Who Is Going To Give IBM The Bad News?

By Douglas A. McIntyre Published Jun 22, 1:19PM EDT

Key Points

IBM Is A Tech Company Failure
It Has Failed To Keep Up With Microsoft And Nvidia

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Who Is Going To Give IBM The Bad News? — © Sundry Photography / iStock Editorial via Getty Images

IBM has been one of the first tech companies to say it would lay off workers because of AI. The media put the number at 8,000. CEO Arvind Krishna said AI would replace some HR workers. Overall, IBM plans to put money to work adding programmers and salesmen. It doesn’t matter. IBM is so badly battered that no amount of AI advance is going to improve its crippled situation.

International Business Machines Corporation (NYSE: IBM | IBM Price Prediction) was one of America’s greatest, if not its greatest, tech companies. Founded in 1911, it had among the most outstanding CEOs in tech history, led by Thomas J. Watson and Louis V. Gerstner, Jr. In 1980, it ranked No.4 on the Fortune 500. A shadow of what it was, IBM is among the worst tech tragedies over the last several decades. The last decade is proof that IBM has permanently fallen apart.

For IBM, a quarter with flat revenues year over the previous year is an earnings victory. In the most recent quarter, revenue was up 1% to $14.5 billion. EPS fell 33% to $1.1 billion. Each is a rounding number for America’s big tech companies.

IBM’s market cap is $261 billion. The market caps of Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), and Nvidia (NASDAQ: NVDA) are over ten times that. Alphabet is close to the same multiple. There is a reason for this. For example, Microsoft’s (NASDAQ: MSFT) revenue in the most recent quarter was $70.1 billion, up 13% from the same quarter the year before. EPS rose 15% to $2.46. Microsoft’s net income for the period was $25.8 billion. Microsoft has a smaller revenue than Apple, Amazon, and Alphabet.

The list of large tech IBM lost out on is long. Among them are search, cloud computing, computer operating systems, e-commerce, and AI chips. Each of these leaders began as a small company when IBM was bigger.

If cloud computing is among the key metrics for the success of big tech, AWS has a 30% global market share, Microsoft’s share is 21%, and Google’s is 12%. IBM’s is 2%

If AI is the future of global technology, the Magnificent Seven and OpenAI are the leaders, and IBM does not appear on anyone’s list. IBM CEO Arvind Krishna continues to talk about his company’s AI success. For now, the talk is led by a discussion of layoffs.

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.