Thread regarding IBM layoffs

"And after buying companies they don't know what to do with it..."

"Buying companies means increasing revenue by merely adding someone else's..."

These two observations are perfect examples of IBM's management problems. One can see how Red Hat and Softlayer could have helped IBM. The jury is still out on Red Hat, but Softlayer became IBM Cloud...a service that, to my understanding, you cannot even buy from IBM Consulting (they only deal with AWS, Azure and Google). That doesn't speak well for IBM Cloud and its Softlayer roots when IBM's own consultants don't offer it in engagements.

"Amazon is a shipping company selling cheap Chinese goods..."

IBM's management could learn a lot from Amazon. They do indeed sell cheap Chinese goods, but they also sell everything else in the world...especially CLOUD COMPUTING SERVICES. IBM was once into that stuff (they teamed up with Sears back in the day to form Advantis Networking Services), but once again they couldn't handle it themselves. Once again, they sold the business (to AT&T), and used the cash for who knows what.

Buying companies means increasing revenue by merely adding someone else's, like Xbox did with Activision. It helps obscure the net declines.

No surprise. They keep spending billions buying companies to play catch up. And after buying companies they don't know what to do with it. When was the last time anyone heard about how softlayer is doing ?

It Took $5.8 In Debt To Generate $1 Of US "Growth" In The Fourth Quarter

As the BEA reported, in Q4 US GDP grew at a seasonally adjusted rate of 2.3%, below the 2.6% estimate and down from the 3.1% growth pace in Q3. More specifically, the number represented the annualized increase in the 131BN change between what the BEA calculated was chained Q3 GDP ($23.400 trillion) and Q4 GDP ($23.531 trillion). In other words, to keep it simpler, in Q4 the US economy actually grew some $130.6 billion chained dollars.

So far so good. The only problem is what funded this growth, and as regular readers are well aware, in the US the source of all growth is - and for the past 100 years - has been debt, and boy was Q4 a doozy.

As the chart below shows, while the US generated $131bn in chained GDP growth in Q4, this was the result of a $711 billion increase in the US budget deficit, which in turn was funded with a $754 billion increase in debt which, as of Dec 31, 2024, stood at a record 36.218 trillion. The Q4 snapshot is shown below.

"Large companies carry debt just a part of doing business"

Girls undergo FGM as "part of growing up".

Just because many do something does not make it OK or healthy.

"Large companies carry debt just a part of doing business. Oracle is over $60B and Amazon is over $150B. "

Amazon is a shipping company selling cheap chinese goods. I don't know what the heck Oracle is today, basically a nobody. Please list the debts of the CEOs and the upper management.

Large companies carry debt just a part of doing business. Oracle is over $60B and Amazon is over $150B. Part of IBMs debt is going to be acquisitions especially large ones like RedHat and Apptio plus there are those stock buybacks. When Arvind is trying to move IBM from a value company to a growth company, the debt payments are going to make it harder to grow free cash flow.

https://finbox.com/NYSE:ORCL/explorer/total_debt/
https://finbox.com/NASDAQGS:AMZN/explorer/total_debt/

"We just need smarter Execs who are not greedy!"

I would settle for smarter execs who ARE greedy. IBM is run by executives who are neither smart enough nor hungry enough to succeed, so Darwin has been winning for quite some time. Their longtime strategies of offshoring, labor arbitrage and selling of divisions are at their limits. They must organically grow the company past its mainframe roots, or it will stagnate while others in the world move past it.

The world may just grind to a halt even with IBM still around.

IBM, its hardware and software are still running most of the business transactions in the world. Banks, Insurances, Airlines, the various Fed agencies, retailers, and the list goes on. If IBM and all its deployed hardware and software were to disappear instantly, the world would grind to a halt... sure TikTok, Facebook, Instagram, and the likes would still be working but you would very likely not be able to get money out of the ATM, purchase anything with a credit card, file an insurance claim, book a flight or travel on an airplane, get a UPS or Fedex package delivered and the list goes on and on... So, how about a little respect for IBM, please!

Now sure, the IBM Execs are close to total id--ts these days, and Ginny the Eagle was the worst when she decimated the company by selling one business division after the other. IBM has certainly missed of lot of things the past 10-20 years though most of it was really invented at IBM.

We just need smarter Execs who are not greedy!

IBM has proven time and again, they are incapable of transforming themselves into anything. They just keep throwing s-h-i-t against the wall and hope something sticks, and it doesn't, like Watson, the Cloud and Hybrid Cloud, whatever that is . IBM doesn't even rank as a cloud provider, their market share is a joke. IBM is a 1960s mainframe company that depends on that dump in Poughkeepsie NY to keep churning out big old fashioned mainframes for their revenue stream.

IBM's debt is high, but not horribly so. It does mean, however, that IBM will need really high amounts of continuing free cash flow to keep on rolling over that debt. That's money that will NOT be spent on either employee salaries or investing back into the business. All that cash flow will be returned to investors or paid as interest to banks.

As IBM transforms itself into an enterprise SW company, all that debt will have to be paid back by a company that has sold off major pieces of itself. Assuming that Storage and POWER go away, that leaves ongoing mainframe and software license fees to supply that free cash flow for paying off debts.

It would be nice if IBM could leverage Storage and POWER to increase their cash flow. I'm sure it happens to some extent, but I'm too lazy right now to read the statements to see just how much money they are currently producing.

titanic

Arvind said: “More jobs to move to India to reduce costs and large debts ; this initiative will allow me to keep my job and many millions from my compensation “

Don't worry, IBM has 34,482 billion in "assets" (not cash) and it values "Goodwill" at 60,706 billion (not kidding, IBM says it in its report*). https://newsroom.ibm.com/2025-01-29-IBM-RELEASES-FOURTH-QUARTER-RESULTS

It times get tough, IBM can sell "Goodwill" at the local pawn shop and pay back the lenders, right?

@bx

Will IBM be around in 40 years ?

IBM management has brought down our debt by $1.5 billion over 12 months.

This is fantastic news - it means that IBM will be debt-free in only 40 more years!

So much debt and yet ....Alvind still gets a supersized bonus for lying to investors.

How does that work ?

Is that because he is hiring more Indians or because he dropped China Research like a hot potato in 2024 ?