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I always thought that IBM was a declining giant. I just looked up their share price and it has done strikingly well over the past 2 years. Their revenue has als

I always thought that IBM was a declining giant. I just looked up their share price and it has done strikingly well over the past 2 years. Their revenue has also been growing, albeit slowly. Maybe capitalizing on the AI buzz? https://finance.yahoo.com/quote/IBM/ https://finance.yahoo.com/quote/IBM/

KK7NIL 2y ago
IBM has largely retreated from consumer facing ventures but it's still a behemoth. From the start of its Wikipedia page: > IBM is the largest industrial research organization in the world, with 19 research facilities across a dozen countries, having held the record for most annual U.S. patents generated by a business for 29 consecutive years from 1993 to 2021. I know that in semiconductors they're still doing bleeding edge R&D which they then try to license to foundries. Their mainframe business is still doing quite well too. And I'm sure they're active in many other niches that I know little about.
- marcus0x62 2y ago
  They have an absolutely massive consulting/services business (~ $20B/year run rate.)
  - coredog64 2y ago
    Kyndryl was spun out of IBM a while back. My cynical take is that the “IBM GS” brand was so toxic this was the only way to continue to sell those billable hours.
    - DebtDeflation 2y ago
      Kyndryl was the infrastructure services group (then known as GTS). Consulting is still part of IBM (formerly known as GBS).
rmbyrro 2y ago
Nobody has (still) ever been fired for hiring IBM. They have a very strong brand in traditional corporate industries, which have an endless demand for IBM services.
- yellowapple 2y ago
  > Nobody has (still) never been fired for hiring IBM. I'm pretty sure I came pretty damn close the one and only time I opted for IBM Cloud (which was called "Bluemix" back then). In fairness, running a PostgreSQL DB in a container wasn't the brightest idea on my part, and it was also my fault for not having backups in place, but when Bluemix ate our entire prod DB, and the multiple-weeks-long back-and-forth with IBM's support only yielded something along the lines of "whoops, that sucks, good luck building a new DB instance from scratch", we rather quickly jumped ship to AWS and never looked back. I'm sure IBM Cloud is better these days, though it was a bit telling that during my brief time working for IBM my primary job was to build customers' stuff on AWS instead of IBM Cloud. Go figure.
  - rmbyrro 2y ago
    And yet, you haven't been fired
  - ghaff 2y ago
    Bluemix wasn’t really IBM Cloud. It was what turned out to be ill-advised backing of Cloud Foundry but a lot of companies did that with a certain degree of public ridicule falling on those who didn’t fall in line.
- 486sx33 2y ago
  Whomever hired IBM to build this mess should have been fired https://en.m.wikipedia.org/wiki/Phoenix_pay_system https://en.m.wikipedia.org/wiki/Phoenix_pay_system
  - stonethrowaway 2y ago
    There’s a lot of ass coverage involved. Someone came in temporarily, was given a certain title, hired IBM, left shortly afterwards. People shift, staff turn over, and before anyone knew what happened nobody knows who said what.
fsckboy 2y ago
share price matters to a shareholder in the short term, but doesn't come close to telling the whole story. IBM is not performing well. In 1990, IBM's market cap was $27B and Microsoft's was $5B. In 1999, IBM's was just under $100B and Microsoft's was just under $400B. For the last decade+, IBM has hovered (rather wildly) around $160B, while Microsoft has grown from $250B (post dot com crash) to $2,500B. so yes, IBM really has been a declining giant relative to their market share in the strong technology sector IBM selling off more and more businesses might be "the right move" for shareholders and props up the share prices, but it shrinks the overall business and in terms of value creation (where wealth comes from) indicates a shortage at IBM
- browningstreet 2y ago
  Honest Q, why compare MS to IBM? MS has (mostly) products and licensing, and as far as I understand, IBM has consulting and licenses. Pretty different in this day/age.
  - fsckboy 2y ago
    Honest A, an investor and/or the financial market does not care what the similarities or differences are between companies, but how investments in those companies do. Microsoft and IBM were major players in the personal computer business, and subsequently both have had a heavy presence in enterprises and data centers. IBM is gone from personal computers, although Microsoft's products probably figure heavily in IBM's consulting. could easily compare IBM with other companies; google didn't have a presence prior to 2000, Apple pre 2000 and post iphone are entirely different businesses, nothing else came to my mind. Amazon? they were around in early days of the dot com (1994!) but I'm not really that familiar with where they stood back around 2000 and didn't want to sample apples and oranges. IBM's other competitors like Digital disappeared, but not because IBM gobbled up their share. IBM compared to itself has not grown. Other companies have grown, through survivorship bias if no other reason.
  - atmavatar 2y ago
    At the beginning of the comparison period, IBM was also pretty heavy into products. For example, in the late 80s and even into the early 90s, the market for PCs was broken up into IBM PCs and compatibles. IBM was the PC. IBM invented many of the technologies that went into the early PCs but pissed away their lead with every single one until we find ourselves today where they no longer manufacture anything that can be found in a modern PC as far as I can tell.
bluedevil2k 2y ago
Their share price growth is only a result of share buy backs. They’ve fired tens of thousands of employees and used the cost savings to buy their own stock back, enriching executives, especially their CEO, whose pay increased 23% from 2022 to 2023 to $20.4M. (And IBM didn’t even meet their own internal revenue goal). Are the execs doing what’s best for the company’s long term prospects or what’s best for the shorter term shareholders holder? * https://ycharts.com/companies/IBM/stock_buyback https://ycharts.com/companies/IBM/stock_buyback * https://www.theregister.com/AMP/2024/03/15/ibm_ceo_pay_jumps_23/ https://www.theregister.com/AMP/2024/03/15/ibm_ceo_pay_jumps...
- lotsofpulp 2y ago
  Share buybacks enrich all shareholders, it just happens that executives get paid in stock and/or are awarded compensation triggered by meeting certain stock prices. This is all for the benefit of shareholders.
  - bluedevil2k 2y ago
    Dividends enrich all shareholders as well and at a lower tax rate (15% vs 20%). So why do share buy backs? Because that increases share price and helps execs hit stock price targets which trigger more options, while dividends decrease share price.
    - lotsofpulp 2y ago
      As a shareholder, I usually do not want dividends. If a share buyback increases the stock price, then I don’t have to pay any tax. If a dividend is given to me, then I have to pay tax…but why would I want to pay tax now if I am just going to buy more shares with the post tax dividend money? Also, federal US capital gains tax rate is 20% only for those earning $518k+ per year if single and $583k+ of married filing joint. Otherwise, capital gains tax rate is the same 15% as qualified dividends.
stogot 2y ago
I asked previous IBM leaders about this oddity. Basicaly boiled up to financial engineering

KK7NIL 2y ago

IBM has largely retreated from consumer facing ventures but it's still a behemoth. From the start of its Wikipedia page: > IBM is the largest industrial research organization in the world, with 19 research facilities across a dozen countries, having held the record for most annual U.S. patents generated by a business for 29 consecutive years from 1993 to 2021. I know that in semiconductors they're still doing bleeding edge R&D which they then try to license to foundries. Their mainframe business is still doing quite well too. And I'm sure they're active in many other niches that I know little about.

marcus0x62 2y ago
They have an absolutely massive consulting/services business (~ $20B/year run rate.)
- coredog64 2y ago
  Kyndryl was spun out of IBM a while back. My cynical take is that the “IBM GS” brand was so toxic this was the only way to continue to sell those billable hours.
  - DebtDeflation 2y ago
    Kyndryl was the infrastructure services group (then known as GTS). Consulting is still part of IBM (formerly known as GBS).

rmbyrro 2y ago

Nobody has (still) ever been fired for hiring IBM. They have a very strong brand in traditional corporate industries, which have an endless demand for IBM services.

yellowapple 2y ago
> Nobody has (still) never been fired for hiring IBM. I'm pretty sure I came pretty damn close the one and only time I opted for IBM Cloud (which was called "Bluemix" back then). In fairness, running a PostgreSQL DB in a container wasn't the brightest idea on my part, and it was also my fault for not having backups in place, but when Bluemix ate our entire prod DB, and the multiple-weeks-long back-and-forth with IBM's support only yielded something along the lines of "whoops, that sucks, good luck building a new DB instance from scratch", we rather quickly jumped ship to AWS and never looked back. I'm sure IBM Cloud is better these days, though it was a bit telling that during my brief time working for IBM my primary job was to build customers' stuff on AWS instead of IBM Cloud. Go figure.
- rmbyrro 2y ago
  And yet, you haven't been fired
- ghaff 2y ago
  Bluemix wasn’t really IBM Cloud. It was what turned out to be ill-advised backing of Cloud Foundry but a lot of companies did that with a certain degree of public ridicule falling on those who didn’t fall in line.
486sx33 2y ago
Whomever hired IBM to build this mess should have been fired https://en.m.wikipedia.org/wiki/Phoenix_pay_system https://en.m.wikipedia.org/wiki/Phoenix_pay_system
- stonethrowaway 2y ago
  There’s a lot of ass coverage involved. Someone came in temporarily, was given a certain title, hired IBM, left shortly afterwards. People shift, staff turn over, and before anyone knew what happened nobody knows who said what.

fsckboy 2y ago

share price matters to a shareholder in the short term, but doesn't come close to telling the whole story. IBM is not performing well. In 1990, IBM's market cap was $27B and Microsoft's was $5B. In 1999, IBM's was just under $100B and Microsoft's was just under $400B. For the last decade+, IBM has hovered (rather wildly) around $160B, while Microsoft has grown from $250B (post dot com crash) to $2,500B. so yes, IBM really has been a declining giant relative to their market share in the strong technology sector IBM selling off more and more businesses might be "the right move" for shareholders and props up the share prices, but it shrinks the overall business and in terms of value creation (where wealth comes from) indicates a shortage at IBM

browningstreet 2y ago
Honest Q, why compare MS to IBM? MS has (mostly) products and licensing, and as far as I understand, IBM has consulting and licenses. Pretty different in this day/age.
- fsckboy 2y ago
  Honest A, an investor and/or the financial market does not care what the similarities or differences are between companies, but how investments in those companies do. Microsoft and IBM were major players in the personal computer business, and subsequently both have had a heavy presence in enterprises and data centers. IBM is gone from personal computers, although Microsoft's products probably figure heavily in IBM's consulting. could easily compare IBM with other companies; google didn't have a presence prior to 2000, Apple pre 2000 and post iphone are entirely different businesses, nothing else came to my mind. Amazon? they were around in early days of the dot com (1994!) but I'm not really that familiar with where they stood back around 2000 and didn't want to sample apples and oranges. IBM's other competitors like Digital disappeared, but not because IBM gobbled up their share. IBM compared to itself has not grown. Other companies have grown, through survivorship bias if no other reason.
- atmavatar 2y ago
  At the beginning of the comparison period, IBM was also pretty heavy into products. For example, in the late 80s and even into the early 90s, the market for PCs was broken up into IBM PCs and compatibles. IBM was the PC. IBM invented many of the technologies that went into the early PCs but pissed away their lead with every single one until we find ourselves today where they no longer manufacture anything that can be found in a modern PC as far as I can tell.

bluedevil2k 2y ago

Their share price growth is only a result of share buy backs. They’ve fired tens of thousands of employees and used the cost savings to buy their own stock back, enriching executives, especially their CEO, whose pay increased 23% from 2022 to 2023 to $20.4M. (And IBM didn’t even meet their own internal revenue goal). Are the execs doing what’s best for the company’s long term prospects or what’s best for the shorter term shareholders holder? * https://ycharts.com/companies/IBM/stock_buyback https://ycharts.com/companies/IBM/stock_buyback * https://www.theregister.com/AMP/2024/03/15/ibm_ceo_pay_jumps_23/ https://www.theregister.com/AMP/2024/03/15/ibm_ceo_pay_jumps...

lotsofpulp 2y ago
Share buybacks enrich all shareholders, it just happens that executives get paid in stock and/or are awarded compensation triggered by meeting certain stock prices. This is all for the benefit of shareholders.
- bluedevil2k 2y ago
  Dividends enrich all shareholders as well and at a lower tax rate (15% vs 20%). So why do share buy backs? Because that increases share price and helps execs hit stock price targets which trigger more options, while dividends decrease share price.
  - lotsofpulp 2y ago
    As a shareholder, I usually do not want dividends. If a share buyback increases the stock price, then I don’t have to pay any tax. If a dividend is given to me, then I have to pay tax…but why would I want to pay tax now if I am just going to buy more shares with the post tax dividend money? Also, federal US capital gains tax rate is 20% only for those earning $518k+ per year if single and $583k+ of married filing joint. Otherwise, capital gains tax rate is the same 15% as qualified dividends.

stogot 2y ago

I asked previous IBM leaders about this oddity. Basicaly boiled up to financial engineering