Back in 2011, IBM guided for EPS of $20 a share by 2015, up from $11.52 in 2010. However, that goal
soon became more of an albatross than a guiding light. The promise was made by Palmisano, but was
tasked to Rometty, who was named CEO in 2011. During the intervening years, IBM's revenue growth
turned negative as enterprise customers switched from traditional IT solutions — IBM's strength — to
cloud-based technologies. To try to meet the goal, Rometty aggressively bought back shares, laid off
workers, and sold divisions, but it wasn't enough, and the strategy hurt both morale and the company's
performance.
Regarding morale: luckily at this point, there's none remaining left to hurt.
However, Buffett seemed to be mistakenly focusing on the goal rather than the process. Share
buybacks are easy to do, and are often a sign of management's lack of ideas. Prior to 2015, Rometty
aggressively repurchased shares in the hopes of meeting the $20 EPS goal, but that did nothing to
shore up the underlying business.
In 2014, IBM spent more than $12 billion on buybacks, and for a time the company was spending more
on buybacks and dividends than it was bringing in in free cash flow, funding the difference with new
debt. Spending on research and development, though, was flat. The company lost ground to
competitors, and its revenue and profits fell.
"Share buybacks are easy to do, and are often a sign of management's lack of ideas." Indeed. . .
https://www.fool.com/investing/2018/02/18/the-3-biggest-mistakes-warren-buffett-made-with-ib.aspx