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Highlights—February 1, 2014

  • Bloomberg: IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide. By Alex Barinka and Jesse Drucker. Excerpts: International Business Machines Corp. has reduced its tax rate to a two-decade low with help from a tax strategy that sends profits through a Dutch subsidiary.

    The approach, which involves routing almost all sales in Europe, the Middle East, Africa, Asia and some of the Americas through the Netherlands unit, helped IBM as it gradually reduced its tax rate over 20 years at the same time pretax income quadrupled. Then last year, the rate slid to the lowest level since at least 1994, lifting earnings above analysts’ estimates.

    IBM is aiming for $20 a share in adjusted earnings by 2015, up from $11.67 in 2010 -- a goal made more difficult as the company posted seven straight quarters of declining revenue. To stay on target, IBM has bought back shares, sold assets, and fired and furloughed workers. A less prominent though vital role is played by its subsidiary in the Netherlands, one of the most important havens for multinational companies looking for ways to legally reduce their tax rates.

    “They’ve got a lot of ways to beat earnings and they definitely take advantage of it,” said Josh Olson, an analyst at Edward Jones & Co. “It’s part of how IBM operates.” ...

    Offshore tax strategies like the one used by IBM are coming under increased scrutiny. In the past year, the tax-avoidance techniques of companies including Apple Inc., Google and Amazon.com Inc. have been the subject of U.S. Senate and U.K. Parliament hearings. Meanwhile, the Organization for Economic Cooperation and Development, a government-funded think tank, is developing a plan to fight so-called profit-shifting at the direction of the Group of 20 nations. ...

    IBM has stumbled during the technology industry’s transition to the cloud, where information is stored online instead of onsite. While the company’s sales from cloud services are growing, the trend has spawned a new crop of competitors and eroded demand for traditional hardware and services.

    Even as that technological shift affects the business, Chief Executive Officer Ginni Rometty has stuck with IBM’s profit goals. To stay on track for her $20-a-share earnings target, the company spent $1 billion last year to restructure its workforce -- shedding 3,300 employees in the U.S. and Canada, according to employee group Alliance@IBM. It also sold businesses, getting $505 million for a customer-service unit last month and agreeing to let Lenovo Group Ltd. buy its low-end server business this year for $2.3 billion. ...

    Even with the cost cuts, IBM hasn’t been able to convince some investors to hold onto its shares. The stock was the only member of the Dow Jones Industrial Average to decline in 2013, and it trailed the Standard & Poor’s 500 Index by 32 percentage points. ...

    It’s becoming more difficult to find other areas where IBM can cut costs, making it hard to see how IBM can meet its earnings targets, Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co., said in a note to investors.

    “The model is increasingly strained,” he said. “IBM risks being tethered to its road map to the detriment of its longer-term financial health.”

    Selected reader comments follow:

    • Palmisano made the promise of $20 EPS by 2015, Ginni got stuck with it and is running it, Ginni will retire after 2015 and whoever her successor is, is going to be knee deep in you know what. The hardware is unraveling from years of reduced investment. What is surprising is that IBM missed the cloud initially.

      IBM always wanted the cloud and due to lack of investment and laying off all their experienced employees, missed the boat. The old days of big data centers is back and IBM wasn't prepared. AWS has them beat by a mile. IBM no longer has distinguished engineers, it has distinguished financial advisors and tax lawyers. Wonder if they are going to write patents on all their antics or keep them trade secrets. What IBM has done is all one time gains, after all you can only fire the employee once. Re hiring the same employee and then firing again doesn't count and it cost to do that.

      You can only sell the PC servers once. Those one time gains are all exhausted. There are no big countries with cheap labor anymore, China and India were the last two. Yes there is Viet Nam and Indonesia and others but its only a matter of time til their wages catch up plus they don't have big work forces like China and India. Whats left in the hardware business, System P, System I and System Z and the new Watsons division. P and I have been loosing money for a lot longer than 7 quarters. I know, they will sell more of them at below cost to make up for it.

      By selling the PC Servers to Lenovo, IBM can no longer stop the x86 servers from chewing up the power systems (System P and I). How many System Z's, Watsons and Bluegenes can they sell, its finite but the PC servers are effectively infinite. Look at the TOP500.org and see how many systems are just big cluster of x86 system, and they are growing. They are a lot cheaper than one big Watson. The board should re visit their strategy, cause they are approaching the event horizon and it won't be long before they are spaghettized due to gravitational forces beyond their control.

    • IBM has been around >100 years as an innovation & applied science business that created value & improved the quality of for society at large. It's present financially driven strategy is an optical illusion that adds little overall benefit, but for a few "financial engineering" magicians.
    • IBM, the parasite multinational—sucking up local and state grant (taxpayer) money to open operations—then true to their old form—when the free money ends, it closes up and moves on to another location desperate for "jobs" and willing to provide grants again. They, their top executives, know no loyalty to any nation. We only deceive ourselves to believe that these once American Companies are American in anything other than name any more.
    • Sad IBM now has to resort to gimmicks to stay on their earnings track. A better answer would be to boost revenue with great products.

  • WRAL-TV (Raleigh): IBM to cut 13,000 'heads' analyst says; unions expect 15,000. By Rick Smith. Two weeks ago, IBM committed $1 billion to cost-cuts and "rebalancing" of its work force as revenues continue to decline. Then came news of its x86 server unit with some 7,500 workers to Lenovo. Will that move mean some cost cuts are delayed?

    Unfortunately for the workers, the deal won't close for months - if at all. Government regulators must still approve the deal, so 2,000 Big Blue workers in the Triangle won't know for a good while yet if a transfer for Lenovo is certain. ...

    Now a Wall Street analyst has run the numbers and sees Big Blue cutting 13,000 jobs. A $1 billion plan a year ago cut more than 3,500 jobs in North America alone, including several hundred in North Carolina where the company has cut jobs by 30 percent in recent years.

    An interesting story from Bloomberg news on Tuesday showed another way IBM is driving up earnings despite declining revenues: Manipulation of income through a Dutch tax haven to cut its tax bill in dramatic fashion. (Read the full story at WRALTechWire.) ...

    Meanwhile, unions seeking to represent IBMers in the U.S. and around the world say they believe IBM will cut 15,000.

  • Wall Street Journal: Does IBM Love or Hate Itself? Stock Buybacks Make Firms Look Attractive, but Also Deprive Them of Capital for Real Investment. By Dennis K. Berman. Excerpts: There is a rare type of organism that eats itself alive. One of them is International Business Machines Corp.

    For the past 20 years, IBM has been an avid, methodical buyer of its own stock. In 1993, it had 2.3 billion shares outstanding. Today it has 1.1 billion, shrinking at more than 1% per quarter over the past few years. At that pace, there will be no more publicly traded IBM shares left by 2034.

    Rejoice! You might regard all this buying as good news for shareholders. Buybacks push up earnings per share. They flaunt management's confidence in the future. And they are a reason why retail investors have held on so lovingly to IBM stock.

    Look deeper at IBM and dozens of mature U.S. companies, and you can sketch a different, more ominous, story: That CEOs are in fact stuck, reluctant to build new plants, launch products or pursue an acquisition.

    By rote and by fear, they are pitching their billions into buybacks, nearly $1 trillion from the 100 largest companies in the S&P since 2008. In the 12 months ending in September, the total dollar amount of all corporate buybacks increased by 15% from a year earlier, according to S&P Dow Jones Indices. ...

    IBM competitor Amazon.com Inc., meanwhile, continues to pour in big dollars into actual technology. It grew its capital spending 14-fold since 2008, and R&D spending fivefold.

    Investor Jim Chanos is starting to worry about just this problem. As one of Wall Street's best-known short sellers, he's quietly been building an investment thesis around the idea that buybacks are a sign of corporate weakness, not strength. ...

    "Corporate CEOs, with their massive share-buyback programs are in effect investing in the stock market rather than in expanding business opportunities at their companies," said Mr. Chanos. "Either they expect higher returns from the market, or lower returns in their business, or some combination of both. Given their questionable track record in timing the market, this may be a cause for concern." ...

    Many on Wall Street are now beginning to regard IBM as a company more focused on its stock price than its long-term path. "Only IBM knows what it might be forgoing," says Barclays analyst Ben Reitzes. But "one can make an argument for organic investments," especially with revenues shrinking 3% and fresh competition from cloud-computing competitors.

  • Bloomberg TV: Is IBM Falling Behind in Innovative Technology? (Video Clip)
  • Barron's: IBM: $20/Sh EPS Goal Increasingly Irrelevant, Says Bernstein, Why Stick to It? By Tiernan Ray. Excerpts: It’s a bit of a mystery, writes Sacconaghi, why IBM is sticking to the EPS roadmap when it appears less and less relevant:
    We expect IBM to repurchase $15B or more of its shares this year, and rebalance its workforce by at least 13,000 heads. Many investors believe IBM should be investing in its future by buying new technologies and investing in building capability, rather than rightsizing the organization. So why is IBM steadfastly driving to its roadmap? It is hard to say. Perhaps IBM genuinely believes it can invest and do what’s right for the business while simultaneously achieving its roadmap. Perhaps it is worried about disappointing Wall Street (though some believe the stock might go up if IBM reduced or eliminated its 2015 target in a constructive manner). Another possible explanation is that the roadmap/prevailing financial model is the way executives have always run the company, and changing it is uncomfortable and/or requires a different skill set and risk appetite. A final theory is that IBM’s financial incentives (senior executives’ incentive programs are based 60% on operating net income near-term and 80% of operating EPS long term) make the choice simple.
  • Selected LinkedIn comments concerning the Bloomberg video:
    • Dan: So chasing EPS has resulted in a better EPS at the expense of all other numbers? Is that really a shock to anyone? EPS is a good indicator, but it isn't one of those "core" numbers that really drives a business.
    • Ken: Dan, From our view EPS has become a core number at IBM and one that seems to be at the must obtain level since Sam started it.
    • Dan: I agree. My point is this, since it has become a "core" number, and been one of those "must obtain" things, our performance has seemingly suffered. We seem to be more focused on financial controls to meet EPS numbers, rather than focusing on sales and revenue numbers which would be better for the long term health of the company.
    • Ken: Agree. Would like to add, I feel the focus have been more on getting a certain result then ensuring that the process to get that number is healthy and adding value to IBM not just "painting pretty pictures" for investors. While investor happiness is good, customer happiness is vital.
    • Tom: To IBM and any companies like them that thinks the same way...EPS is a just a number which in the short term can easily be improved by expense constraints, reductions in wage rises, reductions in bonuses, encouraging higher paid staff to leave and encouraging lower cost staff to join. But what is the true long term cost of this strategy?

      Since I left IBM less than a year ago, my inbox has been littered with emails from LinkedIn announcing more and more of my former colleagues, quality people, leaving IBM like myself. What is the saying? The loss from one bad project outweighs the profit from 10 good ones and without good quality people how will IBM continue to deliver good projects? How will they win good business and how will they deliver good projects in the future without the skills, knowledge, experience and loyalty that was built up over decades and squandered over months through a truly short sighted pursuit or an unrealistic EPS.

      When I left the share price was around $215 per share. It is around $177 today. Is this 20% not just another metric or number? As a shareholder I'd be much more worried about this number than EPS. Very fortunately I had to sell all my ESPP and ESPP* shares when I left IBM. And, my increase in salary from a rival was larger than all the wage rises I got from IBM in the last 11 years.

      I should have left years ago, shortly after IBM stopped being a great company to work for and decided to became a company that treated its staff like a resource (Human Resources) rather than like family. Who remembers family dinners and a one for all—all for one team spirit in the good old days?

    • Michael: As a shareholder (retired IBMer), watching the value of my portfolio drop hurts. Do I give up and sell? Can Ginni really lead the company to the next great product line? I see no evidence and am about to give up. That will help EPS too...
    • Srini: Like many pointed, IBM is trying to achieve EPS not with real "E" (earning), You can keep reducing staff and buy back shares. On the other hand pressure to make the numbers was felt at all levels; this culture slowly eroded the innovation and passion. Now It is difficult to achieve the pride 25-year club. The elephant is not dancing any more; it is tired and gone to sleep.
  • Bloomberg BusinessWeek: IBM’s ‘Smarter Planet’ Needs a Tutor. By Ashlee Vance. Excerpts: Samuel Palmisano sure knows how to make an exit.

    In October 2011 the former IBM chairman said he would turn the reins over to Virginia Rometty. At the time, it looked like Palmisano was doing his successor a solid. (Bloomberg LP, the owner of Bloomberg Businessweek, hired Palmisano as a policy adviser last May.) IBM’s share price had been rising and would continue to rise even higher in the months following this leadership announcement. To all appearances, Palmisano had shaped IBM into a steady, profit-making machine, and Rometty just needed to keep executing his plan—shifting toward software and services while expanding the company’s presence in growing overseas markets.

    Except, well, things haven’t exactly worked out so neatly. ...

    The wrapper IBM is putting around the Lenovo deal is familiar. It’s selling off a low-profit business while maintaining its higher-profit Unix and mainframe hardware. Just as it did when it sold off networking, hard-disk, and PC businesses, IBM is moving away from making physical things and toward selling the software and services that make physical things work. For a long time the company argued that hardware tie-ins would help it sell more software and services. Now, though, IBM clearly thinks it doesn’t need the hardware, and some market researchers agree. “While IBM does generate significant revenues from Linux and Windows software sales, there is limited tie-in to hardware (in contrast to UNIX and Mainframe servers) and accordingly we expect limited impact on other parts of IBM’s business,” Toni Sacconaghi, an analyst at Sanford C. Bernstein (AB), wrote in a research note.

    Still, the underlying context behind this deal is more troubling for IBM’s long-term business. Its hardware sales have plummeted as the cloud computing business of Amazon.com has soared. By the thousands, customers have shifted to renting much or all of their computing capacity from Amazon—and Google and Microsoft —rather than purchasing equipment. This trend helped push Dell private, and it led Hewlett-Packard and IBM to make much larger investments in the cloud. IBM, for example, acquired the cloud specialist SoftLayer Technologies last July for $2 billion, then pledged to spend more than $1 billion advancing its cloud technology.

    Did Palmisano see all this coming? Did Rometty?

    It feels in a lot of ways like Palmisano set Rometty up. IBM downplayed the threat of Amazon and the whole “renting a data center with your credit card” movement. Its executives resorted to rhetoric, ignored by customers, about the insecurity of Amazon’s approach. It’s only within the last few months that IBM has really swung into action. (This is not good form for a company that prides itself on forecasting the future and advises customers on what to anticipate.) With the sale of its server business to Lenovo, IBM looks like it’s scrambling to deal with the unexpected. Rometty, who inherited an IBM that recently set an all-time trading high, suddenly has a sagging share price, chaotic financials, and a fixer-upper on her hands.

    Selected reader comments follow:

    • He set all of us up, not just Ginny.
    • I have friends who work for IBM. Based on what they've told me over the years, from inside the company you could see this coming since well before Palmisano left. IBM has consistently raised EPS not by growing their income, but by cutting costs (very much including R & D) and by stock repurchase. What growth they could generate has come from acquisitions rather than organic growth. Cost cutting might be the right response to a business cycle dip, and stock repurchase a way to weather a rough patch in the market, but neither are a strategy for growth. The only question was when it caught up to them, not if. The chickens are coming home to roost—you can't run a technology company like a financial holding company indefinitely.
    • PBC Rating of 3 for all the executives and the "yes" managers. They were so into kissing asses they did not care if the company goes down. All that matters to these idiots are their bonuses. I can tell you now that the rate of brain drain is accelerating to a point of no return. only idiots will be left at IBM.
    • Palmisano set himself up a nice Illusion so he could leave looking like all was right with IBM. He rode revenue gains for years by simply cutting bottom line costs. When your as big as IBM is, you can pull this off by creative accounting and beefing up the workloads of fewer engineers. Eventually this will not work anymore since there is no more to cut, engineers are left scrambling, managers are terrified and build protective fiefdoms, and customers are leaving because they are unsatisfied.

      The consequences are only now beginning to rear their ugly head. It's hard to blame anyone though. I can only imagine trying to steer a death star sized company like IBM in a technology landscape that demands continuous change at internet speed, with prices for commodities and services falling due to innovation and competition. It must be a monumental task. It may just be that the days of technology companies the size of IBM are relics of a bygone era and are no longer viable in the world today. It's ironic that technology itself is the thorn in the side of the technology giants.

    • The history major (as Sam was referred to internally by the IBM engineering community) not only saw this coming but he, Mark Loughridge , Mike Daniels and Randy MacDonald, all assisted by the cult of personality underlings that surrounded them, engineered this. The house in disrepair was accomplished by cutting costs with no regard to company health, LEANing out processes, mass firing of skilled employees, driving the customer to the breaking point and buying back shares at a rate never seen before. Couple this with lack of forward thinking leadership and EPS short sighted greed, shake well and you have a workforce with no morale and little buy in for any reinvention.

      Even the brain behind WATSON could not take the toxic atmosphere and resigned from IBM recently. All of the above executives retired within the last 18 mos (but still on the payroll save for Daniels) with hefty payouts and not a care in the world or for the mess left behind. Of course as a top lieutenant, Ginni had a hand in this and must have seen what she was inheriting but it's hard to turn down the top slot when you are drunk with compensation.

      Even if this does not work out, all the architects of this company's demise will enjoy many years to come relaxing in their respective Nantucket/Greenwich/Palm Beach manse that IBM built and maybe the only tangible thing IBM has built in the last 5 years.

  • Seeking Alpha: You Won't Believe It, IBM Is An Example Of Poor Earnings Quality. By Valuentum Securities. Excerpts: Never did we ever think we'd be using Big Blue (IBM) as an example of poor earnings quality, but its fourth-quarter results, released January 21, fit the mold. Let's first become acquainted with why assessing earnings quality is important. According to the Research Foundation of the CFA Institute:
    "Understanding the quality of earnings is an essential part of processing and interpreting information. A high-quality earnings number will (1) reflect current operating performance, (2) be a good indicator of future operating performance, (3) and fairly annuitize the intrinsic value of the company." ...

    IBM's fourth-quarter revenue dropped 5.5%, a pace that exceeded that of the 4.6% drop for the year, indicating an acceleration of the revenue decline. We're viewing this as a sign that the worst may still be ahead of Big Blue as it tries to steer the company back to growth. Without a solid backdrop of revenue growth, earnings-per-share expansion will have to come either from lower quality cost-cutting, one-time items, or share buybacks. Interestingly, IBM didn't cut operating costs faster than the revenue declines in the period, as SG&A and RD&E as a percentage of revenue expanded, to 21.6% (up 140 basis points) and 5.7% (up 30 basis points), respectively. Clearly, revenue and costs are moving in the wrong direction at IBM. ...

    The quality of earnings expansion, however, was muddied even further. IBM bought back more than 50 million shares of stock (1,072.5 million versus 1,124.7 million), which further boosted headline earnings per share. On a diluted basis, IBM recorded 11% earnings-per-share growth, but there wasn't anything fundamental in the quarter that should have driven such strong bottom-line expansion. Said differently, the buybacks acted as an artificial means to hide weakening underlying fundamentals.

  • Jeff Matthews Is Not Making This Up: IBM: "I’ve Been Manipulated"? Excerpts: To Wall Street, however, IBM could stand for “I’ve Been Manipulated,” because no public company we can think of does a better job of schmoozing Wall Street’s Finest and convincing them that there’s a there there, when in fact the there is not quite as there as it might seem.

    The quarterly earnings calls are curiously synthetic, almost antiseptic affairs, run by the CFO and focused strictly on the numbers: on the revenue number, on the cash flow number, on the share buyback number, and on the earnings number. In particular, the per share earnings number.

    The CEO never graces the call, and no actual business operators discuss their business. No success stories are told, no customers highlighted. It is all about margins and currencies and so-called one-time charges and so-called one-time gains, and tax rates, and how all those things added up to the earnings per share that quarter.

  • Middletown (NY) Times Herald-Record: IBM planning layoffs for 1Q. CFO suggests job cutting will come in March. By Jessica DiNapoli. Excerpts: IBM plans to rebalance its workforce — corporate code for layoffs — in the first quarter, said Martin Schroeter, the company's chief financial officer, during a conference call with analysts Tuesday. The announcement comes as the company deals with a deepening slump in its hardware division, which includes manufacturing operations in Dutchess County.

    Schroeter, who stepped into the CFO job Jan. 1, didn't specify where Big Blue's axe would fall, and suggested the layoffs would happen in March. But, he said that the financial effect of the layoffs on the company would be roughly the same as last year's round. IBM's layoffs in the second quarter of 2013 cost it about $1 billion.

    The layoffs are intended to help IBM's long-term financial performance. Because this year's layoffs will happen in the first quarter, they'll have a greater effect over the course of 2014, Schroeter said in the call, which covered the company's results in the fourth quarter of 2013.

    "We'll get the payback within the year," he said. ...

    Schroeter said there would be "rightsizing" in some of IBM's hardware divisions. Fourth-quarter revenue from the systems and technology division, which has operations in Dutchess County, fell 26 percent from the same time last year. Revenue from System z mainframe server products, which are made in Poughkeepsie, fell by 37 percent from last year, but Schroeter said that was mainly due to the cyclical nature of the business.

  • Poughkeepsie Journal: Molinaro: IBM future uncertain; Dutchess must push on new paths. By Craig Wolf. Excerpts: With IBM's future in hardware cloudy, Dutchess County must aggressively seek new jobs from other sources, County Executive Marc Molinaro told the Dutchess County Economic Development Corp. today.

    He mentioned IBM Corp.'s announced workforce reduction plans and said, "We certainly are uncertain whether IBM will remain in the hardware business at all."

    IBM's two plants in Poughkeepsie and East Fishkill are predominantly in hardware and remain the county's largest employer.

    IBM has said it will have a major "resource action" in the first quarter. The last one eliminated 697 jobs from Dutchess County IBM payrolls last September.

    Molinaro addressed the board of directors of the economic development group, which the county funds in order to attract jobs and investment to the county.

  • Yahoo! IBM Employee Pension, Employee Issues, Retirement & Health Insurance message board: "project Apollo" by Lee Conrad. Full excerpt: The Alliance@IBM has received information that managers in Systems Technology Group and the acquired business Kenexa, must submit a list of names for a resource action by Friday, January 24th. This years resource actions, and there will be more through the first quarter, is code named project Apollo.

    Coupled with the dismal earnings report today, the future continues to look bad for employees. CEO Rometty, in response to the earnings report said this, "in view of the company's overall results, my senior team and I have recommended that we forgo our personal annual incentive payment for 2013".

    Big deal. They are rich enough to withstand that. They should forgo their jobs.

    As we go through another critical time for employees we need now more than ever for people to say no to Roadmap 2015.

    The Alliance is here to help organize and fight back.

    Information is also key. Send RA packs to the Alliance at ibmunionalliance@... so we can track and notify the media of the number of job cuts.

    Post job cut information here: www.endicottalliance.org/jobcutsreports.phb

    Good luck to all. Your co-workers in the Alliance.

  • Yahoo! IBM Employee Pension, Employee Issues, Retirement & Health Insurance message board: "IBM blocking Alliance emails" by Lee Conrad. Full excerpt: IBM is blocking all Alliance emails to IBM internal addresses. They do that occasionally and we find a work around, but not this time. If you have received our alerts through your IBM email please go to the alliance web site and join, at least as a supporter, so you will receive our information. Employees are going to be in for a rough time again. Lee.
  • Yahoo! IBM Employee Pension, Employee Issues, Retirement & Health Insurance message board: "RE: IBM blocking Alliance emails" by Kathi Cooper. Full excerpt: IBM is also blocking emails from this IBM Pension group. I know because I no longer get out-of-office messages from the Armonk site.
  • Yahoo! IBM Employee Pension, Employee Issues, Retirement & Health Insurance message board: "International statement on IBM job cuts" by Lee Conrad, President, Alliance@IBM. Full excerpt: There were times when IBMers were proud to work in one of the largest IT-companies in the world. They were respected as employees, were well paid, had secure jobs and worked in an environment conducive to innovation and collaboration.

    But things have changed in IBM since the company published its Road Maps for 2010 and 2015. Instead of focusing on the people that made the company great, IBM is now transfixed by numbers and Earnings per Share (EPS).

    In 2013, IBM spent 1 billion USD on what it called “workforce rebalancing”, which means nothing else than a giant job cut. In 2014, the company is set to spend another 1 billion USD to eliminate an estimated 15,000 jobs worldwide. This comes at a time when the company continues to make hefty profits.

    UNI Global Union and the UNI IBM Alliance denounce the company’s move to lay off its employees en masse. IBMers remain the company’s biggest asset, and should be in the forefront of any change. Alternatives to layoffs exist for companies looking to cut costs. Retraining programs can yield positive results for both employees and the company, and have been implemented successfully in numerous companies.

    Lee Conrad, from Alliance@IBM CWA and UNI IBM Alliance Coordinator said “The hits just keep coming. Following the news that job cuts will happen this quarter, the latest is that IBM will sell one of its server units to Chinese company Lenovo. 7500 workers worldwide will be impacted and moved out of IBM”.

    Said Alan Tate, Head of UNI ICTS: “IBM needs to go back to its roots and focus on what made the company successful for over 100 years. It needs to invests in its employees and ensure decent work. Innovation is what made IBM a great company not greed.”

  • Yahoo! IBM Employee Pension, Employee Issues, Retirement & Health Insurance message board: "Yes, there were good managers" by "thefielder". Full excerpt: would like to think that I was one of them, as well. In the 90's...after going through 4 downsizings, (some let go needed to be let go) One day, I was asked to come up with, again, my bottom 10% performers, with the view they would be released from the business. I told my director, that I do not have any bottom 10% performers, all were released in prior downsizings, and refused to name anyone. He walked away, nothing ever happened.

    After about six months, I told my director, that I didn't want to be in management anymore, that I was tired of what was happening to people and messing with people and that I wanted a non-management job that could take good use of my skills. Thanks to some "old style" executives with integrity that knew me, I worked another 12 years as a regular employee, and was very successful managing myself before retiring.

  • Yahoo! IBM Employee Pension, Employee Issues, Retirement & Health Insurance message board: "RE: STG Job Cuts Coming" by "divaberyl". Full excerpt: A manager after my own heart. After begging to be laid off for two years I voluntarily left as a senior manager. Good managers are not transparent. Hence, people on these boards focus on the lower level leadership since they have no view of the real villains — IBM executives.

    Executives give organizations a number to cut and we must chose from our own staff. Performance is a factor but there are others things we consider — retirement eligibility, customer reaction, location of the employee, teamwork, etc. More often than not employees selected for layoffs are high performers so we make a "Sophie's Choice". Laying off employees is heart-wrenching. My first-line managers who had the highest numbers to cut are often cut themselves and/or end up basket-cases at the end of the process.

    Not trying to make you feel sorry for managers but your focus should be on the executives who are responsible for these layoffs.

  • Glassdoor IBM reviews. Selected reviews follow:
    • A company to be proud to work for!” Managing Consultant (Current Employee), London, England (UK). I have been working at IBM full-time for more than 10 years. Pros: Great team, awesome people and Watson. Cons: Salary and continual pressure to do more / better / always be on the limit. Advice to Senior Management: Start with Why (Simon Sinek)! Forget Utilisation targets and learn to value people and their contributions. Innovate, research, push boundaries like Smarter Planet. Utilisation/targets were at their lowest in the 60s and IBM's sales team were the best in the world! Give people freedom and space to innovate and exceed expectations. Don't force people to exceed utilisation targets to get ahead. Yes, I would recommend this company to a friend. I'm optimistic about the outlook for this company.
    • senior engineer” Senior Engineer (Current Employee), Austin, TX. I have been working at IBM full-time for more than 10 years. Pros: There are no pros that I can say about this company these days. Sad to see how company's going downhill. Cons: So many RAs. Company always trying to get into market by buying another company instead of spending on R&D. Advice to Senior Management: Stop the quarterly number game. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Salespeople should stay away from IBM” Sales Leader (Former Employee), New York, NY. I worked at IBM full-time for more than a year. Pros: Huge software portfolio; terrific training and relationship building opportunity access to clients with IBM name recognition and ability to learn Internally from highly talented professionals. Cons: Massive internal conflict between well-entrenched highly toxic organizations and agendas; lack of understanding line of business domains; very difficult to navigate thru complex process laden self-service systems; very difficult for customers to do business with IBM, and very difficult for sales people dealing with internal organizations and personalities to help clients. Advice to Senior Management: Break up IBM into smaller innovative firms that drive innovation with agility and speed of a start up mindset. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • IBM is going away” Software Engineer (Former Employee), Tucson, AZ. I worked at IBM full-time for more than 10 years. Pros: IBM used to be a really good company. Cons: IBM is going to reduce itself to nothing. The stock market in the last 6 months has been responding to this. IBM stock price dropped during the market recovery. Advice to Senior Management: Replace yourselves. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • For 25 years overall a great company to work for, now trending down.” Anonymous Employee (Current Employee), Atlanta, GA. I have been working at IBM full-time for more than 10 years. Pros: Great people and opportunities. Cutting edge technology. I've made many life-long friends around the world and worked on some amazing projects. Cons: Increasingly all decisions made by accountants, and not by the visionaries. Ridiculous amounts of red tape for the most simple decisions. Advice to Senior Management: Stop driving the company by cost-cutting. It's a death-spiral. You talk about trust and responsibility, but don't walk the talk. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Great people hampered by stale culture and risk-aversion” Director, Business Development (Current Employee), Somers, NY. I have been working at IBM full-time for more than 8 years.

      Pros: Great people here, some great managers, opportunities for advancement if you are in the NY area (where the decision making takes place), commitment to diversity initiatives, flexibility and ability to work from home when needed (but this is largely manager dependent). Base pay is pretty competitive.

      Cons: Bureaucratic, too process-driven, pervasive risk-aversion and managers are uncomfortable making decisions, slow to adopt change, innovation and new business models, bonuses are non-existent for non-executives, way too focused on pleasing Wall Street.

      Advice to Senior Management: The shell game is up. Wall Street is onto the financial engineering and sooner or later investors are going to demand real revenue growth. Get away from the poisonous EPS roadmap and get back to investing for growth. You have to spend money to make money. Lastly, recognize that your employees really are your greatest asset. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • Great people. Terrible Executive Management” Senior Project Manager (Current Employee), Austin, TX. I have been working at IBM as a contractor for more than a year. Pros: Great colleagues who are willing to go the extra miles or two to achieve, sometimes unrealistic goals, set by business and executives. Flexible work hours. Since you VPN in, you can work from different state or even country as long as you have internet and phone. Cons: The management has been going from bad to worst. Constant layoff which is not based on performance. Poor communication. No growth. Advice to Senior Management: There is no failure in business but only failure in leadership. No, I would not recommend this company to a friend.
    • Culture of mediocrity” Anonymous Employee (Current Employee). I have been working at IBM full-time for more than 10 years. Pros: IBM used to be a great company to work for, but has been in a steady decline for a while now. There are still many smart people left in IBM, although almost all are on the opposite of young side. The corporate culture is the opposite of the startup culture, which has some benefits, for example, a widespread ability to work from home. Quite a few people have had a steady job in IBM for their entire careers, although this is getting harder to accomplish now. Some parts of IBM are doing all right, while some are in a steep decline. If one gets into one of those good divisions, it could result in a steady job with decent pay and benefits.

      Cons: The corporate culture is stifling. For many years now, the strategy that IBM has apparently been following is reducing the size of the US workforce, through attrition and resource action, while keeping new hiring to very low levels. This has resulted in a US workforce that is decidedly older and shrinking. There's an acute shortage of fresh young blood and the exuberance that comes with it. The idea was to replace lost talent in US with cheaper labor in other markets, but that has been a spectacular failure, because IBM plays hard low ball in those markets, and doesn't even come close to capturing and retaining top talent.

      IBM is not poor, in fact it makes a lot of money every quarter, but the strategy has been to use this money to prop up the stock price through share buybacks and dividends rather than reinvest in development.

      Relative to nimbler competition, IBM has not been investing in R&D at the level needed to stay apace with the evolution of the tech universe. In many parts of IBM, there's a culture of poverty: shrinking budgets, steady exodus of people, and no relief in sight. The company overall is not poor, but it certainly feels this way. Between the brain drain due to workforce management practices, and the lack of R&D investment, IBM is no longer competitive on many (most) fronts, and has to prop itself up by regular acquisitions.

      This doesn't work too well either, because ambitious people from acquired companies usually leave as soon as their contact terms allow. Few startup-minded bright individuals can tolerate the "permanent cost-cutting" culture, heavy bureaucracy, and highly diluted level of talent that's endemic in most of IBM.

      Advice to Senior Management: Cost cutting makes short-term financials look better, but it won't bring the growth that's sorely needed. If you want to grow, use the power of the purse while you still can. Invest heavily in R&D. Let managers hire top people in all markets, and pay them enough to retain them. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • Good place to start out. But found the top-down nature stifling” Software Engineer (Former Employee), Washington, DC. I worked at IBM full-time for more than 5 years. Pros: Brand. Stability. Exposure. Cons: Focused on utilization rates instead of innovation and productivity. Advice to Senior Management: Don't just give lip service to work/life balance. Focus more on delivering successful project versus just making the sale. Attract and retain talent. No, I would not recommend this company to a friend.
    • Downward spiral” Managing Consultant (Former Employee), Toronto, ON (Canada). I worked at IBM full-time for more than 8 years. Pros: Benefits of most huge corporations. In the early days had smart people. Cons: After a few years realized how utilization driven the company had become. By year 9, competition and pressure was unbearable. Although I was promoted twice, hated company culture and left. Advice to Senior Management: Business as usual and risk averse mode of thinking will just continue the death of big blue...embrace creativity and dare to 'think different' otherwise good riddance! No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • clumsy and poor vision” Anonymous Employee (Current Employee). Pros: pay and compensations are OK. Cons: upper management put too much emphasize on corporate financial engineering. Advice to Senior Management: good luck and you really need much more than that. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Professional environment without any undue stress but with high standards and great execution of deliverables.” SAP Data Manager (Former Employee). I worked at IBM full-time for more than 3 years.

      Pros: 1. Very professional. This applied to in terms of approach to tasks, assignment of correct persons to tasks, planning of timelines in respect of resources and workloads and in monitoring of execution. All around there was a clear understanding of what was involved and what needed to be done. The work accordingly proceeded smoothly and all knew what slippages were acceptable and which were not. 2. High standards of work. The quality of work expected was high and it was achieved. 3. Stress free. There was a refreshing lack of office politics and no undue pressure as all involved had a clear understanding of the processes and what should be done and what could not.

      Cons: None experienced during my time at IBM. Advice to Senior Management: 1. More focus on immediate returns to justify projects. 2. Tighter control of project creep. Yes, I would recommend this company to a friend. I'm optimistic about the outlook for this company.

    • Faded glory” Intern (Former Employee), Winchester, England (UK). I worked at IBM as an intern for less than a year. Pros: The letters 'IBM' look impressive on a CV but they shouldn't be. (Theoretically) you get to work on some fairly high-profile projects.

      Cons: My department was disorganised and unmotivated. The staff seemed in no hurry to change or improve and were perfectly happy to do their 9-5 and keep their head under the radar.

      Few people showed initiative or took innovative risks. It seemed like the day job was a competition to see who could be noticed least.

      Morale was rock-bottom. The US management were threatening to lay people off because sales weren't good enough. Well, of course they weren't! Not with that attitude and lack of enthusiasm.

      Advice to Senior Management: Get to know your staff better so you can exploit their talents. Otherwise they just get bored No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • A lot of smart people, but with no direction or passion left.” Senior Managing Consultant (Former Employee), Nashville, TN. I worked at IBM full-time for more than a year. Pros: Starting salaries are competitive with the marketplace. The work can be very interesting. Cons: The company manages profit mostly through benefits reduction at this point. There is not much shared sense of objectives or interests managed within the team. Advice to Senior Management: Go somewhere else.
    • No longer good. Things are going downhill. Useless management.” Senior Managing Consultant (Current Employee), Atlanta, GA. I I have been working at IBM full-time for more than 10 years. Pros: Work flexibility. Decent training. Nothing else. Cons: Pay no longer competitive. Bonus, GDP are now zero. Advice to Senior Management: Share the wealth. Stop being obsessed with useless metrics like the 2015 roadmap. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Great experience but time to move on.” IT Consultant (Former Employee). I worked at IBM full-time for more than 10 years. Pros: The people are the best. More than willing to take on new challenges and work together to help the customer. They keep up with technology for the employees; the ThinkPad is a great laptop/workstation. Cons: The ongoing layoffs are hurting morale. Workloads are increasing to take up the slack and it is impacting the customers. Good talent is leaving the company. It's a shame. Advice to Senior Management: Please find a direction. IBM used to be a tech leader. Where are the great ideas going to come from if all the people are gone? No, I would not recommend this company to a friend.
  • Glassdoor IBM Canada reviews

  • Alliance for Retired Americans Friday Alert. This week's topics include:
    • President Stays Away from Cuts to Key Programs in State of the Union Speech
    • Illinois Public Sector Unions Sue to Block Pension Theft
    • In Fight of Their Lives, Union Members Rally at Pennsylvania State Capitol
    • Coalition Challenges ALEC with the Facts
    • Today is Intercontinental Day of Action against the TPP; Harry Reid Lends Support
    • Thousands Join Sen. Bernie Sanders on Monday Night Call
    • Alliance’s Virginia Chapter Marks Its Third Year
New on the Alliance@IBM Site

Job Cut Reports

  • Comment 01/25/14: The difference between the PC sale and server sale is that there is no duplication of work. In the PC sale, Lenovo already had a high number of employees in the PC business. This is not the case with servers. It is a completely different deal. Either way, people in System x now have almost 2 years to find a new job. This is far better than the 10-18k in Storage and P getting whacked next month.

    As for the area in IBM making money, it is because IBM has no real structure for business. They leave the high profit service area out of the low margin hardware business. Why should one organization see 100-200% profit while the other doing the real work gets beat to death for an industry of single digit profit? If IBM thinks they can compete, let them. This is the Titanic that is already going down. Services - good luck competing with Accenture. Cloud - Amazon, Google, and others have you bent over already. Software - anyone can write code. -Anonymous-

  • Comment 01/26/14: Ms. Rometty confirmed during her Q4 employee call that only PBC-1-ranked staffers would receive bonus payouts, and that those payouts would total ~6% of salary. Some sort of salary-adjustment (raise) plan will also happen for those performers, though, based on the previous 90%-of-market ceiling, I wouldn't expect much. The hardware sell-off is painful to witness.

    This deal was on the table (to Lenovo) for 4-to-6 billion last year; one can't help but see the China-delays-buying-x86, China-boycotts-IBM-post-Snowden, IBM-revenue-plummets, China-buys-x86-at-a-discount progression as cruelly strategic. To link this to "job cuts" and stay on-topic, Services (GBS/GTS) will be the next area hit -- their results have been poor (though rosy compared to STG), and there won't be much left to cut (or hide behind) in Hardware anymore. -SimpleMath-

  • Comment 01/26/14: Point to remember looking at the $1B workforce rebalancing charge to be taken in 1stQ. It does not mean that the entire action and related cost will be taken before March. It's an accounting bury the cost trick similar to 1stQ last year but the Lenovo deal fell through. This year it won't be a highlighted item as it's offset by the $2B from announced Lenovo sale. Resulting RA's can take place through the year as evidenced by the 600+ terminated in PoK in July. -Anon-
  • Comment 01/26/14: To worriedsystemx - I was told by System x IBMers under STG that they are locked down; they cannot apply for any job within IBM. I'm not sure if that is true for anyone supporting System x outside of STG e.g. folks in TS (Country Support) / ITS / GTS etc. From what it looks like, only SSRs supporting System x are safe, Lenovo needs IBM to perform the break fix work for the next 5 years.

    I don't believe Lenovo will keep half of the 7500+ IBMers moving over, especially the Presale / some sales reps and remote support staff not part of Atlanta Help Desk. Lenovo is all about streamlining their business and heard from current Lenovo employees, they will use the channel partners and their current PC sales reps to drive their server sales once the dust is settled -Sammy-

  • Comment 01/26/14: IBM is probably one of the very few companies that doesn't even offer free coffee. With it watching its expenses like a hawk, did IBM miss the opportunities to enter the more marketable businesses? Microsoft has Bing to compete with Google, Surface to compete with Apple, what does IBM have that can compete with Google and Facebook? When paradigm shifts, if you are not in the game, you are out of business. IBM keeps selling away the stores, what's next? -what now?
  • Comment 01/26/14: Hey Ginni, saw a little something on Linked In that you should think about - "Never push loyal employees to the point that they no longer care". Good luck with the call to action crap when the non-PCB 1s tell you to pound sand. - deaf to the call -Gary-
  • Comment 01/26/14: Always time for RAs and sniper job cuts coupled with a massive incestuous stock buyback and now NO GDP for PBC 2+ and PBC 2 employees? GDP for PBC 1s only? How many of them are there now, particularly non-management? Great way to further polarize the workers Ginni: you make Jack Welch look more benevolent every nanosecond.

    Where is the T in Teamwork Ginni? So PBC 2+ employees are not adequate contributors anymore in your myopic eyes? So PBC 2 is the "new" PBC 3? If IBM is only investing in PBC 1s then that shows utter contempt for the vast majority of it's workers. Can we assume Ginni you are a PBC 3 and no one on your team is greater than a PBC 2? LOL. Old MacDonald mentioned IBM's most important resource was its resources (ahem, employees) so I guess that retired to the farm with him. LIFE@IBM IS ____ (you THINK TWICE and fill it in!) -trexibmer-

  • Comment 01/26/14: The imminent drastic downsizing of STG should come as no surprise. Remember a guy named Tim Ringo? In early 2010 he was the head of IBM Human Capital Management when he leaked to the industry publication "Personnel Today" that IBM's intention was to eliminate the vast majority of IBM employees and hire them back as contractors, making 1/2 pay and no benefits.

    IBM denied Mr Ringo's comments, said he had no authority to speak for the company, and mysteriously Timmy disappeared from bluepages 2 weeks later.

    Outsourcing experts said employers from both the private and public sector were increasingly using the model as they looked to squeeze people costs post-recession. Ringo also stated that IBM's global workforce of 399,000 permanent employees could reduce to 100,000 by 2017, the date by which IBM is due to complete its HR transformation program. If you want any chance at all to derail this transformation and keep your job, you need to join the Alliance today. What more proof do you need? -YouCanMakeADifference-

  • Comment 01/26/14: -YouCanMakeADifference- Here's a link to the article: http://www.personneltoday.com/hr/ibm-crowd-sourcing-could-see-employed-workforce-shrink-by-three-quarters/ Tim joined IBM Global Business Services in 2006 after 16 years at Accenture, where he was Executive Partner Human in Accenture's Human Performance Service Line and is now a partner at Maxxim Consulting. -InBangaloreMaybe?-
  • Comment 01/26/14: I heard there was a video conference for all X Series employees last week after it was learned that they were being bought by Lenovo. Anybody have any information on what was said? Did they say all the employees were going to go to Lenovo or just a portion of them? Did they guarantee your pensions, vacation time etc etc? -longtimebeemer-
  • Comment 01/26/14: All this talk of only PBC 1-rated IBMers getting bonuses is fine and dandy, what many may not know is that in Belgium, The Netherlands and Luxembourg no bonuses were paid (regardless of PBC rating) for 2012 despite the rest of IBM getting paid bonuses. Just because Ginny says there will be a bonus doesn't mean there won't be local exceptions. -ImAnIBMers-
  • Comment 01/26/14: Remember when Cringely wrote in 2007 that IBM would shed 150,000 jobs? IBM even came out and officially stated that it wasn't true. Well, guess what? Another IBM LIE. By the time 2015 rolls around IBM will have shed this number (RAs, voluntary resignations, division sell-offs, retirements, etc).

    Cringely was wrong? Still believe IBM when they tell you anything? Imagine a company actually coming out stating the information was incorrect, all the while KNOWING it was the truth? Still believe you are safe from an RA if you keep your nose to the grindstone, don't cause any trouble and work 24x7. THINK TWICE and prepare. An RA is headed your way. Just a matter of time. Unionize or accept your fate. What more can I say. Cringely's article from 2007: http://www.pbs.org/cringely/pulpit/2007/pulpit_20070504_002027.html -miss_understanding-

  • Comment 01/26/14: When I read posts and the subject of PBC ratings comes up it seems some people have no clue how meaningless the PBC system really is. I read posts from those who boast of being a 1, 2+ or even 2 suggesting they think the system is fair. But God forbid the dreaded 3 gets put in front of them, all of sudden the system is a sham.

    The reality is and always has been that the system is a sham regardless if you got a 1, 2+, 2, 3 ,4 or 99. How many employees know what being a 1 really requires? From what I remember, before being RA'd, a 1 requires going way above and beyond the job description. It also requires some incredible effort or input that saved the company buckets of $. The 1's I knew didn't come close to that requirement.

    I worked with someone who complained to our manager that he deserved to be a 1. His argument was that he was with the company for 30 years. He felt for that reason he was a 1. Never mind pushing off his work on others, disappearing for the day at noon without notice and being the most negative force on the team. He was a 1 in his mind. He got the 1 just to shut him up.

    I knew someone who got a 3 for no reason other than volunteering for a special project, performing well and getting a 3 because, "He didn't have the day to day #'s as his counterparts." Of course he didn't. He was working on a SPECIAL PROJECT he volunteered for when our team was ASKED IF THERE WERE ANY VOLUNTEERS!

    I always felt the system was a joke. The 2?s and 2+?s, meant nothing to me. I tried my best, did a good job and was a loyal employee. That's all that mattered to me. The PBC rating system is a political sham. Keep that in mind when you compare yourself to your colleagues, and most importantly, if IBM shows you the door. I know the stress. I was there too. I was never so proud when I got the job with IBM, and never so relieved when it was over. -anon-

  • Comment 01/27/14: -@worriedsystemx-, When a sale is done, the people associated with that sale are also done. They gave a statement of 30 days to determine if you are "in scope". That is BS. That work was done before the sale mainly because there is intellectual property in the people. If you want to find out how quickly you know, try applying for an internal job as a System x employee. They may not lock you out, but you are definitely flagged to be rejected. The good news is that you have about 18 months of employment to look for another job while trying to assess what Lenovo plans. It is difficult to judge based on the PC sale. People that work there love the company. The real people that get screwed are the ones that are on IBM's old pension and do not have 29 years in. They will get moved to the cash plan which amounts to about 90% pension reduction. I do not have strict numbers, but a good 30% of System x have 30 years in and were waiting for packages. This sale gives them pension + paycheck for a year. Many of those will go after a year at Lenovo. -A-
  • Comment 01/27/14: There are a few negative comments to Ginni's 2014 kickoff, lost in the midst of all the 'awesome inspiring' drek - mainly people who point out that only giving GDP to 1 performers is serious demotivation for the rest of us.

    There was a time when I was proud to be an IBMer, when it was a big goal for me, but that time is long past. Over the years, I've seen a lot of layoffs and pruning of benefits. Of contractors used in greater numbers and in many cases paid a pathetic slice of what they would have made as regulars. I don't know if Lenovo will treat us any better, but at least I can hope. In the meantime, I plan to eagerly watch IBM flounder and see what other whipping boys they create, once the hardware business isn't around to blame. -IBMer_no_more-

  • Comment 01/27/14: Last year IBM had the opportunity to sell xSeries Servers to Lenovo and couldn't agree on a price. Then over two quarters, IBM hardware business sunk. X, Z, and P are all down. Now Lenovo walks in and names it price for xSeries and the rest of the company is told no GDP except for ass licking 1's who get 6% of salary. Management keeps cutting resources, communication, skills, and assets and every year revenue goes down. It is 8 consecutive quarters of revenue decline and management keeps doing the same thing expecting a different result. It is Ginni and the senior leadership team that must be fired. They have lost the trust and confidence of the entire workforce by sacrificing human resources for material greed. And our customers notice. Delivery quality is declining everywhere. Non-performance lawsuits are rising. Hard to fathom how the company is dooming itself just 2 years after celebrating its 100 year anniversary. -Fedup-
  • Comment 01/27/14: Hearing that there are non-sales people in STG being converted to commission based plans. Meaning it is a massive pay cut due to the fact they can't actually sell anything in their positions. -Too-much-fun-
  • Comment 01/27/14: Hearing that the rumored ~15,000 Q1 job cuts will land heavily in Western Europe this time. One major European country might lose as much as a quarter of its workforce. Europe generally has strong labor protections and more employees who support strong unions, so this will not be at all cheap for IBM to pull off. It's quite desperate, really. But then there's $2.3 billion from the X86 server business sale to spend. IBM is likely to lose a lot of great talent, unfortunately. -Anonymous-
  • Comment 01/27/14: I'm disturbed by people complaining about other groups not making as much money. It isn't as though we as individuals are responsible or can impact which group earns what (assuming we aren't in sales). I'm in software, I do my job, and I believe I do it well. But my IBM co-workers who support hardware work just as hard, and are just as valuable regardless of what their 'group' earns. We are all employees of IBM, and all deserving of respect and fair compensation. It is unfair of IBM to grant bonuses and ascribe worth due to something completely out of the employee's control. I hate that I am seeing us do the same thing to each other. -LackOfRespect-
  • Comment 01/27/14: In some divisions or areas of business, IBM has delivered more "3" appraisals this year, largely to encourage attrition and avoid severance. -Anonymous-
  • Comment 01/27/14: Re: Coffee: I heard some divisions have free instant coffee but that was downgraded from their original Starbucks coffees. TBH, I know a few CEOs in other companies and they are all bewildered by the fact that IBM cuts on these things, since coffee is very cheap compared to salary and giving employees free access to coffee can boost productivity in a way that'd more than offset the cost of the coffee.

    It's all about incompetent paper pushers in the administrative offices that play around with numbers and without regard to the more subtle consequences. This also ties into the whole cutting bonus this year. They think they can save their money at the expense of 2 and 2+'s, but you know what, these guys will likely not work as hard (or leave the company with their knowledge) after being treated that way. As for me, it's time to start looking for a job in a more optimistic company. -Anon-

  • Comment 01/27/14: This is why IBM needs a union, not job cuts. A retiree recently submitted an estimate for some dental work only to discover that the IBM benefits that supposedly would only cover 60%. However surprise surprise the rates used, were based on the 1998 fee guide. That's right, 16 years ago work since retiring at the end of 2001. Using the 1998 fee guide - is a demonstration of a slimy company supported by even more slimy customers. Maybe Warren should try this dental plan. Of course IBM management is already toothless and clueless -IBM Customer support AKA my word is worthless-
  • Comment 01/27/14: Today, I received notice that I am going to be replaced on the project. I'm the 4th PM to be let go. The first thing I thought of, after I got past the shock and surprise, was regret over the countless hours I spent managing this project, including 2 all-nighters in the last three weeks. Over the weekend, I had come to the realization, particularly after reading some of the posts in this Board, that this job was not worth neglecting my family and friends over.

    I also had been ready to quit because of verbal abuse from IBM management. I will probably be without work for a while, since I am a long term supplemental and we receive no severance packages. I know there's a bright world beyond IBM, and am looking forward to finding another spot where I'll have a higher salary and a better work-life balance. Life is too short! Thank you, Alliance, for your work here. I will definitely be donating to the cause. -Crazy-

  • Comment 01/27/14: Despite what Ginni says, don't get the impression Cloud is making money. In fact, they're losing their butts in records #'s. SCE was sold and merged with Softlayer (a $4bil acquisition), and they quietly RAd the entire SCE staff early last year except for a few butt kissers. SCE+ is a multi$bil hog that only has a handful of customers, and continues to hemorrhage cash by the $millions. But it *IS* in vogue, and since Rackspace, Amazon et.al. is making money at it, well Ginni can get a free ride on that media wave too.

    But IBM doesn't have the inherent mechanisms to pull off Cloud. Cloud (of all kinds) at this company is on short notice, and in a year it won't resemble anything they're thinking. Face it, IBM Exec Management could screw up a 1 car funeral. The two best days of my life:

    • The day I was hired by IBM and ,
    • The day I got out of this forsaken hostile dump. Just think, no more High-School PBC exercises, no more college children as people-only managers, no more grade school show-and-tell in front of class and teacher each Friday for Utilization explanations, no more screaming and fighting in meetings. Just no more!

    -Cloud means you can't see where you're going-

  • Comment 01/28/14: Why can't non-exec management join? We are ground troops like everyone else and not part of the old guard senior leadership making these decisions without truly knowing how to implement without needed investment in many areas. There are hundreds of first lines just like me that have had enough -Need to act- Alliance reply: As mentioned before, managers are prohibited from joining under US Labor law.
  • Comment 01/28/14: @Need to act -- you cannot join, but you can DONATE. I used Paypal as a way to support the ongoing work to maintain this open forum for us. -15yrsandcounting-
  • Comment 01/28/14: For those of you who don't have the time (or stomach) to listen to all the drivel in Ginni's "2014 Kickoff Message For All IBMers", here are her statements that apply to the GDP Bonus and Salary Increase Program, which start at roughly 23:40 into the webcast: "So this year ... we did not generate a pool for GDP payments ... authorized a payment of 6% of compensation for ... the 1 performers, our top contributors ... salary increase program continues ... for our top contributors" -Ginni Got the Goldmine and We Got the Shaft-
  • Comment 01/29/14: Hearing another 1000 or more for the redundancy pile in Australia this in 1st Qtr...could be more by year end...what's another 10 or 20% reduction in the workforce again this year...not even shocked anymore...just expected. Again the true numbers never really make it into the media here. Management doesn't seem to have any more ideas than getting staff to take leave and make staff redundant to meet the numbers. Guess I could even do that. Same way of operating for a long time now...getting boring. :( -Anonymous-
  • Comment 01/29/14: Too true: "Over the past six months a familiar conversation is 'Sorry, the people who knew how to do that were RA'd in September. No one knows how that application or process works anymore.' or 'Sorry, that function was transferred to (place your favorite low income country here). The staff we trained to take over the work left a few months later and now no one understands the inner workings of this project.' PBC ratings are driven down not by curves, rankings, or personal performance but the need to limit salaries." -Anonymous-
  • Comment 01/29/14: "...we did not generate a pool for GDP payments..." Ginni, you mean ALL business sectors did not make their numbers or got even close? We (IBM) make sure of it now by setting the bar as high we want so we can dangle that carrot from the sky now to over 90% of the resources. Ginni, take your lowest 10% of business sectors for 2013 and RA that Senior VP(s), VP(s)! IBM executive management has lost all accountability, reasonableness, and perspective. -anonymoose-
  • Comment 01/29/14: Regarding Ginni's 2014 kickoff, how many of you noticed the great opportunity for DATA mining of comments on her video? Let's see, most of the "we love you" comments come from India and Brazil, but I see we do have some American butt kissers in HR and sales groups, too. If you do some business analytics on this data, you could calculate per capita butt kissers in each country and each division of IBM. I think it would be quite interesting. -The Emperor Has No Clothes-
  • Comment 01/29/14: It's amazing signing up for benefits with Toshiba as we transition on March 1. For a family plan (employee,spouse,and 3 or more children) is $400 per month cheaper than IBM. Think somebody has been padding the bank account eh? -Tired-
  • Comment 01/29/14: Buddy, you're right. Reality is I am one of the last of the technical resources in a dumpy area of GBS (on the IBM Account), full of thugs and scoundrels. Soon, nobody will be left but project managers in the US directing GRs. I see no reason to keep those PMs in the US, either, frankly. They will likely be "encouraged" out with a "3" next. -Anonymous-
  • Comment 01/29/14: Ford Motor Company reported an $8.6 Billion dollar profit for 2013 and announced each of its 47,000 U. S. unionized UAW employees would receive a bonus check of $8,800. GM reports in February and is expected to report a $8 Billion dollar profit which would mean a bonus of $7,000 per unionized employee. Chrysler/Fiat reported a $1.3 Billion dollar profit and a $2,500 bonus per employee.

    IBM reported a net profit of $16.5 Billion for 2013 and notified employees the small percentage of "1" performers would be the only ones getting a 6% bonus, and that they would be firing over 10,000 employees, mainly from STG. You have 2 choices: you can stand in line and wait to be slaughtered and watch history pass you by, or you can take a stand and be a part of this movement and make history. The choice is yours. -Its_Your_Choice-

  • Comment 01/30/14: And it has started for STG. My colleagues in Protectier project were told yesterday that they are closing down the group. Almost everyone will be fired. Same as SONAS project. -Anon-
  • Comment 01/30/14: have been working 70+ hrs and thought it will slow down after New Years, but it has not... on the contrary, some people have left and instead of getting a replacement for them, we now have to pick up their work. I am not sure how long more we can survive like this. Everyone is overworked. -overworkdIBMer- Alliance reply: Those kind of hours are not healthy. We keep getting reports of employees having serious health problems because of this. There is a reason workers fought for the 40 hour work week. Is it time to fight for it all over again? YES.
  • Comment 01/30/14: Ginni, I need to laugh when I hear "...we did not generate a pool for GDP payments..." from you. Looking back the last 5 years (when we were still making good profit), GDP is continuously decreasing since. You took our employees' GDP bucket to make senseless promises to shareholders to increase EPS—to shareholders who are only concerned about money, not about IBM as we are (or should I say: as we used to be). So 2013 was a great success for all IBMers who are IBMers with their hearts! Showing you that you will only get high performance with going the extra mile if you are willing to pay for high performance. Not adhering to these rules will even bring better years than 2013 was. THINK -Unfortunately-Still-IBM-
  • Comment 01/30/14: As of Feb. 1st 35,000 Customer Service FTE's are now off of IBM's books and transitioned to Concentrix. Now how to trim some of the 395,000 global FTE's that are left. -SlimPickins-
  • Comment 01/30/14: I was let go in 09 while on vacation 400 miles from home at a close relatives' funeral. The call came between the viewing and the funeral. I was so stunned I couldn't even attend the funeral. So there I was, away from home and kicked to the curb.

    It doesn't matter who you are, how hard you work, who you know, how many vacation days you work or days you work sick. It doesn't matter how many times you miss your kids functions, birthdays, New Years Eve, or anything else. I doesn't matter how many nights you pull an all nighter. Believe me. I did all of that.

    If you are still there, you are probably doing it too. You are being used so stop it. It won't change anything because one day your number will come up and I'M not talking p b c. You can be a 2+. I was. Didn't matter. Y'all need to get a union or get out.

    I am glad I'm gone. I've been gone nearly 5 years. Nothing has changed at IBM. Plenty has changed for me. I am no longer in that abusive, threatening relationship. Sign me, GLAD I'M GONE -mbb-

  • Comment 01/31/14: I worked for IBM Australia for the last 19 years - variously as 'casual','contract','fixed term hire' - all the while requesting to become a regular employee. Finally, I lost my job in December 2013.

    IBM is sending all administration, technical support jobs etc to cheap countries by 2015 as we all know. My wage was not high and IBM was constantly finding ways to make the wage I had lower (finally non-existent).

    The management handled the terms of employment appallingly. I was a subject matter expert in various areas over the last few years. I have been replaced by brand new employees who are labelled SMEs with no experience or knowledge. However, they are very cheap. IBM's customers will suffer. -Anonymous-

  • Comment 01/31/14: You cannot be RA'd while on medical leave, but you can be RA'd as soon as you return - I was. Once you have been notified of a layoff, I believe that any subsequent medical leave will end on your last day of employment. To those working long hours: Why? It won't protect you from layoffs. I worked 8-10 hour days, did what I could and then left for the day. Harder workers than I were laid off years before I was. Sometimes it just makes no sense. I was finally laid off last August and had a celebration for it. -Glad to be gone-
  • Comment 01/31/14: At 8:00 am, January 31, we received the following:
    "Team, It is hard to believe we are at the end of January. Let me start by thanking you for your efforts in 2013. We needed to bang the Utilization drum hard in 4Q. This is probably why 2014 week 1's utilization (UTE) was much lower than planned. I would like to recover week 1 with a request to charge three more hours a week (each) for the remaining nine weeks of Q1. If we all do that we will keep the wolves off the door step.

    In addition...

    • Look for opportunities on your current projects to place someone from our bench. We have talent available across all Bands ready and willing to be engaged. Our bench is high and they need your help to get Billable.
    • Be diligent in submitting your hours each week in ILC. Follow-ups on missing labor take time and utilization reports are reviewed weekly so accurate data is important. You did a great job last year so keep it up. Work with your project Partner/PM to get to minimum of 44 hours/week if you are not already there.
    • We will revisit capped projects to see if there is any flexibility on those engagements. The Americas leadership is all over this and I would like us to be best practice.

    Thanks for your efforts, you make all the difference in meeting our goals. Regards, Tom Crane"

    Doesn't bode well for those of us in AIS. At the end of the first month we are already way behind the forecast. High bench numbers probably mean there will be RAs in AIS. Who ever does the forecasting for this organization should be fired for incompetence. Just what I want to do after being rewarded for all of the extra hours last year with a big double zero - 0 bonus and 0 raise. Hate to think about the other "best practices"! -I Don't Think So-

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.

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