Monday, March 09, 2009

IBM Appears Upbeat in Faltering Economy

In a move that appears to run counter to the way things are going in the economy, the CEO of IBM issued an optimistic, forward looking statement about IBM's plans for the future. They plan to engage in with governments in those areas that are soon to be enriched by President Obama's stimulus package.

What follows is the entire New York Times article:

By now, much of corporate America is humbled and hunkered down, hoping to survive an economic crisis that seems to get worse day by day. That is certainly not the posture at I.B.M.’s headquarters in Armonk, N.Y.

In a spirited message in the annual report sent to shareholders on Monday, Samuel J. Palmisano, I.B.M.’s chief executive, writes, “We entered this turbulent period strong, and we expect to exit it stronger.” Later, Mr. Palmisano adds, “We will simply not ride out the storm. Rather, we will take a long-term view, and go on offense.”

Mr. Palmisano struck a similar tone when the company reported its strong quarterly results in late January. And certainly history could prove Big Blue’s against-the-grain confidence to be short-lived and misplaced. But in his lengthy “letter from the chairman,” Mr. Palmisano presents a detailed case for I.B.M.’s comparative optimism. It centers in good part on the assumption that countries — and large corporations — around the world are going to make investments in so-called smart infrastructure projects in transportation, electrical grids, health care information technology, telecommunications, food distribution and water systems.

And, in I.B.M.’s view, its portfolio of technology services, software and research make it ideally positioned to be the general contract of choice for such projects.

Two things lend support to the I.B.M. strategy. First, governments around the world are putting such projects in their stimulus packages as they try to stabilize their economies. In the United States, the Obama administration included big investments in smart electric grids and health technology, for example.

Second, we do appear to be entering a corporatist era in which big government and the big corporations who are still healthy are looked to as engines of recovery. Large corporations and governments are I.B.M.’s prime clients.

In this environment, the strong, big corporations seem to be positioned to be the consolidators in their industries. Wal-Mart, which raised its dividend last week, amid the carnage in the retailing sector, is one. And in technology, I.B.M. clearly hopes to be another.

“The coming era will not be kind to enterprises or institutions that have failed to step up to unresolved issues in their core models, strategies or operations,” Mr. Palmisano writes. “In our view, this is not simply a cyclical downturn, but a major shift in the global economy and society.”

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plez sez: IBM had a strong january despite estimates, but they've also gone through massive layoffs and have exported tens of thousands of jobs overseas (the day after the january earnings report, they laid off 1,400 workers around the country). if there are no "american-only jobs" provision in the stimulus package, then the stimulus package will turn out to be a big mistake.

i used to work for big blue as a consultant, they will squeeze profits from government contracts and send jobs overseas without blinking!

~ ~ Citations ~ ~

Read the New York Times article about IBM promises contracts with governments.

Read the New York Times article about IBM lays off thousands after a strong January 2009.

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