As Buffett Dumps IBM Shares, Board Needs to Oust Ginni Rometty

By Douglas A. McIntyre Updated Jan 12, 12:18PM EST · Published May 5, 6:30AM EDT

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As Buffett Dumps IBM Shares, Board Needs to Oust Ginni Rometty — © Wikimedia Commons (Asa Mathat / Fortune Live Media)

[cnxvideo id=”509735″ placement=”ros”]Warren Buffett told CNBC that he had dumped part to his International Business Machines Corp. (NYSE: IBM) holdings. Earlier in the week, Moody’s Investor Services downgraded IBM debt. CEO Ginni Rometty’s turnaround has never happened. The board needs to get a new chief executive before more of Wall Street abandons the company.

Buffett told CNBC:

I think if you look back at what they were projecting and how they thought the business would develop I would say what they’ve run into is some pretty tough competitors. IBM is a big strong company, but they’ve got big strong competitors too.

He has to be referring to Amazon.com Inc. (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT) at the very least. They have trounced IBM in the cloud computing business. IBM’s artificial intelligence business, called Watson, is barely a shadow, at least insofar as the company will not break out its revenue. IBM’s quarterly revenue continues to fall. Sales of Rometty’s products and services cannot keep up with erosion in the company’s older line operations.

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If the Buffett rebuke is not enough, according to 24/7 Wall St.:

After multiple analysts chimed in after earnings, now IBM is even taking a credit rating downgrade. Moody’s Investors Service has downgraded the senior unsecured rating of IBM to A1 from Aa3. Its rating outlook has now been changed to stable after having been negative.

After multiple analysts chimed in after earnings, now IBM is even taking a credit rating downgrade. Moody’s Investors Service has downgraded the senior unsecured rating of IBM to A1 from Aa3. Its rating outlook has now been changed to stable after having been negative.

Moody’s does think IBM can grow what its calls its “strategic initiatives.” However, what the company will need to spend will weaken its financial position.

In the first quarter of this year, IBM’s revenue fell 3% to $18.2 billion. Earnings fell 11% to $1.85 per share. Rometty said:

“In the first quarter, both the IBM Cloud and our cognitive solutions again grew strongly, which fueled robust performance in our strategic imperatives,” said Ginni Rometty, IBM chairman, president and chief executive officer. “In addition, we are developing and bringing to market emerging technologies such as blockchain and quantum, revolutionizing how enterprises will tackle complex business problems in the years ahead.”

That is about what she has said for each quarter for over five years. It hasn’t helped.

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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.