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1/22/2014
09:20 AM
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IBM Plans Layoffs, New Investments

IBM says it will "rebalance" its workforce in 2014 after a steep slide in hardware sales, but also invest in cloud, mobile, analytics, big data, and security to fire up growth.

IBM's full-year results for 2013 as reported and in constant currencies.
IBM's full-year results for 2013 as reported and in constant currencies.

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TerryB
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TerryB,
User Rank: Ninja
1/22/2014 | 12:55:34 PM
Re: IBM Is Reinvesting
I know this is very low profile in terms of volume in Power hardware but keep in mind there are still many tens of thousands (maybe even hundreds of thousands still) of us SMBs who use the same Power hardware to run the i5/os, what used to be called the AS400.

You won't find a single reason to ever convince me to change, that is still the most rock solid business server there is. The problem for IBM is that these servers are too good. I bought our last one in 2009 and it was the smallest server they sell. I plan on replacing in 2015. But even after all these years, we are using 35% of avail disk space and maybe 20% average CPU usage on a given day. We have not had a single day of downtime caused by this server.

And the price/performance curve is amazing. I remember the first AS400 this company bought in 1998, before consolidation to Power hardware with Unix/Linx, the server was $90,000. We bought next one in 2004, then it was $50K. After Power took over, the current one purchased in 2009 was $24K, with half of that being software and unlimited user licenses. The next one will be in the $8K range for hardware and we may be able to port our existing software and licenses for no cost, IBM runs upgrade promotions like that all the time.

Given all that, how can there overall revenue not decline? Power isn't sexy but boy can it get the job done, whether you use Unix, Linux or i5/os.
RobPreston
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RobPreston,
User Rank: Author
1/22/2014 | 11:29:42 AM
New Suitor?
The WSJ is reporting today that Fujitsu is now in the mix as a possible acquirer of IBM's X86 server business.
D. Henschen
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D. Henschen,
User Rank: Author
1/22/2014 | 11:28:47 AM
IBM Is Reinvesting
IBM is constantly reinvesting and moving money and people into high-growth and high-value areas. The $1.2 billion in new investment in SoftLayer (for cloud) and the $1 billion in new investment in Watson (for cognitive computing applications) are just two cases in point. In hardware, IBM is trying to move the Power line into the Linux arena, and it's trying to get out of the low-margin x86 business (just as Oracle has been doing with Sun).

The trouble is that the new investments haven't been keeping pace with declining revenues elsewhere. The speculation is that cloud is taking a dent out of software and services, and IBM's own cloud initiatives aren't far enough along to compensate.
Lorna Garey
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Lorna Garey,
User Rank: Author
1/22/2014 | 9:43:04 AM
Balancing act
At what point does failing to reinvest in order to meet aggressive dividend targets damage long-term growth prospects?
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