Can IBM CEO Ginni Rometty Survive?

By Douglas A. McIntyre Published Jan 21, 7:01AM EST

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International Business Machines Corp. (NYSE: IBM) board Presiding Director Michael Eskew and his fellow directors have a difficult decision ahead of them. Should they keep CEO Ginni Rometty for another year, or replace her as the tech giant continues to stumble? The board only has a brief time to act, since IBM’s spiral down, quarter by quarter, shows no sign of ending.

IBM management released another set of bad news for investors. It issued 2015 guidance of earnings between $15.75 and $16.50 a share. The forecast was short of analysts’ expectations. And revenue in 2014 fell from 2013, although some of that had to do with restructuring.

Rometty and her management team have to sell Wall Street, and IBM’s own directors, on its future progress in cloud computing, which has become the yardstick on which so many other tech companies are measured. IBM appears to have come to market late, and it will continue to be late, in the cloud sector. A great deal of industry research shows that IBM trails Amazon.com Inc. (NASDAQ: AMZN), Oracle Corp. (NASDAQ: ORCL) and Microsoft Corp. (NASDAQ: MSFT), depending on which part of the cloud market is being evaluated. IBM is not the leader in any of them, and in most cases is not even close.

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The success of IBM’s cloud initiatives also supposes that its competitors stand still. That is not going to happen, because the expanding market is so essential to success across the entire industry. Additionally, an improvement for IBM is dependent on it taking enterprise and government customers from its larger rivals.

It is impossible to find an analysis of any industry that believes being late to market is an advantage. This is particularly true when the company that is late has no major features its competition does not. IBM cannot turn around its cloud initiatives. There are too many hurdles. Maybe the IBM board will take this into account as it evaluates Rometty. Why not replace a CEO who has already lost a key battle and created a loss from which the company cannot recover?

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.