Looking like the days of Arvind fooling Wall Street with his financial engineering shenanigans is coming to an end. Heading right back to $160, where it was before he embarked on his "RA everyone, move everything to India, stop investing in everything" strategy.
22 replies (most recent on top)
@Rm. Yes it’s easy to put Consulting in the cross hairs, BUT they have brought that on themselves. Consulting as an industry has changed. When Gerstner decided to move into consulting, it primarily provided value for knowledge. Today only about 20% of any consulting company provides value for knowledge. 80% is just perform (coding, repeatable tasks, back office, etc etc). It’s the relentless march of generate revenue even if it’s not profitable and hope to outlast your competitors. Yep 80% has moved to a commodity service organization, not contributing to generating free cash flow but just supporting the employee base. That 80% is not being innovative, but rather just treading water. It’s time to take a hard look at consulting and get back to its original roots (delivering value for knowledge)
Infrastructure suffers from several “misses” with Cloud leading the pack. BUT Infrastructure has an historic innovation get out of jail investment and that is its chip design toolset. IBM is a VERY VERY good chip designer, and their Telum and Spyro accelerator prove it. IBM has put all of their chip design efforts into the “Enterprise” basket (farming the install base) and you will gradually see all of the products offered thru the channel get partnered off as the channel is competing in a growing commoditized marketplace
When it comes to SW, you have hit the nail on the head. IBM has decided to buy innovation and is willing to over pay for it as long as it gets the distribution rights for the acquired SW.
NET NET. IBM has shrank its SW development to a skeleton crew, IBM has shrank its Infrastructure to be centered on Enterprise only, AND IBM now needs to focus on shrinking Consulting back to where it provides free cash flow to IBM and outsource the rest.
It's easy to bag on Consulting, but what innovation has HW or SW delivered over the last decade? Mainframe has a captive audience and a stable cycle, but what new logos have been acquired? None. SW has mainly grown through acquisition - Red Hat, Hashi, Confluent, etc., zero organic growth. Virtually all of the reported "growth" numbers are just ELA renewals tied to Z upgrades. IBM missed cloud, is in last place (if any place at all) in AI, and quantum is mostly hype. The lack of innovation is IBM-wide, not confined to any particular unit.
@Kt. OK so please name the innovation at scale that IBM is uniquely delivering vs any of its competitors. IBM has invested billions over 15 years in Consulting and it still doesn’t move the free cash flow or profit needle. NET NET why do I need it vs scaling it down to the parts that deliver real value for money, and outsource everything else
That is a fairer critique than the usual rage-posting, but it still misses what IBM Consulting is actually supposed to do: it is not IBM Research, Red Hat, Z, Software, or AI product engineering. Its job is to turn IBM’s technology into real enterprise outcomes. The innovation is helping major clients modernize legacy systems, integrate hybrid cloud, deploy AI responsibly, automate workflows, secure infrastructure, and make complex systems actually work inside regulated Fortune 500 environments. Arvind inherited real problems, no question, but he has also refocused IBM around hybrid cloud, AI, automation, Red Hat, software, and enterprise infrastructure. You can argue execution needs to improve, but saying Consulting delivers no innovation ignores how innovation actually reaches clients at scale.
@Js. You say IBM is still innovating around consulting. PLEASE name it. I would love to hear what innovation is coming out of the division that has 2/3’rds of the employees and continues to fail to contribute to cash flow or to even grow above inflation.
Gerstner brought IBM to the consulting party when they were few competitors and a great need as year 2000 was approaching and most of the major Fortune 500 were restructuring their ERP and CRM systems (yep they needed help, and consulting filled the void). Sam doubled down on consulting ignoring all of the other divisions of IBM. Consulting became stale and the ignored divisions became quasi irrelevant vs competitors. This was a major mistake, and cost IBM innovation in the HW and SW departments. Ginni then doubled down again on Consulting while continuing to ignore everything else, which was a disaster for IBM (just look at GTS under her). Consulting became bloated, while every competitor in HW and SW surpassed IBM. By the time AK arrived on the scene he inherited an outdated and bloated consulting division along with an ignored HW and SW division. Has he turned the ship? Absolutely. BUT the damage done was far more extensive then his improvements, and he needs to double down on restructuring Consulting along with investing in HW and SW innovation. Ginni has tied his hands in that IBM had to pick a HW winner (Enterprise) and abandon everything else (scaleout). Ginni also left him behind the eightball in that the labs within IBM were shelf bare and as such he has had to BUY SW innovation. So I again ask you PLEASE tell me what innovation Consulting is delivering
IBM is in strong financial shape, and Arvind’s commitment to innovation proves the company is not standing still. Hybrid cloud, enterprise AI, automation, mainframe modernization, and consulting are not “fancy talk.” They are the areas where serious enterprise clients are spending money. You can dislike leadership all you want, but IBM is still investing, still innovating, still generating cash, and still competing. That is not a company being “destroyed.” That is a company evolving.
@e7 Tell us how it's been different Sam, Ginni, Arvind. Sam said cloud but ra'd to show numbers, Ginni moved up after being groomed by Sam. She talked cloud but had no clue so brought softlayer. Who uses softlayer now? Avind comes in after being groomed by Ginni, and buys companies still playing catch up. All from the same tree
@bb IBM sold it's call center BPO unit to Synnex and their mortgage servicing unit Seterus to another buyer. They probably should have included the AMS business in the Kyndryl spinoff. These outsourcing businesses that you call "perform" are like hydras that keep regrowing every time they get cut off. As much as Ginni derided them as "empty calories", which they are, they sure come in handy when IBM has a revenue shortfall because they allow IBM to "buy revenue" to report to the street even though it's all just passthrough.
That is a very convenient slogan, but it is not an argument. IBM has gone through multiple eras, divestitures, acquisitions, restructurings, cloud shifts, mainframe cycles, consulting changes, and now AI. Pretending Sam, Ginni, and Arvind all ran the same “playbook” is lazy history.
IBM playbook been the same from Sam, to Ginni, to Alvind. Talk fancy about numbers but in truth they kept getting more and more in dept , destroying the companies they brought
The problem child is Consulting. Until IBM addresses their fundamental structural issues the stock will underperform. Of the three divisions IBM has, only consulting comes up short on free cash flow generation and growth. It’s been a problem child for 5 years + and continues to tell us how great they are going to be sometime in the future. TImes up
The fundamental issue is the entire consulting industry has changed over the last 5-10 years. It has morphed into a commodity offshore perform organization handling mostly repeatable tasks and an actual consulting division handling unique knowledge transfer.
The commodity offshore perform organization (approx 70-80 % of the head count) has become unsustainable. It continues to grow, but provides no free cash flow or profit to the bottom line. As Ginni said empty calories and as such it needs to be spun off or partnered out.
The unique knowledge transfer portion of Consulting (approx 20-30% of the head count) needs to be encouraged. It has the ability to charge rates that generate free cash flow and profit. The other important aspect of it, is it fits IBM’s narrative for having a consulting division, and our enterprise customers request for value.
So IBM management, it’s time to deal with the commodity portion of Consulting. Empty calories don’t feed the bulldog
I bet the board is in an absolute panic tight now and if it drops below $200 will force AK into retirement.
The hate spews thick like lava. Mr Gerstner is not here to defend himself. So I will
The Only reason why there is an IBM and an IBM messageboard is because of Mr Gerstner singlehandedly saving IBM.
They wanted him to break the company up. He made the bold move to say no.
@ag 6 months ago the stock was at $324. Now it's $212. A 35% drop in stock price in 6 months is NOT "part of a normal cycle".
Changes in stock value are part of a normal cycle. IBM is at an inflection point but Arvind, JK, and the rest of our executive team are fully capable of getting through this. IBM will once again be the premier technology company. I recommend reading Who Says Elephants Can't Dance? by Lou Gerstner to see how he transformed IBM.
First. Stop with the spewing of hate. Also, What crime did Arvind Commit? Layoffs are not illegal.
As the stock continues to decline, gotta love the post-Think 2026 cheerleading. Less cheerleading, more innovating please.
Down to 212.35 dollars now. IBM back in the 100s by week's end? Was in 300s months ago.
Long time coming. Chickens are coming home to roost
Red Hat Summit underwhelming keynote might be part of the big drop today
The slimy Indian snake oil salesman should be in jail.
Abraham Lincoln once said "you can fool some of the people some of the time, but not all the people all the time". It's almost as if he had met Arvind or at least conmen like him.