The chatter on IBM is kind of sad to read. Everyone is simply wrting them off: "Playing to loss." "Doing poorly".
Sometimes I have to wonder if these high profile pundits even realize that IBM is a company with over $100B in annual revenue. Very few companies make over $100B. AAPL and HPQ are the only other tech companies that make more then IBM. AMZN and GOOG should on the road to $100B, barring some hiccups or missteps. Maintaining revenue growth with $100B is not an easy feat.
The one aspect of this company that rarely gets mentioned is their 'system'. The corporate system of evaluating trends and entering businesses. The system works, and ensures they are in the right space. But the income statement suggests an execution issue.
Weak hardware sales aside, the software side should be growing faster. The margins are kickass, and they are seemingly positioned in the right areas, but now they need to execute. Growth needs to be more pronounced.
When IBM lost the CIA private-cloud contract to AMZN, this gave the perception of weaker execution. The small growth adds to this perception.
IBM needs to step up execution efforts. They need to step up their differentiation. They need to use their Watson-creating abilities to kick Google and Amazon in the nuts.
Google's greatest strength is their closely held understanding and use of data. IBM has the ability to normalize the playing field for all Google competitors byunleashing Watson. (I hope this is the intent of the recently announced $1B investment in Watson.)
To battle Amazon, IBM has to be realistic in their bids. They have to move faster, be more reliable and not be as pricey. Offer the Watson layer as differentiation (not necessarily for more money.)
Management is not running away from its disappointment, and they are looking in the mirrar. They now need to fix things, I just hope they are fixing the on-the-ground execution.