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IBM Pays GlobalFoundries $1.5 Billion To Shed Its Chip Division
helix2301 writes with word that Big Blue has become slightly smaller: IBM will pay $1.5 billion to GlobalFoundries in order to shed its costly chip division. IBM will make payments to the chipmaker over three years, but it took a $4.7 billion charge for the third quarter when it reported earnings Monday. The company fell short of Wall Street profit expectations and revenue slid 4 percent, sending shares down 8 percent before the opening bell.
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And that'll be the end of that
They'll drop their famous fish division next and try to make up all their revenue in malt vinegar services.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Ginni is a bigger fuckup than John Akers. She and her cronies are fucking pirates running IBM like it's a stolen treasure box and they will personally enrich themselves until there's nothing left. Roadkill 2015 was the plan and everyone knew it was 100% bullshit. At this point all they can do is fire everyone who's not an executive, in the US, re incorporate in a developing nation and sell off the entire company piecemeal. IBM is a poorly run investment fund that simply buys and sells smaller companies to dig as much cash out of them as possible then tossing them away.
Paying someone to take a division off your hands? Are you fucking serious? THAT's better than simply taking that money and investing it into the division? Holy the server division just sold to Lenovo must be happy. They'll have a viable business with actual jobs whereas IBM is too busy borrowing money to buy back stock price with no revenue to pay off the debt.
They're really good at outsourcing and cutting employee benefits. Eventually they'll be down to one employee who's outsourced through 15 different countries and actually pays them to work there. Then they'll be the most profitable company in the world!
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
They're in the business services business now, mostly.
Their only stronghold are IT consulting services and System series of OS, I think.
Enterprise Software - IBM is still the kingpin in this
Cloud - Since they bought SoftLayer and combined them in with their existing portfolio, IBM is one of the largest companies in cloud today
Security - Taken as a standalone unit, IBM Security software & services is the second largest company in security today, second only to Symantec. It's bigger than McAfee now.
Probably need to change the name to IBC and drop the M as they are rapidly on that road to not really building/creating anything anymore - and just being another offshoring consulting firm (once they offshore the managers they could change it to Indian Business Consultants).
How on earth do they find "pay someone a billion and a half to take this business" to be cheaper than just shutting the entire thing down? Even if the division is losing more money than that, I think you could do better by just firing everyone and burning any physical assets to the ground. The only way I think it could be otherwise is if it costs more than $1.5 billion just to shut down the division. Unless IBM is running a nuclear reactor somewhere and I just never heard of it, that just doesn't seem plausible.
If that were true, they wouldn't be paying GlobalFoundries to get the chip division off their hands.
GlobalFoundries is being paid to accept huge employee obligations -- the same sorts of obligations that other old, established industries in the north and midwest have struggled to handle.
I don't know, but I can't help but be impressed by their artificial intelligence research. Seems to me that investment will pay off big as it is already having success.
Its a great book, you should read it and the light will go on. It features IBM a lot, right next to GM.
Made me laugh! One more time:
-kgj
A "Machine" doesn't have to be a literal physical device.
You've heard of political machines? Well, IBM, like most companies of its size, are corporate "machines".
IBM is definitely International and it's definitely business-oriented.
According to NPR this morning, they're the largest IT services company in the world. I think that's due solely to them going 3x over budget on every project though. They're basically Oracle mixed with SAP.
GF: "We won't take it even if you give it to us for free!"
IBM: "How about if we pay you to take it?"
GF: "How much?"
Try their demo before being impressed.
"pay off big" means they'll need to sell it to someone. So far they've just given impressively staged marketing demos.
A couple of reasons. First as others have mentioned IBM still needs the lines. IBM's processor design is fairly integrated. It needs custom circuits which really on their fabrication technology. Their chip design process is the antithesis of fabless development. So they can't just shut off lights to the fab without crippling the Power, Mainframe, and high end storage business for years to come. The other issue is there are customers getting chips manufactured. If you shut that down there are typically very steep contract termination fees. This is really 6 year wind down with higher costs every year. The fab business is very cutthroat, you have to hit fairly high yields and have the line near full capacity or else you lose a boatload because the fixed costs are so high. They've been getting out of this business for years, especially on the low end. This is just the last step.
...not any longer...
They seem to be following the gut the future of the company plan in a feeble attempt to make profit tomorrow maneuver... Those usually never turn out well...
Of course Apple switched to Intel and picked ARM for the iPhone and other iDevices, and then... well... where is PowerPC now?
Apple has been using ARM in handheld devices since the freaking Newton. It was in fact one of the first adopters of ARM.
I realize this was posted in jest, but the truth is not that far off the mark - professional services tend to have much higher margins on lower revenue. Most big companies have smaller margins on much higher revenue streams. If you want to become independently wealthy, come up with a novel idea and start your own company. If you want to become absurdly wealthy, scale your idea up to the size of a big company and try to retain control (hard to do).
This is in my experience accurate. IBM is one of the larger purveyors of wage arbitrage in the market.
From time to time over the past 15 years I have been subbed into IBM to fix things. Currently I am working as a developer fixing a real mind boggling mess. The code base for this product is almost entirely now sourced from China, with some Indians and a few Brazilians thrown in for good measure. Oh sure, the project is fronted by English speakers from the USA for the purposes of sales, but the actual work is all done for bottom dollar anywhere BUT the USA ... until deadlines are missed, features are forgotten and things start to fall apart.
Then they hire people like me for 200+/hr to rewrite it all again.
It turns out that when you translate requirements through 3 language and cultural filters then pay the developers 4 bucks an hour you get shit code. Who knew right?
As they say "when the chips are down..."
According to NPR this morning, they're the largest IT services company in the world. I think that's due solely to them going 3x over budget on every project though. They're basically Oracle mixed with SAP.
They're the model for Oracle and SAP.
I just completed work for a customer who, because of a lot of legacy software, kept needing to purchase IBM hardware and operating systems. They somehow manage to make everything WAY more complicated than it needed to be, and WAY more expensive. I want to believe that their hardware was good, in my experience, IBM hardware does last a long time, and functions well. With that said, I could buy COTS hardware with Linux, and have several sets of backup hardware, for less than the cost of what IBM proposed for a single system, and I could have it up and running in less time than it would take to set up the IBM systems. They're quickly pricing themselves out of the marketplace.
From recent experience, they provide outrageously expensive and highly arrogant, yet utterly incompetent consultants in the "big data" area.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
My condolences on having to actually fix this type of mess. I usually only get to look at it and tell people that the code is insecure and sucks for some other reasons. Decent hourly rate though, do not go lower. Going cheap for software production has to be expensive, or they will never understand what they are doing wrong.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
Yes, they sell arrogance combined with incompetence, as a recent observation I made at one of our customers shows.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
My father is turning in his grave. 37 years he worked at IBM 25 of which he designed and layed out chips at East Fishkill..
So sad.
My experience as a contractor at IBM – I worked for IBM eighteen months ago and my contract was cut short by IBM two months early.
I started another 6 month, hourly paid, PAYG contract with IBM through an agency recently but decided to leave early after working 68 hours (9 working days at 7.5hrs) with 2 days enforced leave, no email or intranet for the first week.
I have been paid for 13 hours only (the hours worked on the first two days of the contract). When I queried I was referred to the:
“No Compensation” clauses on Page 7, this indicates that “Should the Contractor for any reason, not complete the term of the assignment and have been engaged by agency for more than 10 working days, then agency shall not be obliged to pay any fee to the Contractor for the final 10 days worked by the Contractor”.
Just as an indication of how they earn their profits.
https://www.youtube.com/watch?v=JC0MXjOIqfg
Come to Endicott, New York, and see the results of IBM chipmaking chemicals spilled into the soil and water table. Very expensive in direct cost of attempted soil-sucking cleanup; far more expensive in health care for cancers, and organ diseases, that are increasingly being tied to the chipmaking chemicals.
They'll be really to monetize the singularity.