I don't understand this at all. Company tops revenue estimates, but the leadership still decides to lay off employees. I would say it's just the leadership being greedy, nothing more.
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This is a nice summary of where IBM has been, and where IBM is going both financially and strategically
https://www.fool.com/investing/2023/01/30/where-will-ibm-stock-be-in-1-year/
@qon That article states SW companies should have a minimum of 300k per employee with the best companies having 500k per employee. IBM just announced 2022 revenue of 60.5 billion or approx 233k per employee. That’s a 22% short fall of the industry standard of 300k that industries compare themselves to. IBM is either over staffed by 55k or under revenued by 18 billion.
To get out of hardware ? Heres a recipie.
At some point p or z architectures will need to be emulated to save cost. The power architecture will likely be the first to be emulated when the decision is made. There are absolutely no source code updates to the open power cores used in blue gene since they were put on web on git . Giving the source code away for free is not working. Sun put sparq cores on the web and it did not work either
Likely P and Z will be combined into one cost reduced bandwidth monster system to save cash burn. Loaded will AI accelerators.
Just a matter of time if IPC and Ai will not be able to achieve significant performance bumps with each generation
In the past Ibm has ki-led off , sued, or purchased outright emulator of z systems and power on x86(transitive/rosetta). Most of the emulators are limited to development usage to protect revenues of z systems servers in the “cloud”.
Once IBM decides to emulate, they will do it. Legacy architectures from Sun Microsystems, DEC, HP , Unisys all are emulated on x86
This is a business decision not a technical one.
Even at 10% compounded growth IBM comes up 4 billion short 9.3 + 10.25 + 11.25 = 30.8 Get ready for the redeploy or spinoff Its the only way IBM will close the gap.
So let’s play the game from IBM’s announcement 9.3 + 10.5 (IBM’s committed 2023) = 19.8 35 - 19.8 = 15.2 10.5 / 15.2 = 69% growth in 2024 Who thinks that is realistic?
Something has to change and it doesn’t bode well for the way IBM is organized currently
@1hfe - As stated in the other thread, "FCF $35B" is going to become the new Roadmap 2015. An impossible target. Execs almost destroyed IBM trying to achieve Roadmap 2015 before being forced to abandon it. Question is how far will they go this time.
@wan I cannot argue with your assessment. Kyndryl wrap and Z product cycle will definitely have negative implications. The Covid compare should continue for a bit, as IBM tends to trail the economy by 9 months. (fixed long term contracts are most likely the reason) The consulting impact is a wild duck. Normally as goes the economy so goes consulting, BUT this time we are not seeing that especially in Fortune 500 customers. If anything they are accelerating their purchases of consulting. (just look at IBM’s hiring For every RA, PIP, or retirement IBM has back filled by adding in consulting. They are up to over 170k heads) I suspect IBM’s customers are having trouble attracting employees, and IBM is back filling that with consulting. Given that, keep in mind as goes consulting so goes IBM (who do you think recommends modernizing SW with Redhat, running a hybrid cloud on proprietary equipment, and buying new proprietary equipment in the first place). So getting back to the thread subject, IBM will not trim consulting unless your utilization is just plain poor. IBM will definitely trim in SW and Infrastructure as they are supporting organizations. So who do you trim? Legacy comes to mind for both organizations as IBM has switched strategies to Redhat and Hybrid cloud. Does IBM want to be in the HW business? NOPE, and they will shrink that down till only the Fortune 500 is supported. Does IBM want to be in the servicing business? Again NOPE especially given that it constantly shrinks 3-5% per year. Does IBM want to be in the SW business? Definitely yes given the 80% margins, BUT that business is focusing all modernization on LINUX solutions for the legacy programs and their middleware. If you support legacy SW or middleware you are quickly being ridden out of town as LINUX will replace you. Can IBM make this transition? Definitely yes, BUT they will have to trim headcount in infrastructure and legacy SW as their business can’t grow fast enough to meet the streets FCF expectations. IBM has 2 years left to make up 35-9.3 = 25.7 billion in FCF. Given 7% growth for 2023 and 2024 that comes to 10 billion and 10.5 billion respectively. So 9.3 + 10 + 10.5 = 30 billion. They have a short fall of 5 billion and the only way IBM knows how to fill that short fall is cost reductions. I expect IBM to exit the HW business and partner with a manufacturer to make up a good portion of the 5 billion shortfall.
don't worry the top end of town ae doing ok!!!!!!!
https://finance.yahoo.com/quote/IBM/insider-transactions/
Message is out: "You will now work harder". Don't worry, when Musk comes with the kitchen sink, it's gonna be hardcore.
Here are the problems for 2023:
- No more easy Q on Q "Covid compares". Like the one article said, IBM only showed Q4 2022 revenue growth because Q4 2021 was the worst since 1987.
- Z upgrade cycle is coming to an end.
- Economy. The first items customers cut back in a recession is discretionary spending on things such as consulting and SaaS subscriptions.
- Kyndryl. The deal was structured to give a big year 1 boost in revenue as Kyndryl had to pay IBM for all of the SW, HW, and services it had been using now that it was a separate company. That's done.
the results are actually really bad if you read how the earnings were explained and manipulated. The word "at increased currency rate" means after current inflation data. if they are flat on something with increased currency rate, it actually means it's down and losing 10-12%. The report shows IBM doing extremely poorly in all areas. The entire tech sector will be in a lot of pain this year.
https://www.theverge.com/2023/1/26/23571659/tech-layoffs-facebook-google-amazon
Good discussion here on this topic.
@ctq+1kTchogU -- Not just preparing for a bad Q1 but a bad Q2, Q3, Q4 too. And what will be a full-on recession in 2023 & likely for some while beyond that. This 3900 is just the beginning. . .
All the companies doing big layoffs except Twitter are themselves doing fine. There is nothing unique about what IBM is doing here.
it's just companies preparing for a bad Q1. don't read too much into it