Wasn't there something about Warren Buffet investing in IBM?
Ask HN: What's going on at IBM?
11–20 of 80 posts
Re: Ask HN: What's going on at IBM?
#12Accountants 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.
Re: Ask HN: What's going on at IBM?
#13I 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...
Re: Ask HN: What's going on at IBM?
#14I'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...
Re: Ask HN: What's going on at IBM?
#15IBM 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.
Re: Ask HN: What's going on at IBM?
#16I 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.
Re: Ask HN: What's going on at IBM?
#17IBM 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…
Unfortunately, this is 100% true...
Re: Ask HN: What's going on at IBM?
#18From 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.yaho…
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.
Re: Ask HN: What's going on at IBM?
#19IBM 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…
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).
Re: Ask HN: What's going on at IBM?
#20> 14 straight quarters of declining revenue
Yeah, but dat Earnings Per Share though... /s