IBM (NYSE:IBM)’s Road To Recovery


The International Business Machine Corporation (NYSE:IBM) is a well-known multinational technology and consulting firm. The company’s prime business is manufacturing and marketing computer hardware and software along with hosting and consulting services. Back in 2012, the company stood number 2 for being the largest company in terms of employees; it was the fourth largest in market capitalization and ranked ninth as being most profitable and stood nineteenth for revenue.

IBM (NYSE:IBM) has enjoyed it share of success along with many ups and downs along the way. But ever since Sam Palmisano took over the company and made changes, its done nothing but create problems for the firm. Sales of products and services have reduced dramatically, revenues are falling with each quarter for the last ten years. It seems now that the company is more focused on catering to its shareholders then the customers. Whereas in the long run it’s the customers that make or break a business.

IBM (NYSE:IBM) seemed to have changed its overall approach, they began compromising on quality standards for their products and services and started overcharging customers for every deal.

And the only required and quick fix for the scenario is to stop actions that are damaging the company and focus back on the customers, making it your first and at most important priority.

For this to happen IBM (NYSE:IBM) needs to start with fixing its Global Services, as that’s an important part of the company. It’s the services that touch a large customer segment and drive sales through it. At this stage the Global services in suffering from cost cuts and layoffs on a large scale. The company needs to invest significantly on its Global services and customers and instead of making profit the only priority, the company needs to reevaluate its strategies and focus on its customers.

After these cracks were brought to light, The IBM (NYSE:IBM) employees exploded. But as a result it became more and more evident that there is a huge crack in IBM (NYSE:IBM)’s corporate shell. And the company seems to be falling and falling fast. Towards the end of 2013, IBM (NYSE:IBM)’s Global Services division made $38.5 billion but the third quarter of 2014, showed a 11 percent fall. The company rounded up with $18.4 billion in that quarter. Indicating also a huge drop in sales by 15%, sales and services both make up to 57% of IBM (NYSE:IBM)’s business and with both falling simultaneously and quickly, the company needs a quick fix. The company has its hopes tied to the Cloud business but for that to grow to the level of GTS might be a long road ahead. It claims that the cloud business was up by 80% in the third quarter this year: if it stays on this rate then it might reach GTS level in 3.92 years. But if the 80% growth remains constant it might trigger other firms like Amazon, Google and Microsoft to jump into competition. And these companies have a much stronger market share hence their chances of succeeding in this segment are far more then IBM (NYSE:IBM).