Thread regarding IBM layoffs

There is a reason NewCo is called NewCo because it'll be sold off so why name it. This is all buying time to split business functions off so a clean break can be made!

the selloff of the “old” pension plan

Separate from this (scary but possible) speculation, Is there any concrete information about what happens to the pension plan, especially for the (probably not very many) employees who move to NewCo?

If IBM is going to try and renew itself into a younger, and more nimble organization, they will have to deleverage their balance sheet. Look for the sale of global finance, the selloff of the “old” pension plan, and a rebidding of GTS jobs into Newco. I still expect Power and storage to be sold off for an IP deal as that’s the only way IBM extracts their 20 year investment into those legacy products. IBM will offer up their labs to do future research, and a 10 year contract to purchase those products for their “hybrid” cloud.

There is no “Newco.” Ibm will dissolve most of the labor through systematic layoffs over the course of a year starting immediately. The only thing left to pass to another firm “opportunities for investment” will be ongoing legacy contracts without the overhead which some company like HCL will be glad to take. No one announces a spin off a year in advance, you just do it. IBM purposefully k–led its consulting organization to set the dog free and now massive layoffs will happen sooner than you think. THINK before thanksgiving. By best year, all that will be remaining will be an empty shell called Newco. That’s how they will resolve the problem of “Newco” being underwater from day one. It’s another wind down and pass to HCL. Sorry guys. If your in GTS, it’s over.

IBM would have a very hard time loading newco up with undeserved debt IBM has stated RedHat and Global finance stay with IBM, and at least 65-70% of IBM’s debt resides there. 35% of IBM’s current debt resides in equipping and modernizing data centers for cloud operations (yet another piece IBM wants to keep) so you have to pay attention to where the operational pieces of IBM land. Remember IBM’s ultimate goal is to sell this piece for as much as they can get for it as IBM’s overhead is drowning “perform IBM” currently. The much easier way for IBM to “cook” the books would be to load up newco with undeserved heads and let newco have to lay them off. Wall Street has run the numbers on IBM’s announcement and has given it a MEH assessment. What it did do, was lay out a way for IBM to monetize the “perform” part of GTS (perform is for sale) Remember in AK’s announcement he specifically noted IBM would entertain bids for Newco. Given Newco’s backlog of 60 billion (a lot of it in enterprise accounts) and run rate of approx 19 billion a year, you should expect someone to bid for Newco sooner rather than later. Most services organizations have been valued at 1 years run rate, but can go up from there if the backlog is strong. IBM’s ultimate goal is to monetize mainframe and their legacy SW stack. Why Because they have a monopoly there, and that gives them pricing power. Once IBM sheds most of the low margin businesses, someone will make an offer for the remaining parts of IBM. Why Pricing power, and entry into enterprises that opens the door to harvesting the current Intel install base. Every cloud company in 3rd place or less cannot organically grow fast enough to catch Microsoft or Amazon. They will have to buy the install base (or the catalyst to the install base) and leveraging Mainframe or Power enterprise is the play for them.

If your with GTS now, you should be worried. Billion have been set aside for "structural" actions. Blood bath on the way folks.