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Highlights—May 24, 2014

  • AARP:

    IBM Halts Practice of Disclosing Ages of Fired Older Workers. By Carole Fleck. Excerpts: At IBM, older workers who believe they were fired because of their age may have a harder time proving their claim under a new company policy, Bloomberg News reports.

    The New York-based tech company is no longer providing fired workers over age 40 with the ages and job titles of other older workers dismissed in a group layoff, the report said. That disclosure is important because it helps fired employees assess whether IBM has potentially demonstrated a pattern of age discrimination in its dismissals, a critical component in proving such claims in court. Federal law also requires that employers provide that list to its fired older workers.

    Instead, IBM is taking a new approach. It says it’s not subject to the disclosure requirement because it offers employees who believe they’ve been wrongfully dismissed the option of bringing an age discrimination claim to arbitration rather than to court, Bloomberg reported.

    Laurie McCann, a senior attorney at AARP, called IBM’s move very troubling because “it prevents age discrimination victims from joining together [in court] to challenge layoffs that target older workers.”

    She also says IBM is dodging the disclosure law by offering severance to workers if they agree to arbitration. But without the disclosure list, she says, dismissed workers have no way of knowing whether other older workers may have been targeted. Workers would want to know that before they decide whether to accept the severance and agree to arbitration, rather than consider filing a lawsuit or participating in a class-action suit.

    Washington employment lawyer Richard Renner says arbitration rulings often favor the company, not the employee. Arbitration also prohibits workers from appealing an unfavorable ruling. “Arbitrators know it’s the companies that get them their business. It’s had a skewing effect,” he says.

  • Wall Street Journal MarketWatch:

    How IBM made it harder to sue Big Blue. By Matthew Heimer. Excerpt: Tech giant IBM Corp. IBM has changed its personnel policies in ways that will make it harder for older workers to pursue age-discrimination claims if they’re laid off. And employment attorneys and human-resources experts are watching IBM’s move to see whether other big companies will follow

    The move comes at a time when claims of age discrimination have been trending upward, as the aging of the boomer generation collides with a slow-growing, post-recession economy. There were 21,396 age-bias claims filed with the federal Equal Employment Opportunity Commission in 2013, a slight decline from 2012 but an increase of 29% since 2006. IBM’s U.S. workforce has shrunk from 101,000 in 2011 to 83,000 today, according to Alliance@IBM, a website affiliated with an IBM employees’ union; the company employs about 430,000 people worldwide.

    IBM doesn’t dominate America’s corporate culture and tech industry the way it did in the 1970s and ‘80s. But it has tended to be ahead of the herd in experimenting with changes in employee-benefit policies, and given its huge workforce, large companies often watch changes at IBM to see how well they work. Recently, IBM has been among the first big companies to move retirees to private health-insurance exchanges and to adopt once-a-year 401(k) matches–moves that some consumer advocates have criticized.

    The company’s new move amounts to a reinterpretation of a provision of federal age-discrimination law. When companies lay off someone who is over 40, the law allows the companies to require employees to waive the right to sue for age-bias in return for severance pay. In order to do so, the company also has to give each laid-off employee a list of the job titles and ages of all the people being let go. The point of the rule is to help fired staffers figure out whether they might have grounds for an age-bias lawsuit.

    IBM’s new rules make two significant changes: The company no longer discloses that title-and-age data to laid-off employees. And while it no longer requires employees to waive their right raise an age-bias claim, it effectively forces them to make any such claims in arbitration, not in court. IBM told Barinka it was making the changes to protect employees’ privacy; the EEOC declined to comment on IBM specifically, but said that there was nothing in federal law to prevent a company from requiring age-bias claims to go to arbitration.

    A few attorneys tell BusinessWeek that IBM is the only company they know of that makes mandatory arbitration part of its severance agreements. Many consumer advocates believe that consumers are at a disadvantage in private arbitration in general, since the arbitrators are often paid by the company and since proceedings are kept out of the public record.

  • BusinessWeek:

    The Trouble With IBM. By Nick Summers.

    Excerpts: In the summer of 2012, five American technology companies bid on a project for a demanding new client: the CIA. The spy agency was collecting so much information, its computers couldn’t keep up. To deal with the onslaught of data, the CIA wanted to build its own private cloud computing system—an internal version of the vast fleets of efficient, adaptable servers that run technically complex commercial services such as Netflix. For the agency, the power of the cloud was tantalizing. “It is nearly within our grasp to compute on all human-generated information,” the CIA’s chief technology officer, Ira “Gus” Hunt, told a gathering of industry leaders earlier that year, calling it “high noon in the Information Age.” For the bidders, more was at stake than a piece of the lucrative federal IT market. Whoever won the 10-year, $600 million contract could boast that its technology met the highest standards, with the tightest security, at the most competitive prices, at a time when customers of all kinds were beginning to spend more on data and analytics.

    IBM was one of two finalists. The company would have been a logical, even obvious, choice. Big Blue had a decades-long history of contracting with the federal government, and many of the breakthroughs in distributed computing can be traced back to its labs. The cloud was a priority and a point of pride. In 2012, IBM’s new chief executive officer, Virginia Rometty, used her first speech to shareholders to describe big data as a “vast new natural resource” that would fuel the company’s growth for a decade.

    On Feb. 14, 2013, the CIA awarded the contract to Amazon.com. The e-commerce company, a pioneer in offering cloud computing services to corporate customers from Nokia to Pfizer, had persuaded the spymasters that its public cloud could be replicated within the CIA’s walls. Amazon had been bleeding IBM for years—its rent-a-server-with-your-credit-card model was a direct threat to IBM’s IT outsourcing business—but this was different. Amazon beat IBM for a plum contract on something like its home turf, and it hadn’t done so simply by undercutting IBM on price. IBM learned that its bid was more than a third cheaper than Amazon’s and officially protested the CIA decision.

    It would have been better to walk away. As the Government Accountability Office reviewed the award, documents showed the CIA’s opinion of IBM was tepid at best. The agency had “grave” concerns about the ability of IBM technology to scale up and down in response to usage spikes, and it rated the company’s technical demo as “marginal.” Overall, the CIA concluded, IBM was a high-risk choice. In a court filing, Amazon blasted the elder company as a “late entrant to the cloud computing market” with an “uncompetitive, materially deficient proposal.” A federal judge agreed, ruling in October that with the “overall inferiority of its proposal,” IBM “lacked any chance of winning” the contract. The corporate cliché of the 1970s and ’80s, that no one ever got fired for buying IBM, had never seemed less true. IBM withdrew its challenge. ...

    Much of what is wrong stems from something IBM is doing “right”: steadily increasing its adjusted earnings per share, a measurement Wall Street adores. In 2010, Rometty’s predecessor, Sam Palmisano, pledged that per-share earnings would reach $20 in five years, a plan called Roadmap 2015. In interviews, and even in public Internet posts, employees refer to the plan bitterly as Roadkill 2015. To make earnings rise while revenue is falling, Rometty has cut costs, sold business lines, fired workers, figured out ways to lower IBM’s tax rate, bought back shares, and taken on debt. Of the 25 analysts tracked by Bloomberg, nine predict that IBM will indeed hit the $20 target. The question is what type of company Rometty will have left when she gets there. ...

    The cold-sweat scenario for IBM is that it does catch up to Amazon and other cloud providers—only to find that competition has driven margins toward zero. In March a price war broke out among Amazon, Google, and Microsoft, as each announced cuts of as much as 35 percent on computing; 65 percent on storage; and 85 percent on other services. Rometty has made two promises to investors: to lead corporate IT into the cloud and to deliver lustrously thick margins. Those goals may be irreconcilable, as long as IBM faces competitors willing to make the cloud a place of ever-diminishing returns. In a March 25 blog post that surely sent shivers through Armonk, Google declared that cloud pricing should follow Moore’s law, falling as the cost of hardware inevitably declines. ...

    It would be hard enough for Rometty to bring IBM into the cloud era. Doing so while yoked to her predecessor’s $20-per-share earnings promise is almost impossible, says Fleckenstein. Short interest in IBM has increased from 15 million shares at the start of Rometty’s tenure to 30 million at the end of April.

    “You ask anyone who follows balance sheets—tell me this is not a scary prospect,” says Fred Hickey, another IBM short seller, who edits a cult Wall Street newsletter called High-Tech Strategist. “I look at Accenture, I see tangible assets growing. Oracle, Microsoft, others. I don’t see anything like this anywhere. OK? Anywhere. It is the poster child for financial engineering, in my world.”

    Selected reader comments follow:

    • Very good analysis, I would like to add another problem: The employee morale.

      Too many management layers, older people with more knowledge and that helped the company getting fired via RA (resource actions) and no respect, a employee ranking system (PBC) that only serves for giving a motive for firing people (each year the 1st line manager has to give a X number of 3's to the employees, if you get two you're fired) and cost reduction as mentioned in your article. This situation of fear doesn't allow anyone to take a risk decision, everything with medium risk is avoided by the management and technical people in order to keep his job safe.

      New companies acquired after 3 years, enter in IBM actual culture and the best people leave. The people that don't either has a golden handcuff or want to settle down.

      Ginny had the time to change this, avoiding the EPS target, approaching the employees and try to unite the IBM as one company. I think she missed the time and now everyone act in order to just keep their jobs and every IBM unity fight with each other in order to survive, now cloud/watson is on the buzz inside there and dictate the things.

      Just sad for a company that was know for a corporate culture that respect the individual.

    • IBM's solution to everything is workforce reduction. They wonder why they can't compete, but maybe they should look at the fact that they have slashed the company back to the bone. The whole corporate culture there is in a funk and I don't see Rometty leading them out of it. Until they start focusing on long term strategy that values employees - rather than short term, manufactured financial targets that please shareholders - they will continue to struggle. It's sad - a great company being ruined by bad leadership.
    • These managers rose from the cultures of conference calls and PowerPoint presentations. Managers rate their productivity by counting how many calls they join everyday and how many presentation slides they were able to present. And these are the people who get promoted while hard-working creative engineers gets pushed to the sideline and at the mercy of these non-technical managers (people, project, program) for their PBC ratings. Who will lead IBM to recovery? I can assure you not the more than 13 layers of management.
    • The company I work for outsourced IT support to IBM and they have bungled one project after another. The experience has generated such a backlash that management is now trying to find a face-saving way to reverse course.

      For a company that derives most of its revenue nowadays from "services", their abysmal level of service has left us scratching our heads. Big Blue was a great company a long time ago.

    • As an early middle-aged "obsolete", "unemployable" American programmer who does not work because of the actions of so-called "American" corporations like IBM, firing its "overpaid" American employees while hiring folks from such squalid hovels that folks openly defecate into the water supply, I am ecstatic that Big Blue is going down the toilet!
    • True, when you make layoffs part of your business model and culture, especially needless layoffs for financial positioning, it just creates disaffected employees who always have one foot out the door. You can't grow, especially in the ultra-competitive IT industry where talent is critical, when everyone is sort-of committed, pending a better offer, but not really enthusiastic. All of the high-flyers, Amazon, Google, Apple, etc, have employees who are all-in and have a lot of trust in their company.
    • Well, This article finally elaborates on "Financial Engineering" IBM has gracefully put in place over the years. For instance, Harvard Business Review is somewhat biased and more often than not, enhances IBM performance on ephemeral grounds and never exposes the rotten core of the company.

      I foresaw many comments would be about workforce reduction. And I cannot blame them. After IBM Canada I transferred to one of the Low-Cost centers in Central Europe called IDC as a financial analyst for consolidation and planning. It's a mad house were IBM pays workers €18K a year for jobs that in the US were done at $60K/$70k.

      We know this has been happening in India, but what's striking, is the rate at which IBM opens these Centers. After a while you stare and wonder where is the added value in these maneuvers other than salary saving by moving for example tasks from the Czech Republic to Poland. Is this what IBM has become? Waltzing around on penny saving? For workers in these IDCs there are no benefits, no nothing, zero.

      But what IBM has, is a bunch of under educated, incapable and unmotivated people from all over Europe hired simply because they speak a language needed to support remotely a 3rd party company located abroad.

      When you value your financial RoaMap2015 more than your employees I guess results come with a splash.

      I'd like to see IBM with a PeopleMap2020 because the only Cloud Ginni has in front of her eyes.

    • Cloud is as big as distributed computing (aka PCs) was in the 80s. It promises to destroy the high margin piece parts (HW, SW, Services) that is the base of IBM today and replace it will a mostly commodity IT that IBM avoids. If you couple this with their labor arbitrage using cheap foreign labor you have the perfect storm for decay that cannot be hidden by any degree of financial engineering. IBM needs another outsider to change the culture and strategy before its too late again just like in 1993; sorry Ginni pull the golden D ring on that parachute soon please.
    • IBM truly lives up to its name now — my perception of the company is that it's an International Business Machine that goes to the ends of the earth to hire labor at the cheapest possible price to get the job done. While this might be laudable in a pure economic sense, it also has the effect of absolving US companies from need to, well, 'Buying American'.
    • Great article. I spent a career there until recently. It was increasingly hard to watch the idiots running the place, as they tore apart a great company. And please — elitists like Rometty should shut up about "change" and "transformation." The only thing that changes for her ilk are the tail numbers on their private jets. They spend their careers now getting rich on stock options so they can insulate themselves against the type of changes they are wreaking on thousands of blue-collar employees.
    • Bruce, agree 100%, I too spent a career there, left a few years ago. Was always in the technical ranks, what I noticed more and more over time was how management so consistently dismissed the merits of technical 'expertise' in favor of their chosen path to the lowest labor price point. This fact alone probably spells eventual doom to Services as savvy clients inevitably pick up on 'lack of skill' fairly quickly.
  • Business Insider:

    IBM CEO Ginni Rometty Is A Year Away From Delivering On A Plan That Has Tied Her Hands For Years. By Julie Bort. Excerpts: There's a lot of hand-wringing going on about the fate of IBM, and its downward spiraling revenues.

    CEO Ginni Rometty took the helm at the start of 2012 and she's been hamstrung ever since by a promise from her predecessor, Sam Palmisano, made in another day and age: In 2010, Palmisano vowed to grow profits to $20 earnings per share by 2015. ...

    Between then and now, IBM's falling revenues have led to mass layoffs and the sale of entire businesses. Employees have come up with their own disrespectful nickname for the the 2015 Road Map. They call it "Roadkill 2015." ...

    Palmisano all but dismissed cloud computing during IBM's investor's day in 2010, saying, "Enterprise will have its own unique model. You can't do what we're doing in a cloud."

    Flash forward to 2014 and cloud computing tech has matured, the risks are lower and there are options for running every kind of software in the cloud, including Oracle databases and SAP financial software. ...

    But Rometty has also firmly stuck with the promise to deliver $20 EPS by 2015, a decision that increasing numbers of skeptics question. Summers writes:

    To make earnings rise while revenue is falling, Rometty has cut costs, sold business lines, fired workers, figured out ways to lower IBM’s tax rate, bought back shares, and taken on debt. Of the 25 analysts tracked by Bloomberg, nine predict that IBM will indeed hit the $20 target. The question is what type of company Rometty will have left when she gets there.
  • Seeking Alpha:

    IBM On Acquisition Spree. By Sramana Mitra. Excerpts: According to Gartner's latest report on Global IT spending, economic recovery across the world is helping improve worldwide IT spending which is now projected to grow 3.2% this year to $3.8 trillion. Gartner expects a significant recovery in the Devices Market as global spending will grow 4.4% to $689 billion compared with a 1.4% decline reported a year ago. Similarly spending on Data Center Services is expected to improve 2.3% to $143 billion compared with the 0.2% decline a year ago and spending on Telecom Services will improve 1.3% to $1.66 billion from the 0.5% decline last year. The Enterprise Software market will see the strongest growth at 6.9% to $320 billion followed by a 4.6% improvement in IT Services spending growing to $964 billion.

    Meanwhile, IBM's Q1 revenues fell 3.9% over the year to $22.48 billion, falling short, yet again, of the market's expectations of $22.93 billion. EPS of $2.54 was in line with the Street's projections. ...

    Earlier this month, IBM's supercomputer group, Watson Group, also announced plans to acquire artificial intelligence company, Cognea, for an undisclosed sum. Cognea is known for its improved cognitive computing and conversational artificial intelligence platform that helps provide virtual assistants to users based on their personalities. The customer list includes the likes of NASA and HP (HPQ) to name a few. IBM plans to integrate Cognea's intelligent conversational skills with Watson to deliver a system which has the ability to have real conversations with its users.

  • Seeking Alpha:

    Does IBM CEO Rometty Understand Cloud? By Arne Alsin. Excerpts: In the 2013 letter to shareholders, IBM's CEO changed things up. Rather than lead with a detailed discussion of earnings, Rometty talked about IBM's "bold agenda," which eventually led to this startling claim on page 3, the first mention of cloud:
    "The information technology infrastructure of the world is being transformed by the emergence of cloud computing."

    Wow, okay. Late to the party, but it's a start. AWS, or Amazon Web Services born in 2006, lived under the radar for a few years, then Microsoft and Google, among others, realized the addressable market in the public cloud was vast, and have been pursuing it since 2010.

    "Our cloud foundation at the infrastructure level is SoftLayer, the market's premier public and private cloud environment, with 'bare metal' dedicated servers that provide unmatched computing power."

    SoftLayer is a niche player, to claim anything more is quite a stretch. I know, I know, IBM is going to package it up into something they can sell to enterprise, but CIOs have an abundance of better, cheaper alternatives nowadays. Bare metal is single tenant and single tenant is not true cloud. It's like telling the electric power plant to cordon off a special section just for you. Less efficient and more expensive, it's hard to imagine dedicated hosting becoming a significant percentage of the market.

    Here's what Gartner analyst Lydia Leong said about IBM and SoftLayer:

    IBM seems to be trying to redefine everything that SoftLayer does as cloud, although SoftLayer's business is almost all dedicated hosting (bare metal, sold month-to-month), not cloud IaaS in the usual sense of the word. There's abundant confusion as a result. ...

    Oh look, here is a boast by IBM's CEO about IBM's public cloud:

    "Our public cloud processes 5.5 million client transactions per day."

    If CEO Rometty went fishing for a big number to impress shareholders, she reeled in the wrong fish. To compare: Amazon Web Services "routinely handles more than 500,000 transactions per second and has peaked at close to a million per second." That's according to Jeff Bezos in his annual letter, 2011.

    By the way, while IBM has been busy following roadmaps, Bezos and his merry band of builders have been constructing AWS, a platform model which begets more platform models, which in turn (or so it appears) begets still more. AWS dominates the multi-tenant public cloud with over 80% share and $5 billion in revenue. Here is what has been layered on top of the infrastructure base so far. ...

    Um…the executive team has a plan, right? Despite all of the issues, IBM continues to tap credit markets so it can "return capital to shareholders" in the form of share repurchases. The capital return added incremental debt of $8 billion to the balance sheet last quarter. According to IBM, it has returned $117 billion in capital to shareholders since 2000 in the form of stock repurchases.

    Repurchases function similar to debt: When business value is growing, debt and share repurchases amplify growth. Of course, if business value is contracting, it works the other way. Share repurchases can destroy a lot of shareholder value.

    But Armonk understands all of this, right?

  • CRN (Australia):

    IBM: don't compare SoftLayer to Amazon Web Services. Excerpts: IBM Chairman and CEO Ginni Rometty says IBM's SoftLayer public cloud offering is playing in a different enterprise-grade weight class than the Amazon Web Services Infrastructure-as-a-Service.

    Rometty said in an interview with CNBC Tuesday that IBM is delivering hybrid cloud for enterprises -- a far different market than the public cloud from Amazon Web Services.

    When asked how IBM is differentiated from Amazon Web Services, Rometty said IBM is delivering "cloud for the enterprise" with "good margin" for all its cloud services including Infrastructure-as-a-Service, Platform-as-a-Service, Software-as-a-Service and Process-as-a-Service.

  • Forbes:

    IBM, Softlayer Scores Another Massive Hybrid Cloud Deal. Or Does It? By Ben Kepes. Excerpts: An interesting development over this time has been the rise of traditional vendors such as IBM who, thanks to their acquisition of cloud platform Softlayer, is well positioned to deliver on this hybrid opportunity. The latest example of this is a deal being announced today whereby US energy provider NiSource is committing to a seven-year outsourcing deal worth some $600M. The deal sees NiSource transform its traditional IT infrastructure to include a hybrid environment covering both public and private cloud.

    Anyway, back to the announcement, it’s a strong story but, as always, the details are somewhat murky. According to the release, the agreement sees IBM “continue providing a broad range of IT services, including the creation and management of a hybrid cloud computing environment”. Notice the language there – the deal “includes” the cloud components. Of course the natural analysis is that cloud is in fact a very small part of this deal and the majority of the spend covers traditional products and services. I reached out to IBM for more detail on the specifics but at press time had no response. This post will be updated if the company provides more clarity.

    Update from IBM. The company responded to my question by saying that “the purpose of the deal is to help them move to hybrid cloud within an outsourcing services agreement. We don’t break down exactly how the $$ will be recorded but the impetus was transition to cloud.” In other words, we’re not going to see any greater clarity here.

    Interestingly NiSource is an existing IBM customer and this $600M figure is broadly the same as the prior agreement between the two companies – further muddying the significance of the deal. Of course IBM is dedicating the expected number of PR cycles to this announcement and is proudly talking about a recent IDC study that ranked IBM as #1 among enterprises for Infrastructure as a Service. It also, tellingly, points out that in the IDC study arch-rival AWS came a paltry 7th.

  • The Economic Times (India):

    India key in IBM revival, says CEO Virginia M Rometty to staff. By Pankaj Mishra. Excerpts: Virginia Marie "Ginni" Rometty, IBM's chief executive officer, conveyed a message of tough love to employees in India during a low profile visit to Bangalore last week. Rometty, 56, who is trying to win over Wall Street's skeptical investors about her efforts to reinvigorate the $100-billion company, spoke about India's rising importance as she implements her gameplan, employees who heard her said.

    "If you are uncomfortable with what's going on now in IBM, that's how I want you to stay. That's the only way we will transform this company together," an employee recounted her as saying.

    Rometty, who travelled in a private jet to India's technology capital, had dinner with a select group of women executives of IBM India on May 6. The next day she addressed a town hall meeting with the top 100 employees of IBM in India. (Editor's note: You mean, Ginny didn't fly coach on a commercial airline to India like her underlings are required to do?)

    Rometty shared plans to set up a new cloud data centre in Bangalore as part of the company's multi-billion-dollar push to fend off rivals Amazon and Google. The new centre will be part of Softlayer, the cloud storage company IBM acquired for $2 billion earlier this year.

  • Forbes:

    Why You Don't Want to Own IBM. By Adam Hartung. Excerpts: IBM leadership appears to have lost its way. This revenue weakness roughly coincides with the tenure of CEO Virginia Rometty. And in interviews she increasingly is defending her leadership, and promising that a revenue turnaround will soon be happening. That it hasn’t, despite a raft of substantial acquisitions, indicates that the revenue growth problems are a lot deeper than she indicates.

    CEO Rometty uses high-brow language to describe the growth problem, calling herself a company steward who is thinking long-term. But as the famous economist John Maynard Keynes pointed out in 1923, “in the long run we are all dead.” ...

    CEO Rometty may take pride in her positive earnings management. But we all know that came from large divestitures of the China business, and selling the PC and server business to Lenovo. As well as significant employee layoffs. All of which had short-term earnings benefits at the expense of long-term revenue growth. Literally $6B of revenues have been sold off just during her leadership.

    Which in and of itself might be OK – if there was something to replace those lost sales. Even if they didn’t have any profits – because at least we have faith in Amazon creating future profits as revenues zoom. But IBM was far late to the cloud, and hasn’t shown it has anything to leapfrog industry leaders.

    The REAL problems – R&D cuts, higher debt, massive stock buybacks. ...

    And the Post labels as the “poster child” for this leveraged stock-propping behavior...IBM.

    “in the first quarter bought back more than $8 billion of its own stock, almost all of it paid for by borrowing. By reducing the number of outstanding shares, IBM has been able to maintain its earnings per share and prop up its stock price even as sales and operating profits fall.

    The result: What was once the bluest of blue-chip companies now has a debt-to-equity ratio that is the highest in its history. As Zero Hedge put it, IBM has embarked on a strategy to “postpone the day of income statement reckoning by unleashing record amounts of debt on what was once upon a time a pristine balance sheet.”

    In the case of IBM, looking beyond the short-term trees at the long-term forest should give investors little faith in the CEO or the company’s future growth prospects. Much is being hidden in the morass of financial machinations surrounding acquisitions, divestitures, debt assumption and stock buybacks. Meanwhile, revenues are declining, and investments in R&D are falling. This cannot bode well for the company’s long-term investor prospects, regardless of the well scripted talking points offered last week.

  • WCAX-TV (Burlington, Vermont):

    New numbers show what's at stake if IBM sells Vt. plant. By Darren Perron. Excerpts: "There is no employer that's ever matched what IBM has done. IBM has basically opened the world to Vermont and Vermont to the world," said Frank Cioffi, the president of the Greater Burlington Industrial Corporation.

    News that IBM may sell its chipmaking operations, including the Essex Junction plant, prompted the GBIC to dig deep into Big Blue's economic impact in Vermont.

    "IBM has been an incredible economic contributor," Cioffi said.

    GBIC estimates IBM employs about 4,000 people in Vermont. Its study shows that 10,000 families are directly or indirectly supported by IBM. The analysis reveals the plant injects $1 billion into the overall Vermont economy. Losing that, says Cioffi, would set Vermont's economy into a tailspin.

    "No economy could sustain the loss of 4,000 jobs," Cioffi said. "It would be catastrophic. It would shock us into a real estate recession and an economic recession worse than the one we are trying to get out of now."

  • The Channel Register:

    Waterfront flats plan for IBM's UK HQ as housing market goes bananas. Big margins lurking near Big Blue as ever. By Simon Sharwood. Excerpts: Office space leased by IBM at its UK headquarters could become waterfront apartments – if a planning application submitted to Portsmouth City Council is approved.

    The North Harbour Unit Trust, which filed the paperwork, wants a ”partial change of use to 108 residential units" at Big Blue's base in the Lakeside development on Western Road in the seaside city.

    One of the documents points out that IBM's decreasing need for office space means it moved out of some offices in 2006. Those spaces were chopped up and leased to others.

  • The Register:

    HP says 'turnaround remains on track', cuts thousands of workers. 11,000 to 16,000 more jobs to go at Whitman's IT dream factory. By Jack Clark. Excerpts: "With the first half of our fiscal year completed, I'm pleased to report that HP's turnaround remains on track," said HP's chief Meg Whitman in a canned statement. "With each passing quarter, HP is improving its systems, structures and core go-to-market capabilities. We’re gradually shaping HP into a more nimble, lower-cost, more customer- and partner-centric company that can successfully compete across a rapidly changing IT landscape."

    One method of helping it compete is layoffs, and HP announced that it will cut a further 11,000 to 16,000 staff from its workforce on top of the 34,000 layoffs it had already anticipated.

  • Glassdoor IBM reviews. Selected reviews follow:
    • “Skip a sales role”

      Anonymous Employee (Current Employee). I have been working at IBM full-time for more than 5 years.

      Pros: Benefits, ability to work from home.

      Cons: Where to start? No sales culture, too many meetings, no focus on the customer and clueless first line management.

      Advice to Senior Management: None, they wouldn't listen anyway,

    • “So So”

      Anonymous Employee (Current Employee).

      Pros: Good company for starters. Full corporate and bureaucracy experience. Multicultural environment, casual work environment and mostly young staff.

      Cons: No benefits for the employees. Salary increase happens only on quitting threats if you are a hard worker. Low education budget. Inside communication not a strong point.

      Advice to Senior Management: They are not interested.

    • “The Abyss.”

      Manufacturing (Former Employee), Essex Junction, VT. I worked at IBM as an intern for more than 3 years.

      Pros: The paycheck. And the exercise. There were also a few people who were decent and amusing. Not much else.

      Cons: The big challenge was to hold onto my sanity and to keep my sense of equilibrium. This place is a concentrated zone of egghead jerks, patronizing phonies, and assorted wackos. It's Cyborg America at its most grotesque.

      Advice to Senior Management: At least... 1) Introduce variety to alleviate the terrible effects of endless repetition. 2) Teach the importance of positive reinforcement. 3) Teach better conflict-resolution skills. If any company needs a total psychological overhaul, it's IBM.

    • “Senior Manager in Asia Pacific”

      Anonymous Employee (Current Employee), Singapore (Singapore). I have been working at IBM full-time for more than 5 years.

      Pros: Great talent and solutions, and people that want to make a difference.

      Cons: Absolutely lost. No strategy. Very poor execution.

      Advice to Senior Management: Make a plan and stick to it. There are mid-level managers and senior managers that need to be let go. Everyone knows it, but key execs won't pull the trigger

    • “Untrustworthy & Uncaring”

      Project Manager (Former Employee), Sacramento, CA. I worked at IBM as a contractor for less than a year.

      Pros: None that I can think of.

      Cons: IBM's descent into mediocrity continues. I was hired as a subcontractor for an engagement as a PM. IBM asked me for a one-year commitment which I provided, and I turned down other opportunities to take on the work. Two months later, IBM announces a "restructuring" in which they got rid of third-party contractors. They refused to release me from my non-compete clause but offered to send in an IBM employee from India to fill the role. The client was livid — this occurred in the middle of a system cut-over. Do not trust this company — they have an attitude that IBM is a leading company, but this is far from the truth.

      Advice to Senior Management: None. Good riddance.

    • “Nice but pointless”

      IT Architect (Current Employee), Vác (Hungary). I have been working at IBM full-time for more than 3 years. Pros: Nice people; can work from home (mostly); loads to learn if someone wants to. Cons: Ridiculous salary, no bonus, no pay raise, loads of work, continuous fear of downsizing. Advice to Senior Management: Feels like working on the sinking Titanic. You may have your dream job, but you will go down to the icy water with it unless you are thrown out of the ship before.
    • “Lack of benefits”

      SAP FI/CO Consultant (Current Employee), Baton Rouge, LA. I have been working at IBM full-time for more than a year.

      Pros: Great training opportunity within the company if there is a need for the skills. Training for college grads is top notch for a short-term employment opportunity.

      Cons: Lack of benefits that are meaningful at lower bands. In fact, lower bands are in general paid worse than industry standards. Management levels seem to be well taken care of except for the amount of hours required is far more than the norm. A general lack of hustle across the entire company because there is no direct rewards for more work.

    • “32 years Software Engineer”

      Senior Software Engineer (Current Employee), Poughkeepsie, NY. I have been working at IBM full-time for more than 10 years.

      Pros: Work from home opportunities and flexible schedule for programmers. Fortune 1000 companies run IBM computers. The world as we know it could not exist without the mainframe.

      Cons: Company is driven solely by Earnings Per Share. The business is a financial house of cards. Employees are considered a commodity and the company is focused on replacing expensive senior skills with inexpensive entry-level skills. Major shift of employees from US to overseas since 2000. US headcount has decreased every year and is now 50% of what it was in 2000. US employees are now estimated at less than 20% of the company in 2013. US employees continue to be laid off and furloughed every year even with $99.7B Revenue and $16.4B Income in 2013. There is no job security and the official policy is average pay. Most US employees have had no raise of any sort in 2-3 years.

      Advice to Senior Management: Give up the absurd 20xx Road Maps and look to invest in the future. Remember that employees are your most valuable asset, not a commodity. "We have always believed in IBM that our most important asset is our people and so we have followed a basic principle of trying to hire, train and keep the best possible people." TJ Watson, Jr. Unfortunately this is no longer true.

    • “It was the best of times...it was the worst of times...”

      Senior Managing Consultant (Current Employee), Hartford, CT. I have been working at IBM full-time for more than 5 years.

      Pros: Solid structure, assistance with everything from personal issues, to taxes/finances, to you name it. Big dog on the porch. IBM's RAs, ("Resource Actions"...otherwise known as firing frenzies or layoff cycles) do, at some times, get rid of the ash and trash. And that's a good thing. Good benefits. Casual environment. Fairly flexible in terms of personal needs (time off, work from home, etc.)

      Cons: Easy to get lost. Not supportive of the individual consultant all that much. Tough to establish a personal network...took me well into my 5th year here to really establish a network of associate partners and partners that I could really trust...and were genuinely helpful...and seemed as if they were honestly looking out for my best interests. Still feel like a 'contractor' to IBM, even though I am a full time employee.

      Waaaay too many 'offshore resources' here in the USA.

      Have received various bonuses since my arrival her 6 years ago, but year to year, I've received ZERO base salary increase.

      Internal managers (the folks who rate you annually) seem randomly selected (at best), and most have zero leadership skills.

      Pushing too much infrastructure off-shore to folks who struggle with common business practices (and the English language.)

    • “Interesting people and work, but employees are not valued”

      , Senior Information Specialist (Former Employee). I worked at IBM full-time for more than 5 years.

      Pros: IBM has lots of resources to devote to any problem, and there are still a lot of really talented folks working here. Flexible work options are great, if you don't let it take over your life.

      Cons: Corporate culture is pretty bad — employees and long term planning definitely take a back seat to quarterly earnings and the immediate term. Work-life balance can be hard to maintain.

    • “Not What The Company Use to Be”

      Storage Engineer (Former Employee), Boulder, CO. I worked at IBM as a contractor for more than a year. Pros: Adequate pay. Technology up to date. Improved office environment. Cons: Leadership, compensation, lack of training, constantly changing objectives. Advice to Senior Management: Avoid designing teams to be undersized to their workload and laying off already overloaded team members to make quarterly targets.
    • “IBM's greatest talent lies in squeezing employees”

      Senior Engineer (Current Employee), Poughkeepsie, NY. I have been working at IBM full-time for more than 10 years.

      Pros: One single pro: The work is wonderfully interesting and co-workers are, for the most part, talented.

      Cons: Where to start... The sword of Damocles is hanging over your head on a daily basis, with layoffs on what seems like a monthly basis. Compensation is sub-par. The entire intent of the HR group is to squeeze salaries and benefits until retention becomes a real issue, then back off for a bit, then rinse/repeat. Development teams are about 80% staffed, but that's par for the course in the entire industry.

    • “In the beginning it was a great company to work for.”

      Anonymous Employee (Former Employee). I worked at IBM full-time for more than 10 years.

      Pros: Working with very advanced technology was rewarding.

      Cons: Upper level management bases all their decisions on only one concern: Earnings per share. The road map to the future is all about earnings per share. If a division doesn't meet earnings per share, people get cut. Appraisal system is very arbitrary. Certain percentage of people must get a "3" each year. Managers have to scheme so that a "3" appraisal is rotated among different employees. If you get a "3" and the division does bad, you are gone.

      Advice to Senior Management: Remove the earnings per share roadmap.

  • Slate:

    Tech Company Feeder Schools. (Graphic). Excerpts:

    Microsoft (7,300 employees from top 5 "donating" universities):

    • University of Washington
    • University of Washington Foster School of Business
    • Washington State
    • University of Waterloo (Canada)
    • Western Washington University

    IBM (7,300 employees from top 5 "donating" universities):

    • Bangalore University (India)
    • Visvesvaraya Technological University (India)
    • University of Pune (India)
    • Osmania University (India)
    • Jawaharlal Nehru Technological University (India)

    Google (5,318 employees from top 5 "donating"):

    • Stanford
    • UC Berkeley
    • Carnegie Mellon
    • UCLA
    • MIT

    Apple (5,318 employees from top 5 "donating"):

    • Stanford
    • UC Berkeley
    • San Jose State
    • University of Texas, Austin
    • Cal Poly State University

    Yahoo! (1,073 employees from top 5 "donating"):

    • Stanford
    • UC Berkeley
    • San Jose State
    • UCLA
    • USC

    FaceBook (831 employees from top 5 "donating"):

    • Stanford
    • UC Berkeley
    • Carnegie Mellon
    • University of Texas, Austin
    • University of Waterloo (Canada)

    Twitter (380 employees from top 5 "donating"):

    • Stanford
    • UC Berkeley
    • UCLA
    • MIT
    • UC Davis
  • Glassdoor IBM Canada reviews
  • Los Angeles Times:

    The Supreme Court saddles up for an attack on retiree benefits. By Michael Hiltzik. Excerpts: In an era in which corporations have been trying every possible stratagem to cut employee benefits, a new threat to retirement benefits has just arisen.

    The source of the threat is the Supreme Court, which earlier this month agreed to rule on when or whether employers can unilaterally end retiree healthcare benefits, even when they're negotiated as part of a union contract. ...

    ERISA doesn't cover health benefits, however. As the Labor Department warns, "when employers do offer retiree health benefits, nothing in federal law prevents them from cutting or eliminating those benefits--unless they have made a specific promise to maintain the benefits."

    The question raised in M&G Polymers v. Tackett is how specific that promise must be.

  • Alliance for Retired Americans Friday Alert. This week's topics include:
    • Quality Home Care and Public Sector Unions at Risk in Supreme Court Case
    • More than 13,600 Activists Sign Petition Objecting to Sen. Rubio’s Retirement Plan
    • Resolutions Passed at Las Vegas Convention Now Online
    • Hearings Examine Strengthening Social Security, Medicare’s “Observation Status”
    • Anti-Worker Bills Die in Missouri Legislature
    • Fiesta Joins Coalition of Black Trade Unionists Convention in Atlanta
New on the Alliance@IBM Site

Job Cut Reports

  • Comment 05/19/14:

    This statement from Ginni is disturbing and disheartening:
    "If you are uncomfortable with what's going on now in IBM, that's how I want you to stay."

    This is not how you motivate people. It reminds me of what John Akers said in his desperate last months:

    "I don't want to see people standing around the water cooler."

    You know what, Ginni, I'd like to provide value to the IBM company, but you won't let me. You're too busy moving work overseas where you can threaten and abuse employees without constraints. So, you say if I'm not working on cloud, data, or engagement, I'm working on the wrong things? Well, please help me work on the right things me by making it easier to transfer out of this cesspool of GBS IGA despair. -Anon-

  • Comment 05/19/14:

    IBM is asking for 250 people to take a bus every Monday to GF from EF. Work all week and return Friday, for 10 months! All just to get the tax break from the state. Talk about a "work-life" balance plan. I hope all the EF people have the guts to say NO to this crap. -anon-
  • Comment 05/19/14:

    For those of you contemplating or chosen to work in the GF Malta plant, you will be right at home as though it were IBM EF itself. Read the Glassdoor reviews on GF especially those specific to Malta. Don't expect things to get better, but continue to expect more lousy treatment. Wow, I am so glad I'm not in the technology industry anymore. I can't imagine how many of you sleep well at night wondering when the ax will fall. -*Glad_to_be_Gone_too*-
  • Comment 05/20/14:

    There is zero chance of this company turning around with the amount of unhappy people in the company. It just is not enough to say "you are lucky enough to have a job". Works in the third world; not the first world. - Anon-
  • Comment 05/21/14:

    I was a dues paying member of the Alliance. I paid because it provides tremendous value and insight into an environment where managers exploit employees at _ALL_ levels. I've moved to a new employer, and it's a shame how one discovers that respect, compensation, and benefits are much better on the outside. I encourage all of you to interview and apply elsewhere. You owe it to yourself, your family, and your career. Best of luck to all those who remain behind and ignore the warnings. -Me-
  • Comment 05/22/14:

    IBM announced that on July 1st 2014 Global Process Services (GPS) will integrate with Global Business Services (GBS) group. Expect lots of reorganizational synergies and redundancies (i.e. RAs). -SlimPickens-
  • Comment 05/22/14:

    Just watched a new mandatory internal Steve Mills video that kept emphasizing (quoted ver batim) "one of the things that I've been pressing Bob on quite a bit is the idea that our technical people can effectively provide much of the coverage that our sales specialists are called upon to provide". He said we don't have to keep going in "two-by-two" with a sales and technical person; we need to get down to a "one" model (as if we don't always go in there with the "IBM Clown Car" of more like 12).

    Sounds like a major cut is looming in the area of sales. Resonates with what was said earlier about them wanting to fire mass sales people immediately around impact (folks who haven't made their numbers). I'm technical; don't know how that would work since many of us just don't have the polish that sales folks do. He said he wanted tech folks to start dedicating one day a week to call on accounts that have no IBM stuff currently. -SalesYouAreOuttaHere-

  • Comment 05/23/14:

    @SalesYouAreOuttaHere, Interesting. I wonder how Mills and LeBlanc take into consideration the ongoing crisis meetings because of product quality, product delivery slippage, inability to deliver Level 2 service because the technical skills required have been RA'd or leaving on their own. Are they so clueless? remote? or just acting as if nothing is wrong? -Anon-
  • Comment 05/23/14:

    If you have to try to sell of the blood (the chips) to Global Foundries ("GF") what makes up the heart (the mainframe) of a big computing based company that IBM is not organically sound. This doesn't sound healthy going forward as a mainframe company which IBM still essentially is. The mainframe is what makes IBM unique no matter how IBM wants to portray itself as as a services company which it is failing at. -anonymous-
  • Comment 05/23/14:

    I held out for what I'm worth after being shown the door last summer, now working in a fantastic environment. The futility of trying to champion innovation in a shrine to cluelessness is a distant memory.

    So sad to hear of the demise of EFK, where I joined IBM in an extremely cold stretch of winter in early 1985, my first two weeks in a hotel near the corner of 52 and 376. Fishkill was some 15,000 employees strong. I worked in the 300 Building, seemingly a city unto itself. Surely the construction of the 600 complex signaled guaranteed employment for longer than I could possibly live.

    But slowly it all slipped away, one incompetent clown promoted into management after another. A decade later, process and obedience trumped innovation and respect, the writing dripping off the walls. Another decade and those of us with half a brain stood like deer in headlights, in a perpetual state of not sure whether to laugh or to cry. Goodbye, blue-blooded dream of an IBM of those days! -barely remember the place-

  • Comment 05/23/14:

    Whenever I read about some Wall Street analyst casting doubts on IBM's ability to survive or another analyst criticizing the strategies being followed by IBM executives, I get a perverse feeling of joy. This would be understandable if I were a competitor but I AM A CURRENT IBM EMPLOYEE! I hope I am alone in feeling this way. If not, what does that say about IBM when its OWN employees agree more with its detractors than its executives? -ReportReader-
  • Comment 05/23/14:

    To -SlimPickens-, Maybe GPS customers have gotten fed up with IBM doing unto them as IBM does to itself (GBS/IGA)? As a former colleague once said with apologies to Ford, "IGS, Quality is job None". -anonymous-
  • Comment 05/24/14:

    I finally quit IBM in January after 8 years. However for 4 of those years I was on mobilization orders with the US Army — some stateside & some deployed overseas.

    IBM was kind enough to offer a pay differential — the difference between my salary & my military base pay. Once I came back from my deployment to Afghanistan, IBM (in it's infinite wisdom) decided that I owed them over $38k in overpayments. Of course they are hopelessly wrong but will they admit that? Nope! Will they come to the table and discuss it? Nope!

    I am giving them one more chance to recognize their mistakes on a phone call. After that I just may have to approach the media as well as my military employer representative to put additional outside pressure on them. Just sick & wrong of IBM to err this boldly while a service member is called to active duty! -Screwed_over_Soldier-

    Alliance reply: We are sorry for the way IBM disrespects you and your service to our country. Thank you for your service.

    Depending on the state you live in, your representative *may* be able to help you "persuade" IBM to drop their pursuit of the $38k.

    Notwithstanding the fact that you were an "At Will Employee" at IBM and you had no collective bargaining agreement to protect your rights at work. Please contact us at ibmunionalliance@gmail.com for more information.

  • Comment 05/24/14:

    For those of you leaving IBM. Do not disclose where you're going, they'll try to pressure you to find out but hold your ground. There have been two instances I'm aware of where management threatened to walk the employee our the door if they didn't disclose where they were going. Hold your ground, it's your right to privacy. -sad_in_RTP-

IBM Retiree Issues Comments

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.