http://www.forbes.com/sites/petercohan/2017/01/20/4-reasons-warren-buffett-should-sell-ibm/#43f80df91e48
- Lack of market leadership
IBM has been shrinking in a growing market. After all, IDC reports that corporate IT spending is rising at a 3,3% annual rate while IBM's revenues shrank 2.2%.
Meanwhile IBM has been losing market share in cloud services. If IBM is so sticky in corporate IT departments, why did Synergy Research rank Big Blue number three in Cloud Services with 8% share -- about a quarter of Amazon's 31% -- in the second quarter of 2016?
- Weak product development
To win market share, a company must offer customers a better deal on the products and services it seeks to sell them.
IBM’s product development process systematically impedes product development excellence. For example, IBM imposes numerous internal requirements on its product development teams – such as requiring that products can be usable by vision-impaired individuals regardless of whether there is strong demand for the feature, that software can run on mainframes – regardless of whether there is a large market of mainframe users for the product, and that the product is available in at least nine languages (again without regard to the market requirement).
These executive-imposed mandates can consume as much as half of product development teams’ budgets and time. As a result, too many IBM products become available to customers after rival vendors have introduced their products – and those late products offer customers insufficient benefits to compel them to switch from rivals’ products to IBM’s.
- Loss of talent
High technology companies rise and fall on their ability to attract and motivate top talent. Sadly, as I wrote last November, IBM's culture repels talent which benefits rivals who hire its people.
No doubt Thomas Watson Sr. would be turning in his grave if he knew how IBM terrorizes its employees.
A case in point is this former employee who sent an open letter to IBM's board detailing how IBM turned her love for the company into fear. As she wrote "As budget cuts and corporate pressure slaughtered my teams whose jobs were continually outsourced to cheaper labor markets; I shifted with the rising tides from one internal job to another."
IBM's treatment of this employee took away her sense of self-worth "by not providing a raise in years... Instead, you made me believe, year after year, I was 'lucky to have a job.' As I watched endless years of resource actions destroy the lives of loyal colleagues; my labor turned for you no longer out of the love and the pride I once held- but fear. Fear that year after year- quarter after quarter; I would be on the Resource Action list"
Ultimately, she left for a competitor. "Your years of strategic malevolence and blatant abuse have driven me into the arms of a formidable competitor."
- Lack of transparency
IBM likes to brag about Watson but does not disclose revenues from Watson-branded products, according to the Journal. To be fair, IBM did claim that Strategic imperatives revenue for full-year 2016 totaled $32.8 billion. If they are so important, why won't IBM disclose the revenues from each of the imperatives' lines of business?
Buffett seems satisfied to keep Rometty as CEO and he probably thinks that his investment in IBM is poised to pay off.
But there are four compelling reasons why he should sell and put his money elsewhere.