Feeds

IBM puts future profits in the bag

2009 and 2010 a done deal, thanks

Secure remote control for conventional and virtual desktops

IBM is hosting its annual investor conference today, and the top brass of Big Blue's numerous business groups spent many hours walking the assembled Wall Street analysts through the models that show the company did the right things over the past few years.

Those smart moves, according to IBM, included divesting commodity IT businesses and positioning itself for bigtime profits in services, software, and massive infrastructure projects.

You'd almost think that IBM was happy about the economic downturn, given its ability to re-balance its workforce - a euphemism for firing employees in the United States and Europe and replacing them with employees in cheaper labor markets - and then chase deals around the globe. IBM can do this because it has built a single accounting system, a single supply chain, and a single customer support and management system that can be fired up and shut down in any geography where IBM wants a business unit to play.

The only part of IBM that is local anymore is sales. And in a lot of cases - particularly with servers and storage excepting the largest 2,500 accounts - that function is performed by the company's reseller channel.

But IBM didn't want to appear too cocky, because an economic downturn is a time for stern contemplation and tough decisions. "It was not an easy environment for us to operate in," said Sam Palmisano, IBM's chairman, president, and CEO, in his opening presentation. "We had a good year in a difficult environment."

IBM's 2008 went like this: $103.6bn (£68.3bn) in sales, up 5 per cent; $16.7bn (£11bn) in pre-tax income, up 15 per cent; $14.3bn (£9.4bn) in free cash flow, up $1.9bn (£1.3bn) over 2007. And $8.89 (£5.86) in earnings per share, up 24 per cent.

Those numbers, said Palmisano, were the result of decisions his team made to live up to the International part of the company's name and to start thinking globally and delivering its own internal systems that are truly international, not regional or national. Palmisano said that this kind of globalization of businesses was "obvious," and did not give Big Blue much credit for catching that wave.

He did give IBM credit for its decisions to ditch disk drives, PCs, printers, and other commodity businesses as the company predicted the future of IT and consolidation in that part of the business.

"We divested commodity businesses that do not recover capital no matter how well you execute," Palmisano explained, and said that one epiphany that IBM had is that the integration of these components was not where the profits would be, and that the company had to focus less on hardware and software sales and more on helping companies - not just IT shops - achieve particular outcomes.

That meant focusing less on hardware sales - something that has taken IBM some years to get used to - because IT hardware is, according to Palmisano, the first thing to get cut after the advertising budget.

"Obviously, the world is different from what it was in 2006, but I would argue that because we have done all of these things, we're not in bad shape," Palmisano said, adding that IBM was able to get ahead of the downturn and start preparing for it. "Call it insight. We did it. It is done," he bragged.

Boost IT visibility and business value

Next page: Perfect timing

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
XBOX One will learn to play media from USB and DLNA sources
Hang on? Aren't those file formats you hardly ever see outside torrents?
Class war! Wikipedia's workers revolt again
Bourgeois paper-shufflers have 'suspended democracy', sniff unpaid proles
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.