IBM Remains America’s Worst Big Tech Company

By Douglas A. McIntyre Published Jul 20, 8:30AM EDT

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IBM Remains America’s Worst Big Tech Company — © DKart / Getty Images

International Business Machines Corp. (NYSE: IBM | IBM Price Prediction) posted mediocre figures for the latest quarter, as it has for over a decade. It cannot find the growth path its larger rivals have. Revenue dropped 0.4% to $15.5 billion. Net income rose 8.0% to a paltry $1.5 billion, which some large tech companies make in less than a month. (These companies have the worst reputations.)
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Arvind Krishna, IBM board chair and chief executive officer, “Organizations are using our hybrid cloud and AI technology, and our consulting capabilities, to transform their operations.” Unfortunately, the number of customers who are doing this is relatively small.
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“Hybrid platforms and solutions” rose 7% in the quarter, but to what? That matches what IBM calls “software” in its financials. If so, this number was $6.6 billion. By contrast, industry leader Amazon had $21.3 in revenue from Amazon Web Services last quarter. Its profits were $5.1 billion. AWS may not be in exactly the same business as “hybrid platforms and solutions,” but it is close enough. IBM also trails Microsoft, which had “server products and cloud services” revenue of $22.1 billion
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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 chair and CEO of Emerson Electric), who joined in 2012, and Andrew N. Liveris (retired chair and CEO of Dow), who joined in 2010.
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Over the past year, IBM’s shares are up 4%, against the overall market’s 16% gain. Over five years, IBM’s shares are down 3%, while the broader market is 63% higher.

IBM has a market cap of $123 billion. Amazon’s is $1.4 trillion, and Microsoft’s is $2.8 trillion. The market does not believe in any IBM turnaround at all.

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.