With the caveat that I work for IBM but have no inside knowledge about anything important, it doesn't seem very bad to me? Overall profit is going to be down a tiny amount below expectations.
If I read that as an IBM investor I might fully exit. The new product flopped, growth was 1%, and the CEO sounds extremely unconfident. There are way better places to put your money given the potential for future earnings now looks incredibly weak.
>In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns. While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization. In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter.
The EPS was a lot lower than expectation though - and I thought that was the only reason people held IBM shares, they've not traditionally grown quickly but IBM has traditionally done anything it could to get a good EPS.
The other more techy side is to think that a year or so ago when everyone was climbing on AI, people were buying stocks in lots of tech companies to ride that wave; some companies (Nvidia, Samsung, Micron etc) are making a fortune from it. IBM? It's got some things it can point to it's doing in AI but it's not the big beneficiary of this wave.
its ironic that IBM sold off its x86 pc/server to Lenovo and kept their big iron (mainframe) but now everyone is buying up pc/server due to AI boom. Dell's stock have been surging with the rest of AI stocks
What does IBM even do? Something with India, and servicing legacy no-bid government pork contracts, as far as I can tell. That appears to be the focus and has been for a long time.
Don't forget when it comes to things like this - if in this case IBM ever had an astoundingly good day, CNN would never write an article about it, and you'd never see it on HN. They choose the picture of reality to install in the reader's minds by selectively choosing what news to report on vs. what to ignore.
People will argue that it's not dead yet but they're barely top 100 in the world, when they used to be... Number one.
Ouch.
Now, people are going to argue again but IBM, in its dying breath in 2000, did something really amazing: they committed one billion dollar to finance the development of that little known thing in the world called...
Linux.
Maybe Linux would have been immensely successful even without that one billion dollar investment from IBM but I cannot help but see that move in 2000 as the ultimate revenge move against Microsoft.
IBM knew it was falling into irrelevancy, Microsoft had 95%+ browsers market share and the future looked grim. Apple was in bad shape, smartphones didn't exist yet. It looked like Microsoft would conquer everything else.
Turns out: Microsoft (sadly) mostly kept the desktop but, thankfully, it's Linux that conquered just about everything (and OS X / MacOS / iOS quite a bit too).
So big thanks to IBM for that move.
You can think what you want but to me this what a move to prevent Microsoft from owning the entire software world.
When IBM bought Red Hat in the late twenty teens, they offered us a 10% discount on the stock as an ESPP. At the going price, the stock already had a 5% dividend. It seemed like a great deal.
Our internal mailing list ( the late great Memo List ) had a lively discussion. The majority didn’t see the raging bargain ahead of them. Most seemed to like the safe path— buy the stock, then immediately sell it and invest the proceeds in an index fund. It’s not bad advice, but it deconcentrated your bet.
The index has had some fantastic years since. But I think IBM did even better. The stock went from low one hundreds to over 300 for a while. Even after this big drop, you’d still be far, far ahead. You still get the dividend, too.
In this case the only way to lose was to not play.
This shouldn’t surprise anyone who has dealt with IBM over the past 10-20 years.
1 - IBM audits your company’s software usage.
2 - They find a couple servers that someone forgot to turn off a decade ago that nobody uses.
3 - Since it was found in an audit “you’ll lose the 90% discount” and they present the CFO with a $20 million bill.
4 - “It pains us to have to enforce this MSA that your predecessors signed 20 years ago. In the spirit of partnership we can make this go away with a $2 million Watson purchase.”
5 - You get the Watson subscription which you don’t dare turn on.
6 - IBM touts the growth of AI to Wall Street [0] and fires a bunch of old people [1].
19 comments
[ 3.8 ms ] story [ 45.3 ms ] threadWith the caveat that I work for IBM but have no inside knowledge about anything important, it doesn't seem very bad to me? Overall profit is going to be down a tiny amount below expectations.
(so far)
Jan 28: IBM Mainframe Business Jumps 67%
https://news.ycombinator.com/item?id=46802376
Feb 13: IBM tripling entry-level jobs after finding the limits of AI adoption
https://news.ycombinator.com/item?id=47009327
Feb 23: IBM Plunges After Anthropic's Latest Update Takes on COBOL
https://news.ycombinator.com/item?id=47128907
Apr 30: Granite 4.1: IBM's 8B Model Matching 32B MoE
https://news.ycombinator.com/item?id=47960507
Jun 25: IBM debuts sub-1 nanometer chip technology
https://news.ycombinator.com/item?id=48674967
Go buy it right now, profit tomorrow.
they've the people, tech - only thing stopping them is myopic leadership.
Ouch.
Now, people are going to argue again but IBM, in its dying breath in 2000, did something really amazing: they committed one billion dollar to finance the development of that little known thing in the world called...
Linux.
Maybe Linux would have been immensely successful even without that one billion dollar investment from IBM but I cannot help but see that move in 2000 as the ultimate revenge move against Microsoft.
IBM knew it was falling into irrelevancy, Microsoft had 95%+ browsers market share and the future looked grim. Apple was in bad shape, smartphones didn't exist yet. It looked like Microsoft would conquer everything else.
Turns out: Microsoft (sadly) mostly kept the desktop but, thankfully, it's Linux that conquered just about everything (and OS X / MacOS / iOS quite a bit too).
So big thanks to IBM for that move.
You can think what you want but to me this what a move to prevent Microsoft from owning the entire software world.
When IBM bought Red Hat in the late twenty teens, they offered us a 10% discount on the stock as an ESPP. At the going price, the stock already had a 5% dividend. It seemed like a great deal.
Our internal mailing list ( the late great Memo List ) had a lively discussion. The majority didn’t see the raging bargain ahead of them. Most seemed to like the safe path— buy the stock, then immediately sell it and invest the proceeds in an index fund. It’s not bad advice, but it deconcentrated your bet.
The index has had some fantastic years since. But I think IBM did even better. The stock went from low one hundreds to over 300 for a while. Even after this big drop, you’d still be far, far ahead. You still get the dividend, too.
In this case the only way to lose was to not play.
1 - IBM audits your company’s software usage.
2 - They find a couple servers that someone forgot to turn off a decade ago that nobody uses.
3 - Since it was found in an audit “you’ll lose the 90% discount” and they present the CFO with a $20 million bill.
4 - “It pains us to have to enforce this MSA that your predecessors signed 20 years ago. In the spirit of partnership we can make this go away with a $2 million Watson purchase.”
5 - You get the Watson subscription which you don’t dare turn on.
6 - IBM touts the growth of AI to Wall Street [0] and fires a bunch of old people [1].
Of course this wasn’t going to end well.
[0] https://www.constellationr.com/insights/news/ibm-q4-better-e...
[1] https://www.publicjustice.net/federal-court-boston-ibm-age-d...