I am sick of seeing IBM's build a smarter planet ads. IBM should think about re-building a smarter USA. Also, they are building a cheaper company by dropping US employees and replacing them with contractors from India. Real Smart! Who will buy your products or services in the US when no one has a job....
By selling off its PC business IBM is missing out on significant revenue, which will put it at a disadvantage to Hewlett-Packard (HPQ) which has the potential to grow substantially as it solidifies its number one position in the PC market without the IBM name present.
That's a ridiculous statement - the shareholders were rewarded with increased profitability what IBM needs to do is sell off the low end X series business to Lenovo and concentrate on high end servers.
Agreed (with the comment above, NOT the initial analysis). IBM already has enough criticism for being big and bloated. In any case, the deal is done.IBM has a stronghold on the mainframe market (a New York Times article says it is trying to "keep its tight control". Note the word keep. It is strongly situated for the mainframe market and it is trying to streamline. At this moment, with the competition raised up in the consumer electronics market with low margins (and some analysts claiming that "net-books" are cannibalizing the high-end market), it does not seem a bad position for IBM to have sold the PC group. I quote Techrepublic here "[...] the deal [between IBM and Lenovo] will let IBM continue its shift from selling so-called commodity products to selling services, software and high-end computers. [...] IBM makes little profit from PCs and often loses money." It appears that selling PC Group was a part of a larger restructuring that IBM seems to need to become a bit nimble (please don't laugh at me having 'IBM' and 'nimble' in the same sentence).
IBM has a 'not-built-here' arrogance which limits the effectivness of technology OEM relations outside of their core expertise of m/f nd AS400 technologies.
Case in point, the recent purchase of XIV was a brilliant proactive move against EMC and other tier one competitors but the existing storage sales staff is intimdated and sabataging current opportunities, pushing less-competitive storage hardware solutions because they're built by IBM.
As the broader U.S. economy plods along sluggishly and the dollar has sunk, American multi-national companies like IBM (NYSE: IBM) and Accenture (NYSE: ACN) have seen international markets drive their growth.
However, as the combination of weakening European economies and the strengthening dollar eliminate this growth source, companies will have a difficult time meeting analysts estimates for 2009. For example…
For IBM, The company has also benefited from the weakening dollar and stronger euro. Its European business grew at 17.9% in dollar terms, but only 6% in constant currency.
IBM will see the growth contribution from these regions more than cut in half in the coming quarters at a time where the domestic business is continuing to languish.
In short, 2009 has the potential to be a tough year for multinationals. If the Euro/Dollar exchange rate holds constant at 1.545 (shown in the chart below), the year-over-year growth of the euro drops to 3.2% in the first quarter of 2009.
Fourth quarter revenues, 2007, were up 10%, but 6% of that growth was due to currency fluctuations that may or may not reverse next year. If I want to bet on a rising Euro I think I’ll play the currency rather than IBM.
Worse, though short-term global services contracts were up 8%, total contract signings declined 13% compared to the prior year quarter. That means a big drop (25%) in long-term signings, which likely explains why analyst estimates for 2009 only rose by about a nickel after the 2008 guidance hike.
The IT industry is fast-paced and due to IBM's size it is hard for the company to completely adjust to major market changes. Plus, IBM's large investment in India will fail to produce results as the country is struggling to grow due to its poor infrastructure.
what would you do if you are heading IBM. Would you still keep expensive employees when the same work can be done by Indian in a better way and with cheaper rates. IBM is increasing shareholder value by bringing its costs down.
So be rational before mincing anything.