State and Future of IBM

Former exec and colleague Bob Herbold talks IBM in his blog: 

IBM: Finally, A Bold Move Provides Some Hope
Posted on August 6, 2020   by Bob Herbold

One financial analyst calls IBM’s last ten years its wasted decade.  In that period, the company’s annual revenue dropped from a tad over $100 billion to under $80 billion and net income for the decade dropped from $14.8 billion to $9.4 billion.  In comparison, in the past ten years, Microsoft’s revenue grew from $69 billion to over $143 billion and the company has been totally reinvigorated by the move to a cloud emphasis about 6 years ago.

IBM has had two main problems.   First, its leadership under the prior CEO for the past nine years who was finally replaced 4 months ago, prioritized shareholder returns at the expense of innovation.  Her key tools to keep the stock performance from faltering were $75 billion of buybacks over the decade and $45 billion of dividends.  During the decade the R&D budget was kept flat at $6 billion. For perspective, Microsoft’s grew from $9 billion to $20 billion.  ... "