Start global layoffs IBM Light Transition Cloud computing

IBM, which has driven the industry in every major strategic shift, has again begun the transition.

June 19, Australian media giant Fairfax Media revealed that IBM's Australian staff will be cut 1200 to 1500 people. The news confirmed the news of the June 13 Bloomberg news agency. At the time, Bloomberg quoted people familiar with the matter as saying, "As part of the global restructuring plan announced in April this year, IBM will start a new round of layoffs involving a cost of up to $1 billion." "In addition to Australia, the U.S. labor Organization website ALLIANCE@IBM also confirmed that IBM headquarters has started redundancy plan, involving at least 1300 employees." According to media forecasts, IBM is likely to cut 6000 to 8,000 employees worldwide, judging from the cost of 1 billion of dollars in layoffs.

"Layoffs are affected by bad earnings results. "A number of market investment agencies, such as the Oracle Investment Research Institute in the United States, point out. In April this year, IBM reported its first-quarter earnings, with revenue of $23.4 billion trillion, net profit of $3.032 billion, down 5.1% and 1.1% year-on-year, and 3 dollars per share, below analysts ' expected 3.05 dollars. This is the first time since 2005 IBM quarterly profit is less than analysts expected.

But Tang Leilei, IBM's China PR director, told it Times, "the technology industry is constantly changing and transformation is a necessary trait in our business model." As a result, a certain level of employee reorganization will be a continuing requirement for our business. ”

With the decline in hardware business revenues, IBM has been focusing on software business in years of transition, and the business has been the only revenue-generating sector in 2012, earning $25.4 billion a year, up 2% per cent year-on-year.

As the market continues to prove that "software companies are far more profitable than hardware and IT service companies," other IT giants have shifted their focus to the sector. Intel has acquired 14 software companies since 2004, and Cisco has vowed to double its software revenues to $12 billion in the next 3-5 years, announcing the privatisation of Dell's software division in February 2012 to drive the transition, Hewlett-Packard even autonomy the accounting fraud scandal in the takeover of a British management software company. Now it seems that the original profit of the enterprise-class software market is also becoming the new Red Sea.

Cut hardware Business

"IBM is in deep negotiations with Lenovo to consider selling a ' low-cost server ' Business", the Wall Street Journal said in April, drawing the industry's attention again to IBM's confusing relationship with Lenovo and the new trend of the "blue Giant".

When the global PC business was still growing, two companies reached a PC sale in 2005, which, while allowing Lenovo to overtake HP and Dell as the world's 3rd-largest PC provider, also made IBM's earnings look better. Public data show that after IBM stripped its loss-making PC business, it grew 8% per cent quarterly in 2006 compared with the same period in the previous year.

After tasting the sweetness, IBM sold the printer department to Ricoh at the beginning of 2007 with $725 million. The business accounted for about 1 billion dollars in 2006, accounting for only 1% of IBM's total revenues.

"Selling the printer business to Ricoh will enable IBM to devote more of its energy to the core business and customers." "When IBM Chairman and CEO Palmisano said.

Palmisano's core business is a new business represented by software and services. In 1995, Palmisano's predecessor, Gerstner, believed in the predictions of the renowned communications expert, Professor Douglas Schmidt of Washington University, that "consolidation will determine the future of the software industry", with IBM turning to the software market from the traditional hardware market.

10 years later in 2005, IBM became one of the world's largest software companies. As the financial crisis swept around the world in 2008, rivals were "shot", and IBM's share price soared. 2012, the software business accounted for the company's annual income of 25%.

In addition to selling, layoffs are also one of IBM's main hardware-cutting initiatives. According to ALLIANCE@IBM estimates, about 500 of the jobs known to be abolished were from the IBM Hardware department, the Systems and Technology Division (BAE and Marvell Group), including the company's microelectronics team, servers, storage systems, and other hardware personnel. In addition, 165 semiconductor research and development personnel were abolished.

There are also some employees in China that have been affected, mainly in the channel sector, but the number of layoffs is small, the company said. ”

The hard software business of this, so that IBM achieved a steady increase in net profit, did not come and early peeling pc, printers and other hardware business HP and Dell has become a negative example.

As the entire hardware industry has seen a massive decline in profits, HP has spent years arguing over whether to sell PCs, and frequent high-level shifts have struggled to complete strategic transformation; Dell announced the privatisation earlier this year, "hoping to provide a more comprehensive IT solution on a PC-reserved basis." "In addition, these companies are also emulating IBM's access to high profit areas such as software and services."

The bottleneck of revenue growth

IBM, however, is not invulnerable. "The poor performance of the first quarter of this year was not a one-time mistake," the analysis said. The elephants ' steps are exhausted, the beginning of the decline of the blue giants. ”

As an IT veteran and industry vane, IBM's several key decisions have been the industry's model for transformation, especially in 2002 when Palmisano took over as the CEO of IBM's software and servers as the development focus, reversing the decline in the profit trend. But behind the scenes is a slowdown in years of revenue growth.

Earnings showed that from 2006 annual revenue of 91.4 billion dollars to 2012 of 104.5 billion U.S. dollars, IBM annual revenue growth rate has never exceeded 8%, since 1995, the annual revenue growth rate has not been higher than 10%, the past 5 years of revenue growth has not seen too much fluctuation.

Between 2006 and 2010, the old rival Hewlett-Packard grew at an average annual rate of 7%, with internet companies such as Apple and Google doubling and even multiplying, with the average annual revenue growth of Microsoft, SAP, Oracle and other older it giants exceeding 10%.

Worse for IBM, there are signs of slowing growth in the software and server sectors that are making a huge profit for IBM. "Some of our businesses are or are already showing signs of weakness, such as power X and the storage product line, which have been disappointing in the first quarter of this year," said Mark Loughridge, IBM's CFO, after IBM released its first-quarter results in 2013. ”

According to IDC's latest software market report, the Global enterprise software Market 2012 growth of 3.6%, the growth rate is less than 2010 and 2011 half, enterprise software market is in the "weak growth period." IBM in the enterprise software market for many years in the top of the market share.

"Perhaps only a surprising investment can push IBM forward," he said. Unless there are some interesting measures to take, such as acquisitions or initiatives that boost growth, IBM will be in a smooth period. Oracle Investment Research Analyst Lawrence Barte (Laurence balter) predicts.

Buy new hot spots

Unlike other IT giants extravagantly, IBM has made a lot of acquisitions, but there are few big deals.

In the Palmisano era, IBM carried out about 100 acquisitions, costing about 20 billion dollars. Among them, the most heavyweight was the 2002 acquisition of PwC's consulting business with 3.9 billion dollars and the 2008 takeover of Cognos by 4.5 billion dollars.

From 2005 to 2011 alone, SAP had spent $42 billion in mergers and acquisitions, Oracle CEO Hurd More bluntly, "Acquisitions are an important complement to the company's research and development strategy, which is an important factor in the cost of more than 40 billion of dollars for Oracle over the years." "HP also launched a 14 billion dollar takeover plan over the same period.

At last year's investor meeting, Loriqui said, "IBM is not interested in big acquisitions and tends to buy 2 to 1.5 billion dollars." "But after the first quarter of this year, he changed his attitude and said," Now we have to take substantive measures. ”

According to IBM's previously announced plans, from the beginning of 2011 to the end of 2015 will spend 20 billion of dollars in the acquisition, the remaining 14.5 billion dollars are available. With the advent of new technologies such as cloud computing, the analysis points out that "these areas will be the direction of IBM's acquisition." "In the 2012 earnings, cloud computing has topped IBM's business with 80% per cent revenue growth," he said.

Recently, IBM confirmed the acquisition of SoftLayer, the world's largest privately owned cloud computing infrastructure provider. "This acquisition will strengthen IBM's leadership in cloud computing and help accelerate business practices for public and private cloud solutions." "IBM claims. In February this year, the industry also heard of IBM's acquisition of NetApp, a storage service provider. "This will help IBM strengthen the cloud storage business." "US investment firm Stern Agee & Leach analysis points out. Earlier, IBM said it hoped the cloud technology revenue in 2015 to reach 7 billion U.S. dollars, but 2012 earnings did not disclose the current data.

In fact, other IT giants are also eyeing the cloud market. In 2010, Hewlett-Packard successfully bid for 3PAR with a record 2.35 billion dollar valuation, and in 2011 again threw 11.7 billion dollars into the bid for UK cloud computing provider autonomy. In the same year, SAP spent 3.4 billion of billions of dollars on the acquisition of the cloud company successfactors,2012 and added Ariba into its own. This March, Microsoft acquired cloud computing monitoring start-up company Metricshub. "The cloud computing battle has already begun. "The analysis points out.

(Responsible editor: The good of the Legacy)