In a previous blog post, I took great pains at articulating my 10 Reasons Why Ginni Rometty would fail as IBM's new CEO. In the post, I mentioned the poisonous sales culture (you live by the sword, you die by the sword), which is at the center (of blame) for this and last quarter's missed performance targets. Another concern was the 'garage sale' of business units that would inevitably have to come if IBM were to meet its targets. As we have recently learned, IBM appears to be in the process of selling its server business to Lenovo, and it has long been rumored to be preparing its services business for sale as well. It seems Ginni may be failing faster than even I had predicted.
Latest Update: Ginni Rometty Ouster from IBM Imminent
As most of you know, IBM missed its quarterly numbers again, much like Oracle, blaming the performance miss on a lack of hustle and execution from their sales organization and citing sales that slipped into the next quarter. What's interesting about that, is that it's the second quarter in a row that IBM has used the same tired excuse. This makes me wonder what happened to those sales that slipped from Q4 2012 to Q1 last quarter. Why didn't they show up in Q1 2013? If anything, Q1 should have experienced some over-performance as a result of missed sales from Q4. So, the explanation doesn't seem to hold water unless there were significantly more slips in Q1 than there were in Q4. Either way, it seems to be a wonky excuse.
What (in my humble opinion) may even be worse than the fact that IBM has missed expectations for 2 quarters in a row, is the fact that IBM CEO Ginni Rometty doesn't even bother to show up to make the lame excuses anymore. You heard me right. On the last earnings call to discuss IBM results with shareholders, Ginni was noticeably absent. This must be an outrage to many key IBM stakeholders. Ginni earns $6.1M in pay (not including her very lucrative stock option package). It would seem as the top executive at IBM, she might feel compelled to explain the company's poor performance for two consecutive quarters under her leadership.
IBM CFO Mark Loughridge did participate on the call, and was able to tow the company line, blaming the miss on poor execution, but then went into some death spiral about weak currencies as well. Either way, things are not looking bright at IBM from an investor perspective, which is actually at the back of the curve for CEO tenure. Typically,CEO strategies like the one Ginni Rometty outlined, while cannibalistic to the company's core, start with aggressive company moves to dramatically improve stock performance, getting investors aligned, and only fail after the moves are proven to have cut muscle and bone, and not just fat. IBM's strategy of improving stock performance as the first step towards aligning investors to Ginni's vision (which still has yet to be uniquely outlined), seems to have stalled before it has even gotten started.
Due to missed targets, and poor performance results, IBM will now "reposition" the business, which undoubtedly means IBM will more aggressively lay off its employees. In the Rometty era, it appears misaligned, clueless executives and sales people with no technical prowess reside in the safest bastions, while super smart, US based customer support people, and technology heavy product innovators and developers are the ones most likely to be let go. IBM is much like a desperate housewife, clinging to more glorious days gone by and trying to hold on to the past by getting plastic surgery to improve surface appearance, avoiding at all costs a seemingly declining future, and losing its soul in the process. Ginni is now the plastic surgeon that keeps performing the procedures to strip the company of more of its soul, while trying in vain to improve its shallow appearance. In the end, soul matters, and health is not just skin deep, and it seems that the signs now indicate that the market feels the same way.
NET(net)’s Website/Blogs/Articles and other content is subject to NET(net)’s legal terms offered for general information purposes only, and while NET(net) may offer views and opinions regarding the subject matter, such views and opinions are not intended to malign or disparage any other company or other individual or group.
Celebrating more than 10 years, NET(net) is the world’s leading IT Investment Optimization firm, helping clients Find, Get and Keep more economic and strategic value. With over 1,500 clients around the world in nearly all industries and geographies, and with the experience of over 15,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client value captured in excess of $100 billion since 2002, NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact your NET(net) representative, email us today at [email protected], visit us online at www.netnetweb.com, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and supplier relationships.