeks, to buy a $25 software licence (which I needed urgently for my job).

* Things are changing, slowly. The iX service line is adopting a startup-like approach on some projects. Agile is being promoted in a big way, and we now have access to modern tools like Slack and Enterprise GitHub.

I hope I don't come across as a bitter, entitled millennial. These are just my opinions.


> 14 straight quarters of declining revenue

Yeah, but dat Earnings Per Share though... /s




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