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Ask HN: What's going on at IBM?

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Re: Ask HN: What's going on at IBM?

#31

Post by dontscale »

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.

Re: Ask HN: What's going on at IBM?

#32

Post by IBMGuyHere »

Riod wrote: post #22
IBMGuyHere wrote: post #14

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 follow…

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.

Re: Ask HN: What's going on at IBM?

#33

Post by orionblastar »

samstave wrote: post #12
stonogo wrote: post #4

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 stock…

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.

Re: Ask HN: What's going on at IBM?

#34

Post by tdicola »

IBMGuyHere wrote: post #14

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 follow…

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...

Re: Ask HN: What's going on at IBM?

#35

Post by edge17 »

IBMGuyHere wrote: post #14

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 follow…

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.

Re: Ask HN: What's going on at IBM?

#36

Post by nowarninglabel »

woodcroft wrote: post #21

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…

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.

Re: Ask HN: What's going on at IBM?

#37

Post by twunde »

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.

Re: Ask HN: What's going on at IBM?

#38

Post by chadcmulligan »

Riod wrote: post #8
pdq wrote: post #5

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 t…

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.

Re: Ask HN: What's going on at IBM?

#39

Post by tristanj »

Afforess wrote: post #16
enig_matic7 wrote: post #13

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...

Re: Ask HN: What's going on at IBM?

#40

Post by crb002 »

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.

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