IBM’s Catch 22 Situation
In his 2007 Annual Shareholder letter, Warren Buffet wrote about huge corporations and that their “size” seems to make them “slow-thinking, resistant to change and smug”.
He further said, “Of the ten non-oil companies having the largest market capitalization in 1965 — titans such as General Motors, Sears, DuPont, & Eastman Kodak — only one made the 2006 list”
Warren Buffet, gave up on IBM earlier this year and sold about 1/3 of his stake citing tough competiton ahead for IBM. Unlike the 80s and 90s which was dominated by IBM and then Wintel (Microsoft & Intel), today the scale at which the GAFA* cartel operates is unprecedented and they own the 3+ Billion strong smartphone pie.
IBM’s revenue declined for the 22nd consecutive quarter, but CEO Ginni Rometty heaved a sigh of relief as its key numbers came marginally above what the analysts were expecting — EPS of $3.30 (est $3.28) and revenues of $19.2 billion.
IBM is pinning its revival hopes on its pivot towards blockchain technology now — which is in the limelight thanks to Tulip Bulb-ish Bitcoin mania.
With 5.5 years of continuous revenue decline, while other tech giants are leapfrogging, IBM is sustaining itself with creative accounting (avoiding taxes) with the promise of continuing its “strategic imperatives” {on mythical new businesses?} of focusing on analytics, cloud, mobile & technology.
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