Cringely Predicts IBM Will Shed 78% of US Employees By 2015

Third Position writes "Cringely with more predictions about IBM: 'The direct impetus for this column is IBM's internal plan to grow earnings-per-share (EPS) to $20 by 2015. The primary method for accomplishing this feat, according to the plan, will be by reducing U.S. employee head count by 78 percent in that time frame.' So far, Cringely's pronouncements about IBM have been approximately true, even if he missed the exact numbers and timeframes. Is he right this time?"

Comments

Brilliant!

[Moheeheeko]

We need to make the company more profitable. Lets put out a quality product everyone will need to have.....ehh fuck it thats too hard, get HR on the line.

Re:Brilliant!

[Megane]

Do they have to report it as "layoffs" when they sell off entire business units to other companies?

Re:Brilliant!

[Anonymous Coward]

Nortel went through that stripping itself off profitable business units that were not making as much money as they want.

I guess they haven't figured that the management division was the prime under-performing department except at the end when the filed for bankruptcy.

Re:Brilliant!

[Duhavid]

"You right, but if you do not provide raises, make working condition miserably by giving more work then is humanly possible, give no hope of promotions to most and never back fill."

Then you can raise a hue and cry about how inefficient and lazy US employees are, that they deserved being let go and replaced with bright, shiny overseas workers who will work cheaper, longer and so much more profitably. Never mind the ramifications. Less money circulating in US economy, less taxes being paid by US employees. Good move, management! All the while, continue to drive for shifting tax burden to those who are losing jobs ( no, not as IBM management, but as individuals supporting current right wing ideology )

Re:Brilliant!

[Albanach]

What decline?

http://goo.gl/yRwK5

Compared to their competitors, IBM seems to be doing okay if the markets are to be believed.

Re:Brilliant!

[dubl-u]

Because business school also trains them to minimize costs and maximize quarterly profits. And their managers and stockholders reward them for that as well. Which inevitably leads to that behavior and a bunch of other idiotic ones. Because as you demonstrate with the bit about fixed costs, a lot of these numbers are fictions. Sometimes convenient fictions, but always fictions.

This is in contrast to the Lean approach where one minimizes waste and maximizes value delivered to the end user. In Lean thinking, staff aren't a cost to be shed ASAP, they're an asset, one you invest in.

Probably Wrong

[elbonia]

Considering the fact that most of his big predictions are completely wrong why believe he's right? When did Apple buy out Time Warner Cable? How about Facebook forking and going against LinkedIn. Or Apple’s white iPhone 4 would be the Verizon iPhone 4?

What kind of predictions does he get right? Software will crash and Google will be the new Microsoft and Microsoft will be the new IBM.

http://www.cringely.com/tag/2011-predictions/

So IBM is selling the rest of the company to China

[Karmashock]

That's what this means. When they got out of the PC business they just sold it to china. And now they're apparently doing the same thing with their research division.

Companies don't survive that. The logo might survive. But it will be hollowed out mask.

Oh well. Ironic that this was once the company said to be an unbeatable monopoly.

Re:Absurd

[jbrodkin]

No, it didn't happen because it was never a realistic prediction. Those types of layoffs happen at failing companies. IBM is not a failing company, it is a company making massive profits and revenue. I think IBM probably has too many employees, and is making cuts that percentage-wise are small and likely make sense from a business standpoint. But the company had no need in 2007 to shed massive amounts of workers, and no need to do so now. The idea that the Cringely article from 2007 prevented IBM from laying off a third of its work force is ridiculous. That is not how companies make decisions.

Upvote the above for coining a good term

[Dystopian Rebel]

"Shareseller value": noun; the real reason people buy shares, which is to sell them at a profit; opposite of "shareholder value", which is the diminishing value of shares held by someone who has been duped into believing that investing in the stock market will make his or her retirement pecunious.

Re:Why corporate tax at all?

[dkleinsc]

I don't understand corporate tax to begin with....I mean, it isn't something that a 'company' pays really, it just eventually falls through to the consumer of that company's product....

That's simply an oversimplification. Exactly who ends up paying what percentage of a tax varies a lot depending on the specific circumstances, and is an area of serious economic research. Wikipedia's article on tax incidence provides a pretty good overview, but the short answer is that extra taxes on corporations typically gets split between consumers (in the form of higher prices), employees (in the form of lower wages), suppliers (in the form of cuts), and shareholders (in the form of lower earnings).

This is important to point out, because the false belief that corporations just pass along all taxes benefits the minority of Americans who own significant amounts of stock. In 2007, 1% of Americans owned 43% of all financial assets, the next wealthiest 19% of Americans owned 50%, leaving just 7% for everybody else (source). So if you're a stockholder, you want taxes on corporations low, which means you'd really like to convince most people that taxes on corporations are just taxes on themselves so that they'll oppose taxes on corporations. In other words, it boils down to rich people saying "We want more money".