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Highlights—January 17, 2015

  • Barrons:

    BofA Cuts IBM Estimates, Target. By Johanna Bennett. Excerpts: Analysts at Bank of American-Merrill Lynch have dimmed their hopes for International Business Machines. The firm cut its price target on the tech giant to $160 from $185, and cut revenue and EPS estimates.

    As TheStreet.com reports:

    The firm lowered its price target on IBM to $160 from $185 and slashed its full year 2014 revenue expectations to $93.6 billion, from $95 billion. Bank of America’s full year 2015 revenue expectations are now $88.7 billion versus its previous $92.8 billion forecast. Full year 2016 revenue is expected to be $88.7 billion, down from $93 billion.

    Bank of America/Merrill Lynch cut its full year 2015 earnings estimate to $16.19 per share, from $17.37, and its full year 2016 earnings to $17.15 per share from $18.65. However, the firm raised its full year 2014 earnings estimates to $16.01 per share, from $15.94.

  • Seeking Alpha:

    IBM: A Critical Year In 2015. By Bill Maurer. Excerpts: The second half of 2014 was not pretty for shareholders of IBM. The technology and service giant had an awful October report, sending analyst estimates plunging. The company needs to look for ways to slow down the decline in revenues, and it might take some acquisitions to do so. Spending cash to help the top line might cost the name on the bottom line, since the strong buyback program has been very beneficial to the EPS figure over the years.

    Thus, 2015 is a critical year for IBM. The company has lost a significant chunk of power in the Dow, and is the second-most shorted name of the five technology giants I discussed today. While the dividend yield is the highest in the space and you might get 3.00% over the next 12 months, that will be a small consolation prize if the business does not rebound. If IBM does not get its act together this year, I would look for some activists to come in and try to shake things up.

  • The Register:

    IBM, Accenture play blame game over $1bn project blowout. By Richard Chirgwin. Excerpts: IBM and Accenture are sniping at one another in public over just who should take the blame - and the fall - for the $AUD1bn blowout of a project to provide the Australian State of Queensland's Department of Health with a new payroll system.

    The project kicked off in 2007 with a budget of just over $6m. It's now expected to cost up to $1.25bn to complete, a failure that has led the State's government to run a Commission of Inquiry into the affair.

    That inquiry is due to report by the end of July, and looks set to spark a rolling lawyer-fest on a scale that Cecil B de Mille might find worthy of attention.

    Former Queensland Premier Anna Bligh told the inquiry the former government chose to negotiate a settlement with IBM rather than risk litigation. However, it looks like the vendors surrounding the project will be more than happy to unleash their lawyers as soon as the commission delivers its report.

  • Seeking Alpha:

    IBM To Restructure To Focus On Cloud Computing. By Sarah Roden. Excerpts: IBM is undergoing a massive structural reorganization under the leadership of CEO Ginny Rometty in order to parallel the rise in cloud computing.

    The Register in the United Kingdom published a story on January 9th describing the new structure of the company, which will be divided into different departments including Cloud, Watson and Analytics. Watson refers to IBM’s artificial intelligence system.

    IBM’s restructuring will put software at the forefront of IBM while hardware takes a back seat. Rometty is quoted in an internal memo, stating “IBM software has become an essential element in every part of our company. Indeed, it is so because our software portfolio is the foundation of the world’s core business systems and powers the expanding array of cloud-based solutions we are bringing to clients.”

    Selected reader comments follow:

    • ph8057: Simple question—would you rather have IBM as your cloud provider or Amazon. My layman's opinion would go with the world's longest running technology company over Jeff Bezos Cyber Mall.
    • IndustryView: The US CIA did not agree with ph8057's view. They did a long and thorough study of vendor proposals for a secure and robust cloud offering. The CIA concluded that Amazon's offering could be made more secure, is already more robust, and had more evidence of the concept working in practice (in that it does run that cyber mall ph8057 referred to). This came out after IBM sought a legal remedy to the CIA having awarded the business to their competitor. IBM withdrew the complaint after some of the CIA's evaluation material was made public, presumably because the CIA analysis was a compelling indictment of IBM's lack of capability and experience in the space.
    • Nigel Kelly: Amazon Web Services (or the Cyber Mall as you call it) is one of the great innovations of recent times, perhaps only 2nd to the iPhone. Amazon took the first big bet on the cloud, had an awesome vision and executed on it. They were so good that everyone else is chasing them.

      I can understand why the CIA wanted AWS over IBM. Check out the compliance certs that anyone gets when they use the service: http://amzn.to/1zbJTDe Many Data Centres can't offer this level of compliance.

      AWS is not cheap. You can host for far cheaper on other services like digitalocean.com but you would chose AWS because of its maturity, sophistication, flexibility and compliance to best in class standards. And you pay for it. But I guess IBM would be more expensive than AWS.

      Also I saw a survey of 300 SaaS companies. Whilst a physical server in a DC is still the most popular option (probably because it's actually cheaper than AWS), AWS is a close 2nd. Startups are embracing it. It will become the standard.

      I think Amazon is an awful stock and would not invest in it. But I like technology. I like to code. AWS is great. And the Kindle too.

      I think IBM is a better stock but they seem a long way behind in the cloud where Amazon has done a great job and disrupted an entire industry.

    • b linnen: Re-organize, the only play a management structure has. Re-organizing is not going to bring customers flocking in to spend money. This is more of the same foolishness involving bottom line expense cuts. Nothing new to see here.
  • High Scalability:

    The Stunning Scale Of AWS And What It Means For The Future Of The Cloud. Excerpts: James Hamilton, VP and Distinguished Engineer at Amazon, and long time blogger of interesting stuff, gave an enthusiastic talk at AWS re:Invent 2014 on AWS Innovation at Scale. He’s clearly proud of the work they are doing and it shows.
    • 1 million active customers
    • All 14 other cloud providers combined have 1/5th the aggregate capacity of AWS (estimate by Gartner in 2013)
    • 449 new services and major features released in 2014
    • Every day, AWS adds enough new server capacity to support all of Amazon’s global infrastructure when it was a $7B annual revenue enterprise (in 2004).
    • S3 has 132% year-over-year growth in data transfer
    • 102 Tbps network capacity into a datacenter.
  • Seeking Alpha:

    Why IBM's Stock Will Face Turmoil In 2015. By Brian Nichols. Excerpts: Jefferies, Deutsche Bank, and Stifel each gave a fairly bleak outlook for IBM Corp. in 2015, which involved slashed EPS and revenue projections and continued hardships in hardware. The fallen giant is now trading near four-year lows, but unfortunately for longs, the analysts are probably right. The reason is quite simple: IBM has no answer whatsoever to stop revenue and operating profits from dwindling lower in 2015. It has nothing! ...

    By the time 2015 is over, IBM's annual revenue would have fallen over $17 billion in just four years' time. That's an epic loss. Yet still, some IBM investors remain convinced the company is recovering, and naturally point to its EPS and P/E ratio as a reason why. The reason is because the company has made an equal effort to stop the bleeding in its stock, as it has to spark growth with acquisitions. Unfortunately, both strategies have been equally disastrous, with IBM having nothing to show but a business that's losing profits and cash, and increasing in debt very fast. ...

    That said, with just $9.5 billion in cash and equivalents, and over $45 billion in debt, IBM must change the way it operates. During the last two years, the company's buybacks have not only pushed its EPS higher, but have also saved investors from much larger losses. While its stock price has only declined 19% over the last two years, its market capitalization has fallen nearly 29%. However, with IBM's profits dwindling fast, it won't be able to keep buying back stock at a rate that's appeasing to Wall Street, while also making big acquisitions for the future. It has to sacrifice one or the other, and at the very least, significantly cut buybacks.

    Given the fundamental outlook for IBM, including the decline in revenue which most likely indicates a further decline in profits, I think it's far more likely that shares see accelerated losses in 2015, with IBM having to slow the rate at which it buys back stock. Unfortunately, investors won't be happy with this decision, if it happens, but for IBM to concentrate on its business and grow organically, it is a necessary evil.

    Selected reader comments follow:

    • Every bearish article I wrote on IBM last year was met with faithful investors who cited:
      • Consistent dividend
      • W. Buffett
      • Turnaround plans on schedule.

      Knowing what I know, and it's limited, about cloud, social, big data, it's evident IBM is very far behind. Rev/profits may hold for now, but once customers figure out that they can get solutions for far less, they will leave IBM. IBM's staff was also hollowed out for years. The best talent is leaving.

    • "IBM's staff was also hollowed out for years. The best talent is leaving." Actually, most of the better talent has already left — they saw the handwriting on the wall circa 2010-2012.
    • Other sources say you couldn't be further from reality. Watson, New Mainframe and Margins would differ with you.
    • I wholeheartedly disagree with you:
      • Watson is an extremely niche business, and IBM is essentially paying a couple of big players to use it. It has been a failure revenue-wise.
      • The new mainframes are cannibalizing existing mainframes since they are much more powerful, allowing companies to shrink the total count of machines they have in-house, reducing both software and services revenue.
      • As for cloud computing, IBM is a second-rate player at best. They have no mindshare with a large customer segment (government), have not gotten much traction in the commercial space, and cannot compete against the like of Amazon and other players in the utility-model space.
      • IBM hardware is a joke; no one wants to pay more for products that oftentimes are inferior in power and reliability. Their software products are high-priced, with alternatives available virtually across the spectrum for lower prices and (oftentimes) more functionality. Their professional services ranks are filled with people who have less experience than the customers, yet they want $200/hour for them.
      • The workforce has been treated terribly for years, while management (particularly at the highest levels) has raped and pillaged the company for everything. Now they will be asking the same management that got them into trouble in the first place, to get them out (Rometty is just a female version of Palmisano; maybe worse). What is the definition of insanity again?
    • At one time IBM had the second most recognized name after Coke and they have been living off it up to the current day. However in terms of new products or services they are only followers now; always late to the game. There is simply nothing really new with the one exception of Watson which is yet to show it can make a positive margin and requires tremendous investment by the customer to even set up...no iPhone here.

      IBM is on a downward arc and nothing but a new outsider CEO and epic restructuring and downsizing will turn it around this time...it's Kodak version 2 now.

    • IBM has survived more then one hundred years and the view of some short-sighted quill-drivers will not matter. IBM will exist long after someone put crosses on the graves of those who try to bury it now.
    • Sears has been around for 129 years. Simply implying that years in operation equates to a great investment is misplaced thinking.
    • Another company that survived over 100 years is Bethlehem Steel, founded on 1857, went bankrupt on 2003. It was, until last year, the most recent stock to be the Dow's worst performer two years in a row until it lost this title to...IBM!
    • Add Eastman Kodak too; they kept missing the boat in digital imagery and digital camera, oblivious to the coming of the Cyber Age. Stumble of the Century?
    • Talent, morale, R&D are all in decline or have been in decline at IBM for years now. These underlying problems erode the fabric of IBM from the inside out. Patent volume does not produce Sales. I could go on.
    • Palmisano set or rather modified Gerstner's into the current strategy. His unique contribution however was the offshoring of US/EU jobs to India with the US headcount declining from 250k to its current below 80k (global headcount remained at 400k) with constant trimming under the government-mandated radar. This labor arbitrage has devastated morale in those geographies into a revolving door CV builder for new grads with only long-term veterans too invested in retiree benefits not able to ditch the ship.

      It worked for Palmisano because there was still a high BMI in IBM's bod but not anymore; it's bone and muscle now. Add this to all its other issues and the time has finally come to pay the piper for all these exec shenanigans; desperately need an outsider like Gertsner to right the ship just like he did.

    • I would characterize the IBM layoffs over the recent past number of years as somewhat ruthless (maybe not like Blackberry) in regards to individual contributors (the workers) but not for any level of management, which has hardly been touched. Also, IBM has systematically reduced its workers year after year in an under the radar manner as much as possible in order to skirt the layoff reporting laws and not draw attention to the layoffs.

      With the cumulative number of reduced workers over the years, I think there's now a good number of redundant layers of management (with no reports) that should be ripe for the next rounds of cost-cutting layoffs. However, it remains to be seen if IBM management will continue its layoff pattern of ridding itself of workers and not management.

  • I, Cringely:

    2015 Predictions: It’s about the money, stupid! Excerpts: It’s time, finally, for my long-delayed 2015 predictions. Things just kept changing so fast I had to keep re-writing, but have finally stopped. 2015 will definitely be the Year of Monetization, by which I mean it’s the year when the bottom line and showing profits will become a key motivator in almost every market. And while profit — like beer — is generally good, it isn’t always good for everyone. So here are my 10 predictions in no particular order. ...

    Prediction #5 — Immigration reform will finally make it through Congress and the White House and tech workers will be screwed. Remember the tech worker shortage that really doesn’t exist in the USA? Well lobbyists remember it fondly and will ride the new Republican majority to legislation that will give tech employers even more chances to bring under-paid tech workers into the country to replace domestic tech workers who are supposed not to exist. The facts are indisputable but you can lead a politician to water though you apparently can’t make him or her vote. So despite the improving and ever-more-tech-centric economy, look for no tech salary increases (again) for 2015, just more H-1Bs. ...

    Prediction #8 — IBM’s further decline. You knew this was coming, didn’t you? IBM is screwed and doesn’t even seem to realize it. There was an earlier version of this prediction that said IBM earnings would drop for the first 2-3 quarters of 2015 and then recover because of lower oil prices and the generally improving global economy. Well forget that. Even if the world does do better IBM will do worse because the low dollar IBM has relied on since the Sam Palmisano days has gone away so there’s nothing left to be made on that carry trade. IBM’s old businesses are dying faster than its new businesses can grow. The company’s only near-term hope is that the Fed keeps interest rates low, but that’s not saying much.

    And speaking of saying much, my next column will be all about IBM, its new Reorg-from-Hell, and what this means to customer, employees, and investors alike.

    Prediction #9 — Where IBM leads, IBM competitors are following. When I was in college one of my part-time jobs was at Rubbermaid, a fantastic company based in Wooster, Ohio, where I went to school. Rubbermaid was run like a watch by Stan Gault, class of 1948 — a guy who really knew how to make money. Stan eventually retired, came out of retirement to save Goodyear, then retired again and now gives away his money. But the Rubbermaid of today isn’t anything like the company I remember because it tried and failed to compete with Tyco Industries, a conglomerate run by Dennis Kozlowski. No matter how well Rubbermaid did, Tyco did better, so Wall Street rewarded Tyco and punished Rubbermaid, eventually driving the company into a merger that created a new company — Newell Rubbermaid — which is way more Newell than it is Rubber. The problem with this tale, of course, is that Tyco’s Dennis Kozlowski was a crook and is now doing time in federal prison. Tyco appeared to do better than Rubbermaid because Tyco lied.

    Now I am not saying IBM has been lying, but I am saying that IBM has been setting an example of corporate behavior that makes little to no sense. Sales go down yet the stock price (until recently) went up! Like the Rubbermaid example, this has had some effect on IBM competitors, specifically Computer Sciences Corporation (CSC) and Hewlett Packard, both of which are having IBM-like troubles with their services businesses. And for CSC, which has no printers or PCs to sell, well services is about all there is. So look for IBM-inspired problems in these IT service operations for all of 2015.

  • Glassdoor IBM reviews. Selected reviews follow:
    • “IBM”

      Current Employee — Anonymous Employee in Cleveland, OH. I have been working at IBM full-time (more than 10 years).

      Pros: Pays well, benefits, vacation, 401K.

      Cons: Good pay but believe me you REALLY earn every dime. Highly competitive and large demands placed on every employee are extremely high. Therefore, you can't trust anyone you work with. Management isn't as well aware as they would have you think. Had seven managers in 10 years. Some of them didn't have a clue about proper management. More concerned about meeting work objectives than managing people and helping them achieve their goals, opportunities or promotions.

    • “Great company, with really great intention, research & development.”

      Former Employee — Architect. I worked at IBM full-time (more than 10 years). Pros: There are truly pioneers and top notch people in every technology. You'll have to find the right people, project to work with. You can choose to work 7x24 and make most of the great opportunity or try to be have balance. Cons: Marketing team of IBM is incredibly bad. Director and above are bean counters and mostly care about their next assignment/promotion/job. CTOs have little influence on products. Directors, CTOs with spectacular failures are promoted to have even more spectacular failures [Information Management]. Strategy and forethought is missing — they've been late for L/Unix, cluster, object-relational, in-memory, appliance, BigData, NoSQL.
    • “It's a mixed bag.”

      Former Employee — Middle Management in Austin, TX. I worked at IBM full-time (more than 5 years). Pros: Good benefits, lots of opportunity to learn new skills, matched 401K up to a certain percentage, looks good on a resume. Cons: Huge company, you feel like a number. Poor decisions have been made at employees' expense in the past five years in the quest for share price targets. Resources are a bit of a mess...while they exist, they are somewhat unorganized, and you either have to work within your network to find out how to go about certain things, or follow breadcrumb trails through intranet. Highly matrixed organization—people managers often have little to no interaction with you and gain insight as to your performance from others...highly subjective. Advice to Senior Management: Return to a bit more of an employee-centric stance. Organize resources better. Live up to what you claim to be.
    • “Challenging corporate environment with strong values and high performance expectations.”

      Current Employee — Corporate Citizenship and Corporate Affairs. I have been working at IBM full-time (more than 10 years).

      Pros: Smart colleagues, well-respected company that's a household name, work on challenging and important initiatives, most decisions based on facts and the merits of the argument.

      Cons: Bureaucratic and complex. Company does not invest in its employees as much as it used to; pays the minimum to retain employees. You need to be good at setting boundaries because there are major work/life balance issues with expectations that you be connected 24x7. Lack of promotions unless you are politically connected. Feeling of social isolation due to over-reliance on technology and conference calls rather than face to face meetings.

      Advice to Senior Management: The company focuses on baby boomers who are running the company and millennials who are cute with out-sized egos and ignores gen x employees who have tons of knowledge and experience who have been waiting in the wings for opportunities once boomers start to retire. Need to invest in employees or they will leave when economy improves.

    • “Director of Enterprise Software Sales (executive role)”

      Current Employee — Executive Role In Software Sales. I have been working at IBM full-time (more than 10 years).

      Pros: Work from anywhere. Most of the people have good hearts, and want to do the right thing.

      Cons: Culture, many motivational factors and all of them are negative. Executives have 100% accountability, and zero authority.

      HR practices are archaic, hiring freezes kill innovation. Headcount management vs. expense management? This is a concept from the 90s.

      Too much dead weight, especially in the executive ranks. The most senior level management is focused on quarterly earnings at any cost, and makes very, very poor long term decisions.

      Advice to Senior Management: See Cons

    • “Outsourced to IBM and unhappy”

      Current Employee — Anonymous Employee in Winston-Salem, NC. Pros: We have a job to go to. Cons: Totally different business culture. We went from being employees to being numbers. Management treats us like robots who are not allowed to think for themselves. Advice to Senior Management: Recognize hard work. Acknowledge process improvements. Pay people what they are worth. Stop giving salary cuts and the retained organization would stay and you can retain the many years of the knowledge you just acquired from the company you took over.
    • “I worked in IBM Global Services for 14 months”

      Former Employee — Anonymous Employee. Pros: Work at home, great employees. Cons: Too much cost cutting, barely a raise or a bonus impacting morale. Advice to Senior Management: Take care of the employees.
    • “Business analyst”

      Current Employee — Applications Owner in Research Triangle Park, NC. I have been working at IBM full-time (more than 3 years). Pros: The ability to work from home. Tons of free training material available. A variety of good mutual funds available in the 401k plan. Very laid back work environment. Cons: Pay is pretty low compared to competition. No 401k match for supplemental employees. For regular employees the match is deferred until sometime in December, so if you get let go before then you get nothing. Layoffs seem to happen each quarter. It's easy for your work to go unnoticed; there's a big disconnect between employees and management. Advice to Senior Management: Offer competitive wages, listen to your employees, evaluate employees on a individual basis.
    • “Decent entry level role for those with no prior experience, but look to move on quickly”

      Current Employee — Financial Analyst in Rochester, MN. I have been working at IBM full-time (more than an year.)

      Pros: Decent but declining company brand to put on a resume for future job searches. Great opportunity to develop ping pong and foosball skills. Able to take long lunches and leave early for the day without anyone noticing. Company sponsored events are fun, including baseball games and trips to Minneapolis. Good stepping stone to finding a better job in the cities.

      Cons: Finance is drastically underpaid compared to other companies. Intense boredom is common. Some days I go the entire day without doing any work at all. If you give the impression that you have improved your role and eliminated work, you are rewarded with more responsibility and work added to your role with no additional pay increase. New hires are trained by the person who had the role previously. If the previous worker is already gone, you are in trouble. They used to order pizza for quarter close but the expense was hurting IBM's earnings, so they cut that out. They sell the dream of being promoted to the New York location, but that rarely materializes.

      Advice to Senior Management: Pay a reasonable salary and improve training process.

    • “A company that used to be inspirational”

      Current Employee — Anonymous Employee. Pros: A very large company with tons of smart and capable people. Cons: Lack of vision and focus. Top heavy. Too many layoffs of talented people to favor the short-term value of the stock. Advice to Senior Management: Learn to value employees again.
    • “Biggest Mistake of my professional life!”

      Former Employee — Anonymous Employee. Pros: None that I can think of. Cons: Very poor, disillusioned management that has a clear lack of direction and purpose. Waste money while chasing money and do not communicate with front-line staff. Big Blue is falling apart at the seams; avoid it like the plague. Very bad at handling staff expectations and setting direction for career development. Advice to Senior Management: Resign, you're good for nothing.
    • “There are better places to work”

      Former Employee — Hardware Sales in Overland Park, KS. I worked at IBM full-time (more than 3 years.)

      Pros: Everybody knows who IBM is. They have a good brand. They have a lot of smart people, especially in the engineering departments. It's easy to get appointments with clients and prospects. You have the option of working from home.

      Cons: They do not pay well compared to other companies. It seems like good people are always getting laid off. The sales plan is way too complicated. There are too many managers. The internal systems are terrible.

      Advice to Senior Management: The days of 70%+ margin on hardware are long gone.

    • “Not worth it anymore”

      Former Employee — Senior Systems Engineer in Brisbane (Australia). I worked at IBM as a contractor (more than a year). Pros: Nothing I can think of. Cons: To name one, absolutely don't care about either the customer or their staff. The rest are far too many to list. Advice to Senior Management: None—they need more than advise; they need someone to clean up the place and start again.
    • “Very challenging environment with Sr Execs cost-cutting, revenue declining, and poor work/life balance”

      Current Employee — Anonymous Employee. Pros: Great experience and excellent client satisfaction. Cons: Sr. Exec leadership has a poor regard for employees as they feel pressure to get back to growing the company. Old processes are holding it back and reflect in poor treatment of employees. Advice to Senior Management: Pay the people that deliver the results.
    • “Overworked, underpaid”

      Former Employee — Staff Hardware Engineer in Rochester, MN. I worked at IBM full-time (more than 10 years). Pros: Challenging work, variety of work. Cons: Overworked, underpaid compared to nearby companies; lack of innovation; lack of future. Advice to Senior Management: All middle management and above should be fired...they lost sight of what is important. You have to spend money to make money (and I don't mean buy back stock and buy companies).
    • “Top heavy, Disconnected management”

      Current Employee — Procurement in Poughkeepsie, NY.

      Pros: Work from home; some good 1st level managers left.

      Cons: Where to start — Benefits are bad, no raises, no bonus, nothing for the rank and file. IBM is bleeding talent fast, can't retain any decent employees. Have two types of employees: less than 5 years, and 25+; no one in the prime of their career. Leaving for a better offer after two tours, and 23.5 years total. Management above first level is clueless, and upper management only cares about their bonus, options, and golden parachutes.

      Almost no promotions; raises non existent.

      Advice to Senior Management: Invest in the workers; you can't deliver on customer accounts, never mind internal. If not, you will lose customers as fast as employees. IBM is the leader in off-shoring, they are great at that.

    • “IBM — Infinitely Bad Management”

      Former Employee — Human Resources Leader. I worked at IBM full-time (more than 3 years).

      Pros: Nothing positive about working for IBM.

      Cons: Benefits are horrible, there is no work-life balance, leadership does not support training, and leadership pits employees against each other.

      Advice to Senior Management: The leadership in IBM's Global Business Services (GBS) stinks. IBM puts the wrong people in the wrong position and it's all about who you know instead of what you know. GBS is an albatross around the neck of IBM and eventually, IBM will exit from GBS. Clients' payrolls managed by GBS are horribly implemented and the employees of the clients suffer because IBM lacks the knowledge and capability to implement clients' payrolls successfully. Lawsuit after lawsuit has been filed against IBM.

    • “I am a long time employee and I thank this company for the vast experience I have had. Transformation is key.”

      Current Employee — Anonymous Employee. I have been working at IBM full-time (more than 10 years).

      Pros: Flexibility to work from any location. Access to really intelligent thinkers globally which enables unique learning during this new economy.

      Cons: We work very hard but there are no incentives. There is no assurance of job continuity, or growth and it hangs over your head like an axe. Very hard for morale. No extra money but always need to move faster, do more, keep at it .... nothing removed just more...more. I have much to give but I am not the right age any more so no opportunity for me 'cause I am not under 40.

      Advice to Senior Management: CEO strategy is spot on, however the multitudes of VP's and Sr VP's are getting in the way of success. They each have their take on how this will be executed and it hampers speed of execution which is critical. Cut the layers now and also listen to the seasoned staff that are closer to the work — they know where the traps and opportunities are.

    • “a big company”

      Current Employee — Anonymous Employee. Pros: ibm is a really great company with a very strong culture and an obsessive focus on improving itself. I have learnd more tings. Cons: too big pressure, and no time reading. Advice to Senior Management: i hope ibm be better
    • “Great Company History...sliding downward as of late”

      Current Employee — Anonymous Employee in New York, NY. Pros: brilliant team members, focus on growth. Cons: leadership tends to manage by fire drill with focus on today, tomorrow, maybe this quarter; limited focus on long-term investments or strategy needed; very few raises or promotions due to cost cutting at every level.
    • “13 Years of Ups and Downs”

      Former Employee — Senior Program Manager in Raleigh, NC. I worked at IBM full-time (more than 10 years). Pros: Many different areas which allow for long term growth. Benefits. Salary. American icon. Cons: Next year or two will be rocky while IBM finds their way again. Annual layoffs even when company was doing well. Claimed to do balancing but usually dated lay-offs so current (often well performing) employees who are part of the layoff are forced to leave. Advice to Senior Management: Management needs to try harder to move very qualified people into growth areas prior to doing lay-offs Would say stop with the 20 in 2015 roadmap but that happened late in 2014. Need to use profits to re-invest in the business instead of buying back stock.
    • “Once great company”

      Current Employee — Manager in Poughkeepsie, NY. I have been working at IBM full-time (more than 10 years). Pros: Flexible work schedule. Great engineers. Great low level managers. Cons: Clueless upper-level managers; low morale; very low raises for last several years; no bonuses for last 2 years. Advice to Senior Management: Invest in your people.
    • “Not your father's IBM”

      Current Employee — Sales Specialist in New York, NY.

      Pros:

      • IBM can connect with any company and will usually hear customers forward thinking
      • Flexible working environments
      • Innovation with systems like Watson can impact the world in a positive way
      • Acquisitions of technology rather than feeling must recreate in its own version has allowed IBM to shore up its capabilities.

      Cons:

      • IBM lost focus of its long-honored reputation as an honorable organization
      • IBM is a member's only club with rare exception
      • Many sales reps feel cheated by arbitrary changes in agreed compensation after the deal is done
      • Focus on stock market versus long term planning impacts the short term changes in the company.

      Advice to Senior Management:IBM will be here long term. Don't continually chase the short term dollar and do more long term planning and investment.

    • “Eh, it's OK.”

      Current Employee — Managing Consultant in Washington, DC. I have been working at IBM full-time (more than 10 years) Pros: They have a lot of great company software products that have gradually become available to the employees. Cons: They do not do enough training on their own software products so that their consultants are well versed in them. This would make it easier to sell these same tools to the client. Advice to Senior Management: Train your consultants in the software products that you sell.
  • Computerworld:

    New H-1B bill will 'help destroy' U.S. tech workforce. By Patrick Thibodeau. Excerpts: New legislation being pushed by Sen. Orrin Hatch (R-Utah) to hike the H-1B visa cap is drawing criticism and warnings that it will lead to an increase in offshoring of tech jobs.

    IEEE-USA said the legislation, introduced by a bipartisan group of lawmakers on Tuesday, will "help destroy" the U.S. tech workforce with guest workers.

    Other critics, including Ron Hira, a professor of public policy at Howard University and a leading researcher on the issue, said the bill gives the tech industry "a huge increase in the supply of lower-cost foreign guest workers so they can undercut and replace American workers."

    Hira said this bill "will result in an exponential rise of American jobs being shipped overseas." ...

    Daniel Costa, director of immigration law and policy research at the Economic Policy Institute (EPI), said the bill doesn't include reforms such as higher prevailing wages and requirements to recruit U.S. workers. Nor does the bill limit the use of the H-1B visa by offshore outsourcing firms, he said.

    "This bill is basically a wish list for the tech industry," said Costa. ...

    The IEEE-USA has favored green card immigration over an expansion of the H-1B program.

    "There are simply no arguments for H-1B increases that aren't better made for green cards," said Russ Harrison, IEEE-USA government relations director, in a statement. "The primary, practical function of the H-1B program is to outsource American high-tech jobs. Do the bill's supporters really think that's the direction American immigration policy should go?" ...

    An H-1B visa is good for six years, the IEEE estimates (assuming all the visas are used) that it represents at least an additional 1.8 million employees competing for jobs in a U.S. STEM workforce of about 5 million.

New on the Alliance@IBM Site

Job Cut Reports

  • Comment 01/10/15:

    Yesterday, we received my W2 from IBM for 2014. My taxable wages were .70. This is infuriating because I was RA-ed after 5 years of service in mid-June of 2013. How did I earn anything from IBM last year? Why did they bother spending the $5 in processing and postage to mail this to me? I want the .70 of the fruits of my labor back, IBM. Always such fools. -Anonymous-
  • Comment 01/11/15:

    Anonymous — your 0.70 likely is due to 6 months of life insurance post-RA and that life insurance has an imputed income value. The last week of your 6 months must have slightly dipped into 2014 -anonymous-
  • Comment 01/12/15:

    "Our industry is rapidly re-ordering," Rometty told IBMers in a memo, and so is Big Blue as she remakes the company in her image for the future." Re-ordering? WTF? What language is this? Ginni is clearly lost in the clouds with no ORDER in sight for this IBM. -IdiotsBecomeManagers-
  • Comment 01/13/15:

    Has anyone actually seen Ginni's 2015 webcast? I've been trying for over a week and it just says 'ERROR'. Guess it wasn't that important anyway; probably RA'd the tech guy that handles that kind of stuff. -Robert S.-
  • Comment 01/13/15:

    The Queensland government alleges that misleading information provided by IBM during the tender process was instrumental in why it was picked over Accenture to deliver the payroll solution of the state health department. In his report, Mr Chesterman said that IBM should never have been awarded the contract in the first place, criticising the“commercially motivated vendor” for taking advantage of the government’s fallacies. He also found IBM breached its contract twice by delivering a seriously flawed system several years behind schedule. -Anon-
  • Comment 01/13/15:

    I have always wondered why so few of us joined the union. We all see the need. I understand the older employees in the upper bands who have many years in the company and may be just hanging on as long as they (we) can. Trying to get closer to retirement and (lets face it) Medicare age. But what about the early and mid career people? What is the difference between those at IBM and those happy union members in similar jobs at Verizon for example?

    I have seen some very promising young IBMers quit after only a few years. These were usually the best and brightest of the recruits. Those from name schools with great skills and potential. I asked them afterwards why they quit. They all had some reasons in common. They hated the annual PBC farce, hated the constant RA fears, got a 1% raise every three years whether they needed it or not (sarcasm of course). but the most devastating comment came from all of them. They ALL said the same thing "IBM looks OK on my resume but its not a place to build a career". That is deadly to the company.

    So is it possible that the difference is that in other places (schools, Verizon, etc) the employees expect and desire to spend a career there and thus join the union to better their lives and the company too but that in IBM we all know that we will eventually be fired? So that we have been so beaten down that we just don't care. We don't expect to spend a career here so its just a way station along our work life.

    Despite all the rah rah stuff coming from management these days IBMers are not really committed to the success of the company since none of us expects to be here more than 3 months or however long it is to the next mass firing. Perhaps that lack of long term expectation is why so few join the union. -Lost in Band 10-

  • Comment 01/15/15:

    To -Lost in Band 10- the fact that our youngest and "brightest" employees are leaving the company after such a short time should not be a surprise to anyone. One of reasons given to doing away with the traditional pension plan was so that those younger folks could take their money with them when they left. From where I stand, the plan is working as designed. Management does not want employees to make a 40+ year career out of IBM. -Long Time IBMer-
  • Comment 01/15/15:

    I learnt that my friend who was working in IBM Rational FocalPoint team was RA'ed in Bangalore. Their project was bought by Unicom. The FocalPoint core team had 30+ members(dev+testing) last year. Only 3 from the core team signed to go to unicom. The rest have been RA'ed over-time. Anyone has info on how much IBM got for selling FocalPoint?

    The project is supposedly so complex that it takes one year for a guy to understand the code and contribute meaningfully. I don't know which customer in this world will have the guts to buy a product whose development core team does not exist. The customer must be a brave heart like RAMBO or an idiot. -Rational-IR-Rational-

  • Comment 01/15/15:

    About three years ago IBM stopped reimbursing employees for certification fees...in typical fashion without a widespread announcement. Three security certifications that IBM told us were "absolutely required" by our customers totaled over 400 dollars a year to renew. It also took 80 hours of continuing education annually. The tests were no simple task either. When IBM mentions it has employees who don't have skills I laugh. When you pursued industry "hot" and needed certifications IBM decided three years ago it wasn't worth investing in you to get and maintain them. That message is a major reason why there is the alleged lack of certain skills in IBM.

    My second day of my new job they asked "what certifications do you have to renew each year and how much?" and picked up the renewal fee...clearly showing they value the effort. The new company also said they would attempt to provide some training to help with the CE requirement. -not Blue anymore-

  • Comment 01/12/15:

    -HRP-: You said "Whoever gets a PBC 3 for 2014 will be automatically put under PIP (performance improvement plan)." How reliable is this information? I assume this is for US employees. In the past, employees put on a PIP were given the option to resign with a severance package, though not as generous as the one you'd get from an RA. -Survivor-
  • Comment 01/15/15:

    To -Survivor- The PIP information was confirmed in a note I received this morning. I'm not a manager, just a loyal employee who has bled blue in the trenches for 40 years and who joined the Alliance years ago. The note I received said FLM will have full responsibility for addressing PBC escalations with regards to ratings and that the employee is responsible for drafting their PIP. This is a losing battle for anyone caught in the cross hairs. Does management really think that a person who got a 3 in 2014 will really be able to improve upon that if they're left to their own devices to write their PIP? I think not.

    Twelve people have joined the Alliance since the beginning of Dec? What are you waiting for? The writing IS actually on the wall for you and today's note proves it! -Long Time IBMer-

  • Comment 01/15/15:

    To -lost in Band 10- The reason why the morale is low in IBM today is that there are a tremendous amount of people who call themselves managers and executives who have no ideas on how to treat their employees with respect. Ninety eight percent of IBM managers are in those positions because of the good old boy network in IBM. Managers have no education, no leadership qualities, or no ability to communicate effectively with their employees. That is why PBCs are such a joke in IBM. The younger generation who work for IBM know this, they are very smart, and they will not tolerate the political games and BS that goes on in the ranks of IBM's management. A strong union is way past due in IBM. -ANA-
  • Comment 01/15/15:

    To -lost in Band 10-: Regarding union membership you might be surprised at how many IBMers past and present have been poisoned by the anti-union sentiments expressed by Sean Hannity, Bill O'Reilly, and the like. As a union member I had many conversations with IBMers who may have been intelligent in their specialty areas but were woefully uneducated about the promise of America and what unions mean to this promise. Then there were the bigots who would have been more at home in the USSR than in the USA. From -"A Progressive"-
  • Comment 01/15/15:

    To -Long Time IBMer-: Thanks for confirming the PIP information. Having employees draft their own PIP is incredible -- what will they do next? FYI, for those of you with access to w3, the process for dealing with "low contributors" is documented here: http://w3-01.ibm.com/hr/web/performance/pbclowcontribution.html (this doesn't reflect the "new" process).

    To -ANA-: Don't generalize your experience with a bad first-line manager to all FLMs — some of us have had the good fortune to work for good FLMs over the years. FLMs, even the good ones, have very limited ability to act independently of the directives they get from above, but the good ones might at least treat you with dignity if your number comes up. To everyone else: If you're not joining the Alliance because you don't think it will benefit you, at least consider joining as an associate member (as I did) to support their efforts. -Survivor-

  • Comment 01/16/15:

    One thing to note about being on a PIP — even if you successfully complete the requirements of a PIP, which means you received a 2 or higher rating for the work outlined in the PIP, that rating does not remove the PBC 3 rating that you were given previously. Thus, when there is another RA that affects your area, the PBC 3 is still taken into account. -OutIn2013-
  • Comment 01/16/15:

    -"A Progressive"- Agreed. And the Hanitty's, O'Reilly's, and don't forget Mr. Limbaugh, all agree if you lose your job it is all your fault. They never blame the rich and the corporate America for anything, like the offshoring of USA jobs, and decreasing or wage stagnation for the rank and file, or that if you're in your 40's or 50's you're too old for the work game and 'gotta move on' or just go away.

    They also feel since they have made it in America (they are effectively a brand talk product on their own and not a commodity even though one has to wonder what they actually DO or TALK about) and got theirs then everyone else has to find theirs, if they still can indeed succeed with the "great redistribution of wealth" and greed that has become USA capitalism. And they all consider unions or worker organizing activity the evil since they don't want a level or moderate playing field, not a left one, just their totally right one. To keep them where they are. -LevelPlayingField-

  • Comment 01/16/15:

    To: -A Progressive-. IBM made a concerted effort for many years to make employees feel like part of an IBM family and that a union would be no more that an outside agitator. This family approach worked for IBM up and to the point of the pension/health care heist of 1999. It took many years for IBMers to realize that IBM could be evil. The IBM family approach was a very effective brainwashing technique. It will take water boarding for many long time IBMers to face the fact IBM has changed. So, it is easy to blame right wing radio and TV but I believe the IBM family approach was truly effective for IBM. -ABC-
  • Comment 01/16/15:

    Ginny is another example of the Peter principle. She also cannot execute. I remember Think40. Complete useless lip service. No training budget was allocated and your FLM looked as though you are crazy if you wanted self development. Many companies are run like banana republics where the top people squeeze and distribute all the money amongst themselves and you the plantation worker get nothing. -foobar-
  • Alliance for Retired Americans Friday Alerts. This week's articles include:
    • Budget Committee Chairman Tom Price Has Social Security in his Crosshairs
    • Senators Send Letter to Leader McConnell Repudiating House Rules Change
    • Five Cities to Hold Forums in Advance of 2015 White House Conference on Aging
    • Sen. Paul Alleges Widespread Fraud in Social Security Disability, to Experts’ Shock
    • Nancy Altman-Eric Kingson Book Makes a Case for Expanding Social Security Now
    • Van Hollen Announces Budget Proposals to Address Income Inequality
If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.