IBM Remains America’s Worst Big Tech Company

By Douglas A. McIntyre Published Mar 30, 11:45AM EDT

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IBM Remains America’s Worst Big Tech Company — © MajestiX B / Shutterstock.com

Investors were besotted with the most recent earnings from IBM, but it did not last for long. This has been the case for over a decade. IBM rarely has good news. When it does, awful management and a poor board of directors overwhelm it.

There is no other big tech company that could please investors with a 7% increase in revenue year over year. However, that was what happened when IBM released its most recent numbers. Revenue hit $16.7 billion. This only looks good because IBM has had years of down quarters. Net income rose from $1.356 billion to $2.332 billion. The increase was impressive, but the profit margin was 14%. By contrast, Apple had a net income margin of 28%. Revenue was $123.9 billion and net income was $34.6 billion.

IBM’s primary argument to Wall Street is that it has an attractive cloud business. IBM’s hybrid cloud revenue rose 16% to $6.2 billion. In the most recently reported quarter, cloud leader Amazon posted AWS revenue of $17.78 billion, up 40%. AWS made $5.3 billion. IBM also trails Microsoft and Google in cloud market share.

IBM’s stock took a healthy move up in January but then fell back. Over the past year, its shares are up 3%, compared to the Nasdaq’s 12% gain. Over a five-year period, IBM is down 21%, compared to a Nasdaq gain of 147%.
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IBM’s current board chair and chief executive, Arvind Krishna, has been unable to revive IBM from years of underperformance by his predecessor Ginni Rometty. Much of the blame for this sits with IBM’s long-time directors. This includes David N. Farr (retired chairperson and CEO of Emerson Electric), who joined in 2012, and Andrew N. Liveris (retired chairperson and CEO of Dow Chemical), who joined in 2010.

Can IBM’s performance improve? Not a single piece of evidence says that it can.
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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.