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When I look at their net income (~16 billion) and stock two words that do not come to mind are decline and fall. http://www.google.com/finance?chdnp=1&chdd=1&c
by forrestthewoods 13y ago
When I look at their net income (~16 billion) and stock two words that do not come to mind are decline and fall.
http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1371076142146&chddm=484449&chls=IntervalBasedLine&q=NYSE:IBM&ntsp=0&ei=cva4UYj9DY7-iQKnHA http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&c...
- ajross 13y agoTheir share of the tech industry (which they used to utterly dominate at a scale we hadn't seen since the days of Standard Oil) has been on an inexorable downward path for almost three decades now. Yes, they're still large and influential, and even "successful" in a limited sense. But in context I don't think you can look at their recent history as one of ascendance.
- reinhardt 13y agoA downward spiral for almost three decades while still being a multi-billion dollar company is a problem most hip startups would kill to have.
- forrestthewoods 13y agoIBM is the world's 24th most profitable company (2011). Only 23 companies in the entire world - not country but world - made more profit than IBM. Their revenue and profit grows year over year. Any definition of the term "downward path" that includes IBM is useless and provides no value. http://money.cnn.com/magazines/fortune/global500/2012/performers/companies/profits/ http://money.cnn.com/magazines/fortune/global500/2012/perfor...
- seanmcdirmid 13y agoRead Cringley's articles. IBM is great at marketing themselves and creating the appearance of value, but I doubt that they can do that forever.
- jussij 13y agoPeople have been writing off IBM for decades. If you go back to the early nighties IBM had two or years in a row where it's annual losses where bigger than some countries total income and their share price fell under the $20 mark. That was around the time with the clone PC where taking off and everyone was predicted the end of IBM and big iron. Move on 30 years and their share price is now back over $200.
- seanmcdirmid 13y agoLet's just focus on today and Cringley's articles. If you can find something wrong with his articles, where something isn't factual, please let me know. But what IBM has been doing: cutting R&D for short term gains rather than long term ones is going to have to consequences later down the line. Also, they are betting big on India at the expense of tech talent in the states...I'm not sure if this will pan out. IBM has a hyper focus in optimizing their share price due to the talent they acquired from PwC; I would say, its more like PwC acquired IBM due to the cultural changes that followed (not that IBM was already dysfunctional, they were all too easy to convince of this). But really, how long can this last? Eventually they are expected to do great things to justify their valuation, and all the news suggests that they have no capabilities at all to do such; they just cut and cut!
- jussij 13y agoGuess how they got out of trouble in the early 90s: January 17, 1993 The announcement by International Business Machines, whose corporate world headquarters are in Armonk, that this year it was cutting 25,000 more jobs worldwide and reducing its budget for research, development and engineering by $1 billion may signify that the company will have to initiate the first layoffs in its history. Up to now the company has used voluntary means like job buyouts and early retirement to eliminate jobs. http://www.nytimes.com/1993/01/17/nyregion/ibm-weighs-possibility-of-job-layoffs.html?pagewanted=all&src=pm http://www.nytimes.com/1993/01/17/nyregion/ibm-weighs-possib... Seem familiar?
- npalli 13y agoThey used to dominate mainframe computing. They still do. Its just that the tech industry has become much much bigger than it used to be. PCs, internet, Mobile etc etc. You surely don't expect a single tech company to dominate the entire tech industry. It requires way too many competencies to make it work.
- whatevenisthis 13y agoIBM was smart and got out of the PC business years ago. Selling PCs is a bad business.
- ori_b 13y agoThey've moved from the original consumer facing businesses that they used to be deeply involved. Their involvement in that industry did nearly sink them in the early '90s, where they were losing money hand over fist. They cut their losses, sold off their PC divisions, and moved on. However, in the high end markets where they can extract absolutely massive margins -- they used to dominate there historically, and they're still dominant, and raking in money hand over fist. At this point, I'd say they got past their business problems from the early '90s, and seem to have reversed their decline. They're not the behemoth that they used to be, but they've got a very comfortable niche that is doing a good job of lining their pockets.
- matt4711 13y agothe mainframe / high end server market generates only a small portion of the overall profit at IBM. And it has by far not the highest margin (that would be software and services). Just read the earnings report from last year.
- ori_b 13y agoSorry, I should have been clearer -- I meant to write "high margin" when I wrote "high end". Services are certainly IBM's bread and butter.
- seanmcdirmid 13y agoEver since IBM was taken over by PwC consulting, they've been eating their R&D seed for short term gains. So ya, they play the market well today, but I doubt they have much of a future. They also have played very little roles in recent innovations and inventions, even where they are supposedly strong (e.g. speech recognition and machine learning). Many of the researchers I knew at Hawthorne left last year for places like Google and academia. I honestly know only a couple of IBMers now, whereas 10 years ago I knew many. This has something to do with them continually laying off US employees and replacing them with Indian employees. But to be honest, outside of research, IBM had a very dysfunctional culture in the states since the early 90s. Most of the people they fired here were probably dead weight. Milking until there is nothing left is probably reasonable from the perspective of the shareholders.