back to article IBM misses memo on economic slowdown during Q2

IBM has yet again shrugged off the global economic slowdown with second quarter profits leaping 22 per cent and revenues rising. Although improvements were reported across most operations, IBM's bread-and-butter services division was the star of the show. "I've got to say that this is one of the best quarters I've ever seen …


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  1. Anonymous Coward
    Anonymous Coward

    Only an American...

    ...could call a cut back in the pension plans of the workers that put the company on top a cheery plan.

  2. An IBMer
    Thumb Down

    Well done IBM if only they'd pass that onto some of their employees who are being told, by and large, that they're not getting pay rises due to the current financial climate.

  3. Anonymous Coward
    Thumb Down


    ......funny, just yesterday, my IBM manager explained how conditions were tough and there's no money for payrises.

    awful greedy bastards

    probably why it's leaking talent at a rate of knots.

  4. Anonymous Coward

    IBM have not gave out any payrises

    I work at IBM, (AC) of course.

    I have been told despite a PBC 2+ and increasing my billable by way over 50% of the required anmount (And I dont get O/T) that the market is tough and we wont get a payrise across the board, and this IS the services touted on the BBC and elsewhere.

    I got nothing.

    I make them this money

    Im leaving, see how they cope with zero talent, high performance culture my ar&e!

  5. Anonymous Coward
    Thumb Down

    How do they get away with it

    They charge the customers more each year for their staff but rarely pass that increase on. I'm also leaving.

  6. Anonymous Coward
    Thumb Down

    Lots of unhappy IBMers

    So according to our esteemed leaders and backed up by results we (IBM) did pretty well last year and things are looking good this year.

    But, as some of my colleagues have pointed out many (most?) have got a 0% pay increase despite being told that we (individually) achieved at a higher than expected level (yes I got a 2+ as well).

    It would be nice to work for a company that rewarded its employees based on results. There was a time I thought IBM did that, but if it was ever true it isn't now.

    Apologies to non-IBMers out there reading all this moaning. Having complained internally and got nowhere I'm hoping that one or two senior managers may start to question their policies if they see a few complaints in public.

  7. Anonymous Coward
    IT Angle

    IBMer too

    Sorry to hear about your IBM pay woes.

    I too got a PBC 2+ and got a great payrise. And I too am one of the ones that actually does the work to make the product (i.e. not in sales).

    That said, according to my recent pension plan statement, my money is now worth less than when I put it in. So really looking forward to my retirement in 30 odd years time.

  8. Anonymous Coward
    Thumb Down

    IBM is an embarassment

    What an outrage! IBM is letting its people down once again. In the past few days, employees in IBM UK are being told they are not getting pay raises because of the current climate and the credit crunch. In some cases whole business units are being told they are not getting raises, in others the coverage is as little as 30%. The public face of IBM is a company doing well. Looking inwardly there is low moral, little motivation and an army of staff being pushed to their limits in terms of what they will give to this company without getting anything back.

  9. Anonymous Coward
    Gates Horns

    Mark Loughridge has a moral compass issue :)

    Well lets see how that works when those who can walk do, and those who cant stay.

    IBm will just be another services company scraping by.

    New IBM Moto

    Stop Changing Business, change company :)

  10. Glenn Charles
    Paris Hilton


    That stain on my monitor does look like Jesus. Which seems like an appropriate comment. If only it were an IBM monitor...


    Paris because she's wondering what we're making all the fuss about.

  11. A Wyllie
    Thumb Down

    Where have the IBM profits gone ?

    Like many of the people posting comments about IBM, I too am a 2+ performer and getting 0% increase because we failed to meet our targets. Reading the news headlines today from the BBC and elsewhere just adds insult to injury. To cap it all, our great leader Sam Palmisano also sent an internal broadcast email to everyone this morning telling us what a wonderful 1st and 2nd quarter we had had. So who is telling porkies ? Where have the profits gone ? Well here are some thoughts ...

    Could it be that IBM is using > $2b in a share buy-back. Not surprisingly this boosts the share price, and guess who benefits from that. Well the very same execs who are ordering the buy-back are choosing to exercise their share options and are selling them at market price ! A nice little earner if you can get it. Furthermore, the same execs also get a nice bonus due to the rising share price. Disgusting isn't it ... smells of Enron too.

    Another chunk of the profits is being used to boost share dividends (earnings per share), and what do you know, it's the same execs with their nose in the trough once again. First the wait for the quarterly dividend payment before selling up those share options, and would you believe the get another bonus for the increased earnings per share.

    I have never known morale in IBM to be so bad, but it is what we have come to expect from this money grabbing business who exploit their employees and give nothing back in return. But then again, it is a cheap way to increase the attrition rates in the drive to move work from Europe and the US into low wage economies. It's just like the tea and coffee plantation explotation all over again.

  12. Anonymous Coward
    Gates Horns

    Noticed around the world

    Yes the internal trading is going mad now:

    Ask yourself, if IBm are doing so well why is nobody buying.

    F*ck this im off home, stick your billable utilisation up your A%se :)

    I am a PBC2+ and next year I could be a 3.

    And what would I expect, same as I got this year.

    If your thinking of a services contract with IBM, then beware! No workers left, just salesmen.

    No UK base either. Just another TATA, only more expensive but just as crap :)

  13. Ian Michael Gumby
    Thumb Down

    2+ on a PBC? YOU SLACKER!

    Unless they changed the PBC ratings, in my day, you needed a 1 to get any sort of raise. A 2 meant that you were doing a good job and a 3 meant you had a job for now, but you need to improve your performance.

    Yes IBM works the carp out of you and expects you to be grateful.

    Do your time and move on to a better company.

  14. Anonymous Coward
    Thumb Up

    Tale of Two IBMs

    In some ways I was surprised to see a lot of ppl with 2+ marks in their performance review getting no pay rise (For non-IBMers it goes 1,2+,2,3 then 4 , Dont ask why!) Then I realised they are in the services division. I and the other person quoted above who got a 2+ and a pay rise are in Software Group. Its obvious that IBMs strategy has been to acquire and make money from software since services has become so commoditised and there is little profit. Hence the investment in that division and hence why I would recommend anyone joining IBM join SWG!

    Ironic that the latest results have been driven by services doing so well - I personally see it as a mistake to neglect services since services drive hardware and software sales so by pissin off all the services ppl we will end up losing the SW and HW sales in the long run.

    People bitching that it shows the services managers are all tightwads miss the glacial nature of IBM - it takes months for the business to decide on pay levels so these will have been set when the economy was all doom and gloom and IBMs strategy is to invest in the software business so surprise surprise no money for services.

  15. Grrr

    2+ on a PBC? YOU SLACKER!

    Things have moved on since your day, downhill mostly !

    PBC 1's are now even rarer than hen's teeth. Why ? Well they moved the bell-curve of course and disctated that there were too many PBC 1's and 2+'s. So don't kid yourself that a PBC rating is anything to do with your performance, cos they have already decided on the numbers in each band before they even look at performance.

  16. janetaylor

    this years targets affected our pay

    sorry but I disagree with the 'tale of 2 IBMs' comment above. My manager told me that unit's salary budget, which was low anyway, had been reduced further as a direct result of our falure to meet targets THIS YEAR.

    Targets are being set unachievably high, so that they can never be met by business units (hence no pay raises) but profits are still headline high

  17. Anonymous Coward
    Thumb Down

    Re: Ian Michael Gumby

    They have changed the PBC ratings. There are now 5 grades rather than 3.

    The top 5% get a grade 1 and get a pay rise well below inflation provided that 1) they are below the median actual pay range for their band (not below the median of the pay scale, but below the median of what is actually paid), 2) they have premium skills, 3) their business unit is doing well, and 4) the attrition rate in their unit is too high.

    Someone on a 2+ (again about 5%) might get a pay rise of some sort if they are lucky and meet the criteria above. No-one else gets a pay rise unless they are senior management, who get a trough.

  18. Ex IBM Global Services

    Ah the old stories, the old excuses - there's nothing like them!

    Sorry to say that this all sounds depressingly familiar - which is why I handed in the battery operated blue suit last year. Guess what - there is life & pay outside IBM. I hope all you IBMers remembed to fill in CLAIM on time today - you wouldn't want the CLAIM police hounding you with yet another reason why your endeavours do not merit a pay rise.

  19. Grrr

    Re: Ian Michael Gumby

    There are other discussion forums like this on the web where even PBC 1 performers are reporting zero salary increase !

    Try some Google searches.

  20. Claude Warren

    Union anyone?

    There is a union movement inside IBM in the states ( not that they get enough support to change anything, but it could be a start. In the meantime, here in the states, everything is being done by global resources (GR = offshore). Soon, if you work for IBM in the states, and are not working in corp headquarters, you will be a traveling salesperson that sells products and services that will be delivered by offshore groups. Happy days ahead.

    Me? I'm looking for work in Ireland -- I gotta get out of the states as well as IBM

  21. Anonymous Coward

    Re: Ian Michael Gumby

    Ian, do you really think that all these IBMers posting are dead wood who are merely bitter and making excuses for their poor performance? Trust me, the dead wood was culled years ago.

    Some, if not most of us stay not because of momentum or inadequacy, but because we believe in what IBM was, what it should be, and (hopefully) will be again, if we have any say in it.

    The Fat Bastard Sam will be gone some day...

  22. Anonymous Coward
    Anonymous Coward

    Lots of comments from employees


  23. Anonymous Coward

    Mr Impersonal

    I got it too by bulk e-mail no less.

    Dear Colleague,

    This email is coming from me (as your 2nd Line Manager) because of the recent organisational changes in AS Delivery and the many resulting changes in manager:professional alignments.

    So far in 2008, we are not achieving our full potential and have missed our signings, revenue, profit and utilisation targets. Whilst we have improved year on year, we have fallen behind what is required to achieve our full year targets and as such (in common with many other lines of business within the UK) the budget available for salary increases in 2008 is much reduced.

    I therefore regret to inform you that you have not been selected to receive a salary increase this year.

    I am aware that with a PBC 2+ rating for 2007, this will be a major disappointment to you. However due to the limited salary budget available this year, it has just not been possible to include everybody with a 2+ rating in this year's coverage.

    I would like to take this opportunity to thank you for your continued commitment to AS Delivery. Please talk to your "NEW" Manager if you have any concerns. As we are now in the mid year review cycle this may be the most appropriate time for the discussion.

  24. Anonymous Coward
    Anonymous Coward

    Play it again Sam

    I received the same email as above.

    2+ on PBC, exceeded utilisation, won awards at the account I'm on - but not even a below inflation increase. zilch!

    I worked out that the extra (unpaid) billable overtime I put in last year netted an extra £25k of revenue for IBM - I feel embarrassed.

    I've nearly 10 years service and this has proved to me that its time to move on. I've already started sending out my CV, there is nothing to keep anyone at IBM anymore.

    The sad truth is that this is all by design - IBM want to lose headcount (and continue to offshore everything), but won't pay any severance.

    Its a war of attrition, I hope I've won !!

  25. Anonymous Coward
    Anonymous Coward


    Must be just UK without payrise/bonus?

    Here in central mainland Europe my 2+ got me a rather nice increase thank you very much...

    Onsite IBMer hence AC

  26. Anonymous Coward
    Anonymous Coward

    Try STG Modular Systems if you think the grass is Greener

    STG is now the poor boy of IBM UK and Modular,,, oops sorry System x and BladeCenter (it changed again!) is the poor boy of STG. We have a new general manager who refuses to acknowledge our existence, and I have SUN and Lenovo beating at the door with hugely better offers. Now that's the way to get a payrise!

  27. Blockhead

    It's really not that tough

    Dear Employee,

    You are not receiving a pay rise because the employment market in your locale does not currently demand it and we are smart enough not to pay beyond market price in any economic transaction. You may expect us to apply the same discipline with our supplier contracts and in negotiating business with our client base.

    Yours, etc.

  28. Anonymous Coward


    Same story here, in SWG (contradicting the earlier post about life being OK here - it's no different). I'm another 2+ performer, I'm another one with zero pay rise. It doesn't matter that I have direct responsibility as part of a very small team for nearly $2M revenue last year.

    I echo previous comments about our leadership. Thomas Watson must be spinning in his grave. He started this company under Quaker beliefs, hence the egalitarian approach - such as the "single status company" tenet that has been quietly erased, along with "respect for the individual".

    We now appear to be under the leadership of a very real "Gordon Gekko".

    It's bad enough without Gordon emailing us all to rub it in; to paraphrase, "hey, what a great year it's been, and if we work hard it's just going to get better!". If this is a good year, I'm not sticking around again for a bad one...

    I've seen not far short of 20 years in IBM, and I can tell you that this is probably the worst period for employee morale that I have ever seen. I'm serious.

    Looking wider than just our own immediate circumstances, these cost-cutting circumstances might result in a nice bottom-line for IBM in the short-term; mid- to long-term however, the future doesn't look so rosy. Those who leave will be the best (trust me, I've seen a few go already and I KNOW they are missed), those who stay will be the ones who know they're not up to scratch and might find it difficult to find another position, let alone survive in it.

    What Palmisano has instigated here is a form of inverse-evolution of the IBM workforce; it's not "survival of the fittest", it's "departure of the fittest". IBM will become a shell of its former self, staffed by those who are either aren't really up to scratch or are so dissillusioned they no longer perform to their capacity.

    Advice to any shareholders reading this - by my reckoning you'd be advised to sell up within 12 months. I think you're "safe" to the end of the year - Palmisano will make sure of that - but the staff losses are really going to start to bite, and with that, so will the results.

    Me? I've got a job interview at a competitor coming up. The easy route for me would be to go to a Business Partner - but if I do that I'm still effectively working for IBM, it's win-win for them. No, if I go, I'm going to a competitor. IBM has had more than its pound of flesh from me, I want some of it back.

  29. Anonymous Coward
    Anonymous Coward

    Dreadful company - treats employees abysmally

    What great news this is. It means (yet again) a load of fat americans with their snouts in the trough do very well thankyou while the vast majority of hardworking IBMers get little or nothing. Why do we bother? There's no incentive to work here. Morale is on the floor, management are weak and ineffectual, talent isn't rewarded, and cliques rule. There's only one thing for it .....

  30. Anonymous Coward

    I already have interviews

    I work in data sensitive situations which are being quietly offshored, and let me tell you once its gone its gone, no matter how bad it is.

    You WILL now get fired for buying IBM :)

  31. Anonymous Coward

    How to further demotivate staff

    I hope he dont come anywhere near me, F*cking ly*ing bast*rd!

    Dear Northeast Europe IBMer,

    IBM has reported 2Q 2008 earnings and you can read about them here.

    This is the first time I write to you about our quarterly results. I am pleased to tell you that in Q2 2008 we delivered a strong performance – record revenue growth of 8 percent and pretax income up 10 percent.

    These results extend Northeast Europe's trend of profitable growth to six straight quarters. So let me start by thanking you for your hard work and dedicated focus on client success! This track record also gives me confidence that there is more growth in the market for us to take.

    Many parts of our business performed well in Q2, particularly when we leveraged our unique value proposition in front of clients:

    Global reach and scale: we delivered strong revenue in both Growth Markets such as Central & Eastern Europe, Middle East, Egypt, Pakistan, South and Central Africa, and in Major Markets like Germany, Switzerland, Norway, Sweden, Finland, and Ireland.

    Technology leadership: System Z10, Power6, and Storage hardware revenue grew significantly as did revenue from Software Group, General Business,, Business Partners, and Financial and Industrial sectors. Signings by Global Technology Services and Global Business Services grew double digits.

    Financial strength & flexibility: we improved gross profit margins across the board driven by services. Higher profit margins allow us to invest for our future; for example, Cognos, Telelogic, and other acquisitions helped us to deliver record revenue this quarter.

    Deliver unique client value: in Managed Business Process Services we closed a megadeal in the U.K. with a public sector agency to improve its customer service and increase productivity. This deal is a model for what we can do for other public sector clients.

    While our performance overall was solid, we did have some weak points. Integrated Technology Services signings and middleware both fell short. Another target we missed in Q2 was expenses. As you know, our corporate roadmap to 2010 business objectives relies on margin expansion and productivity improvement. While we were able to improve our Gross Profit Margin (margin expansion) we failed to improve our Expense-to-Revenue Ratio (productivity) because our expenses grew faster than revenue.

    Expense growth relies largely on factors under our control, such as how much we discount our products to make a sale; whether we sell the right 'mix' of high-margin products and services; and how we price and manage our services contracts. Expense control is always important, but especially now as the company invests in Growth Markets.

    We began on a path a few years ago to lower our center of gravity and put more resources and decision making closer to the client. Today we are poised to take that strategy to the next level. As always, we will succeed based on our ability to integrate better in front of the client. We need to find new ways – particularly as we expand our geographic reach – to work smarter, flatter, and faster.

    I look forward to sharing more on this as I travel around to meet you in the coming months.

    Michael D. Rhodin

    General Manager

    Northeast Europe, IBM

  32. Anonymous Coward
    Anonymous Coward

    Read between the lines

    I'm a contractor for IBM in the UK (hence AC) on the Services side. Understandably a lot of my IBM colleages are seriously upset by this. But you have to understand what's going on here.

    What IBM would like to do is sack everybody on the Services side and set up cheaper, more profitable operations elsewhere. They can't do that, it would cost a fortune in redundancies, they would alienate a large percentage of their customers, and would be logistically impossible. So they are doing it incrementally, which means a gradual reduction in the workforce. Now the last thing you want to do as a company if you want to get rid of people is encourage them to stay with decent pay rises, pensions, etc. You piss them off enough that enough people vote with their feet, and bingo! - no redundancies to pay. Not only that, but you can turn around to your customers and say 'sorry Guys we really can't get the skilled staff here in the UK, but we've got lots in India who can do a job'. In the meantime the loyal IBMers are the ones who stick around long enough to allow IBM to make the transition before they lose their jobs too. I've seen it happen elsewhere.

    What can you do about it? Find another job!

  33. Anonymous Coward

    IBM = In Bad Management

    IBM gave me an opportunity. Only to teach me how worthless this Corp is. I have been under pay for 3 years, with no help from the so called w3 and HR. Those 9 years were hard learning. No matter how good and hard i work i only hit a wall of bad management (my direct line is useless and does not care), we are hammer with empty talk and notes. Nothing positive here. W3 is no more then a propaganda machine, PBC are predefine, target are complete fib and IBM HQ are living the good life among themselves. I was proud to be an IBMer, now i am miserable and a shame.

  34. Anonymous Coward
    Anonymous Coward

    Pissed off Uk IBMer

    You guys getting payrises are lucky been 5 years yes FIVE since i got a rise and in that time been a 1 or 2+ performer. I would not trust IBM management one inch, all you get is the usual nonsense about times are hard, yeh for us poor sods looking after their systems, its all empty promises.

    Now the support is going to Hungary which is a no brainer, someday IBM will realise it's its techies that keep the company afloat - how many Salesman are gonna work for No money when the salary system crashes due to it being run by a load of people who

    1. don't speak english.

    2. haven't a clue what they are doing

    3. are cheap

    I've been here 30 years and just waiting to walk with a nice big wedge. As to pensions well forget it, even people who work for pensions UK are getting out of the schemes as its not worth paper its printed on

    And they wonder why the office is empty at 4.30!!!

  35. Anonymous Coward
    Anonymous Coward

    You couldn't make it up if you tried

    70% of 1's are not getting a payrise

    80% of 2+'s are not getting a payrise

    Fortunately the execs have been trousering some very nice options just recently.

    Little wonder that in the UK it is 37 hours and everyone is done. We have a clueless exec team that while being very concerned about morale, do nothing to affect it. In fact, they make it positively worse by sending notes out that congratulate us for our hard effort. It's like an episode from "Are you being served?" where young Mr. Grace says "you've all done very well", and exits stage left.

    As HR remind us, people are not leaving. So, that's alright then.

  36. Anonymous Coward
    Anonymous Coward

    I can't wait for....

    ... Mike Rhodin to show his face at the Town Hall meetings.

    I am so going to be there. I've already anonymously mailed him all these comments.

    You've got to love the power of the internet.

  37. Anonymous Coward
    Anonymous Coward

    It's all about the options...

    Unfortunately, Rhodin couldn't care less what you say (good on you for doing something though). HR and the executive team is fully aware of the internet comments and the general apathy within IBM UK at the moment, but they cannot do a single thing. Why? Because all of this is tied to Palmisano's desire to meet his 2010 goal of $10 - $11 in earnings per share. All the executives are incented via stock options and the behaviour that this is driving is exactly what you would expect in that case. Representation has been made to Palmisano from very senior managers about the "climate", but his attitude is "tough". He will not release any more money for what used to be the salary increase plan. The executives don't have the clout that they think they have, or the balls to do anything as they are all running scared that they will not make their numbers.

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