Blue giant IBM has difficulty transforming, but not cutting 110,000 people?

According to the market news, the blue giant IBM will lay off 26%, based on the current number of employees to calculate about 110,000 people, a record of the company's layoffs (IBM has had a layoff of 60,000 people "feat"), although most of the layoffs may be in India and other developing country branches, However, IBM will still pay a large severance payment, estimated at $10 billion, if the message is confirmed, then the determination of IBM downsizing is evident.

But now that 110,000 people are too aggressive, and the source is single, IBM headquarters is still not responding, the doubts are whether IBM will disregard the current business and the company's morale to do so. IBM is already selling hardware assets and transitioning to cloud services, often attacking multi-domain layouts and working with multiple companies, but not as well, but not suddenly aggressive enough to be so laid off.

At the moment the news of such layoffs is unreasonable:

The transformation of 1.IBM has been steadily advancing, since the purchase of cloud services company in 2010, although because of business adjustment also has layoffs, but in addition to the broken wrist, can not think of IBM such a suitable word for layoffs, but IBM cut the company "organic" One-fourth, not just a wrist, will have an impact on the existing business, IBM will also face a lot of customer and legal issues.

2. The news comes from the Science and technology blog, although the message is now a source of information, but there is no big news agency follow-up, or it is not fully convinced that for a 430,000-person company, the union is very strong, before the layoffs are put into practice, it is not possible to disclose the news.

3.IBM last year layoffs of 13,000 people, the budget for severance pay is $1 billion, expanding to 110,000 people is 10 billion dollars, said the completion of one months, even outsourced to HR company, cut 4000 people a day, is also an unimaginable task.

Before 4.IBM, the transformation adjustment strategy can be seen, CEO Virginia Rometty try to sell the business to adjust, even if "money" also do. What's more, the "wealthy, wayward" Chinese companies covet IBM's mature business, there is no better than the purchase of the market as the first effect, money for the rush to layout overseas Chinese companies is not a problem.

IBM loses $3 billion in revenue for 11 consecutive quarterly declines

IBM last week reported the 2014 quarter and full-year results, IBM in the fourth quarter of 2014 revenue of $24.1 billion, the fourth quarter in 2013, down 12%, net profit of $5.5 billion, down 11%, revenue has been declining for the 11th quarter of a row. China is the best-performing market for IBM, with revenue down 1%. Revenue fell 21% in the BRIC countries, including China, Brazil, Russia and India. The results show almost every business in IBM has shrunk, and IBM's forecast for 2015 was lower than analysts expected.

Shares in IBM fell to $150 in 3%,IBM after the third-quarter report. In the last four months, IBM's share price has fallen 23%, and the hole is "Warren" Buffett, Buffett in the IBM company shares lost more than $3 billion, it seems that Buffett really do not know about technology stocks.

Buffett has been acquiring IBM shares since 2011, and has become IBM's first major shareholder. Buffett spent $11.4 billion, which was also seen as a shift in Buffett's investment philosophy. Mr Buffett, who has been cautious about investing, has been wary of technology stocks. There is no estimate that Buffett's loss at IBM is due to the fact that he has received dividends and should be able to compensate for the fall in share prices.

Even so, IBM's huge investments and losses have put Buffett's old age in disrepute, Buffett has been praised for his excellent choice of stocks, the 84-year-old "Warren" Buffett can again rely on time to prove his vision of the right?

Can IBM succeed again when it lags behind rivals in the cloud services market?

IBM has had a successful transformation in its history, when chief Executive Louis Gerstner (Gerstner) was hailed as a master of management, service, software and financial business for many years, but the tech industry has changed too fast, and IBM is now considered a sluggish "old company".

As corporate customers increasingly migrate to cloud services without sourcing servers, IBM's hardware market needs and revenue declines, and the demand for service personnel is reduced. February 26, 2014, IBM announced the launch of the "Apollo program", the plan to reduce the number of 13,000 people to save $1 billion, but again large layoffs to prove that last year's layoffs did not have the effect of IBM expected. CEO Virginia Rometty says IBM is undergoing a rapid transformation to streamline its people to improve speed and flexibility.

Since 2009, IBM's entire architecture has been adjusted to cloud computing , but it has not been significantly affected by the mobile Internet's PC-based system. Virginia Rometty began to run the IBM ship in 2012 and is currently chairman, President and CEO of IBM, and since taking office, Virginia Rometty has been trying to transform IBM, and she footsteps to implement the former chief executive Sam Palmisano's 5-year profit target, though it has been formally abandoned after a 10-quarter profit decline.

IBM's transformation in recent years and the reasons for its predicament

1 IBM has been aggressively scaling down its hardware business, including selling low-end machine X86 servers to Lenovo, Daotie $1.5 billion "sale" chip manufacturing business for a $2.3 billion price. Hardware manufacturing has long been not profitable, the server market is also growing weak, so IBM's behavior is understood by everyone.

2 IBM has invested $ billions of in research and acquisitions in cloud computing, and IBM has invested $7 billion to acquire 17 cloud computing companies since 2007. Previously released data showed that more than 5.5 million customer transactions per day were done through the IBM Cloud platform, but IBM has lagged behind Microsoft, Google, and Amazon in the cloud services sector.

3 The blue giant is a rare "hundred-year-old shop" in the scientific and technological community, but the large companies with more than 400,000 employees inevitably have hierarchical and slow-decision-making problems, a bit similar to China's "state-owned" problem, IBM is also adapting to the demand for cloud services from the mobile Internet, but how to maintain a leading position depends on the speed of

Virginia Rometty has been trying to reconstruct IBM's organizational structure around cloud computing, big data, social mobility, but whether she can reverse IBM's adverse situation is not yet visible, and investors have questioned its leadership. Buffett is not the dominant "activist investor" of Icahn, but when his huge investment has produced such a big loss, Buffett may also show his fighting power to replace the CEO.

Blue giant IBM has difficulty transforming, but not cutting 110,000 people?