back to article IBM board probes claims of fudged sales figures that led to big bonuses for execs

IBM's board of directors has started an investigation into claims that its sales numbers were manipulated, leading to executives securing big bonuses. If the board fails to take any action, it may face a lawsuit to claw back millions of dollars from top staff. In late March, just days before IBM was sued for securities fraud, …

  1. Fruit and Nutcase Silver badge
    Joke

    Forest visit

    IBM board to visit a nearby Forest.

    Looks like they'll be in for a big surprise

    1. sad_loser

      Re: Forest visit

      The idea that Sales People would lie is profoundly disappointing to me, I feel faint..

      Nurse! the smelling salts!

      1. Version 1.0 Silver badge
        Unhappy

        Re: Forest visit

        These days, "Nurse! the smelling salts! ... I need to go asleep ..." - LOL, I'm not complaining, when you have something like that which helps you then it's good to do if it helps you sleep although I remember when I was a student 50 years ago my friend always slept much better after snorting a little line.

        Sadly we see crappy behavior like this described in IBM everywhere internationally and locally these days.

  2. deevee

    Nothing new here, IBM has been redirecting lots of revenue to "cloud", even mainframes. Along with increased executive bonuses, it was so the execs could say their cloud "imperatives" were working and IBM was a nimble company moving with the trend, when it was nothing of the sort.

    Definitely misleading shareholders...

  3. Yes Me Silver badge
    Devil

    All to be expected.

    Long overdue, I fear. First, IBM was a technology company run by engineers, salespeople and lawyers. It was well on the way to irrelevance when they put a businessman in charge (Gerstner). He pulled it back from the brink but then handed over to accountants, and finally to a techie who has clearly been snowed by the accountants. The accountants didn't know how to manage but did know how to make bad numbers magically look good. Until they didn't, which is where they are now.

    1. OldCrow 1975

      Gerstner the cookie salesman from Nabisco

      Gersterner took over from Akins. The main frame sales were good. I sold my share as an ISAM. Then Gersterner got the wild idea that Client Server Was far superior. On that model Gersterner got rid of support in sales then made support a standalone product. That left support open to competition. Executives at IBM never appreciated support. Which Support was the driving force behind sales. I noticed a lot of questionable executive practices all related to Executive bonuses moving sales of Client server to mainframe and back. Just long enough to record the sales in a specific executives benefit.

      Soon Support would wither and die. Forcing IBM to move Mainframes to.its own data centers. Customers were sold time on mainframe. But told they had purchased a mainframe. They were sold DASD but actually sold a partition on a huge storage device. In My opinion IBM lost its integrity. Now those data centers are staffed with Indians throughout the USA. VERY FEW Americans work for IBM in the USA now.

      1. Anonymous Coward
        Anonymous Coward

        Re: Gerstner the cookie salesman from Nabisco

        I have to admit, you lost me with those last two sentences.

      2. WokeUpThisMorning

        Re: Gerstner the cookie salesman from Nabisco

        You mean John Akers?

  4. Anonymous Coward
    Anonymous Coward

    Ahh. So I wonder if those that are guilty ever bothered to do the mandatory 'Code Of Business Conduct' training that was so regularly trotted out? When I worked there it was almost an IBM mantra - I guess just not for all?

    1. MrBanana Silver badge

      Ethics are only for the little people. It was just a tick box in case there was a lawsuit and then the individual could be blamed. Hmm... I wonder if they ticked that box themselves or just got their PA to do it.

    2. Lord Elpuss Silver badge

      I don't think letter banded executives needed to do that? Or they had a special version just for them?

      1. Fred Daggy Bronze badge
        Devil

        If you have no interest, you only have a tickbox "yes" or "no".

        If you have an interest, you have a much more detailed form to fill out that gives one much more creative ways to bend the truth. At least, that is how it works at our company.

  5. bregister

    only when the tide goes out

    I don't understand finance or shares at all. Why is it worth the shareholders time to pursue this, when even if they win it lessens their dividend due to the cost of lawyers etc. ?

    1. LDS Silver badge

      Re: only when the tide goes out

      If profits are not turned into bonuses to execs because they missed their bonus targets they could still be paid as dividends, or used for buy backs, etc.

      1. Jimmy2Cows Silver badge

        Re: only when the tide goes out

        Also if the figures aren't ... let's be generous... massaged... to show a more rosy picture, it will truthfully reval which C-suite initiatives - surprise - do not actually work as well as promised.

        Damage can be limited before it gets really out of hand, the responsible exec's won't get huge bonuses for doing a shit job, and people will maybe think a bit harder about actually making stuff work instead of fudging the numbers trying to make some daft off-the-cuff idea appear to be working.

        Might catch some of this nonsense before those responsible have migrated to pastures new where they can make the same mistakes all over again.

  6. Coastal cutie
    Facepalm

    Here we go again

    Is there anything that IBM won't obfuscate, manipulate or just darn lie about?

    1. Anonymous Coward
      Anonymous Coward

      Re: Here we go again

      They're usually pretty honest about Oracle.

  7. Snake Silver badge
    Megaphone

    Big surprise

    A large American company. Hiring C-level MBA-certified execs, often based upon their Old Boys connections from other large companies.

    Cooking the books to line their own pockets.

    ------------------------------------------------------------------

    Say it ain't so! -_-

    We've had more corporate scandals in the past 30 years than we had in the previous 80, but let's keep believing that our current interpretation of laissez-faire capitalism is good for us. The 39% that make up the dumb sheep voters keep believing in the Kool-Aid no matter what happens around them.

    1. Ace2 Bronze badge

      Re: Big surprise

      I’m shocked, shocked, to find numbers being manipulated in this establishment.

    2. Patched Out
      Joke

      Re: Big surprise

      Well, if you remove all those pesky regulations, then nothing that they do is illegal. Ergo, no more scandals ... right? /s

    3. MrBanana Silver badge

      Re: Big surprise

      My tiny violin is almost on fire from overuse.

  8. VoiceOfTruth

    Real companies any more?

    Are there any "real companies" any more, that make a product or service and sell it for a reasonable mark up? Instead we have companies which do share buy backs, "creative" accounting which Meyer Lansky would be jealous of, and all to prop up share prices so that certain people get bonuses.

    Here in the UK we have a Chancellor of the Exchequer whose wife who creatively avoided paying tax here, claiming non-domicile status while being married to an effing MP and government minister. Was this some sort of long distance Skype relationship? Then, when she is called out, she "announces" that she will start paying tax here. How very generous.

    Sometimes I feel that I'm the only person paying tax in this country.

    1. Anonymous Coward
      Anonymous Coward

      Re: Real companies any more?

      In fairness he was a permanent resident of the US while in office (or at least that's what he declared for his green card) so it's no surprise his wife didn't live in England either.

    2. Lord Elpuss Silver badge

      Re: Real companies any more?

      If you want to change tax behaviour, change the tax rules. As long as the rules 'permit' something, individuals are entitled to maximise their own benefit; and companies have an actual fiduciary duty to maximise for their benefit. Otherwise the shareholders will riot.

      tldr: don't pay more tax than you have to.

  9. Auntie Dix Bronze badge
    Meh

    The Lobster Clawback, Please

    As dreamy as a clawback of IBM's C-Suite swindlers' pirate treasure sounds, the likelihood seems remote.

  10. Anonymous Coward
    Anonymous Coward

    It is true

    100% true. The most recent example a drive to tag everything as red hat...whose bonus depends on that I wonder? Exec time and effort is wasted on such "farming" instead of solving real problems or on winning new work.

    1. Ken G Bronze badge

      Re: It is true

      Red Hat was designated as "Cloud" not systems so it's sales contribute to the same cloud target as the mainframe sales (because clouds are virtualised, linux can run in a vm and mainframes can host them)

  11. Alistair
    Windows

    Did Jim figure this out?

    Is that why he bailed in a hurry after Ginny crowned him?

  12. HeavyTed

    Autonomy

    When the IBM board decided autonomy had been moving sales around they decided to try and get Lynch actual jail time.

    I wonder if they will do the same this time for themselves?

    1. Anonymous Coward
      Anonymous Coward

      Re: Autonomy

      > When the IBM HP board decided autonomy had been moving sales around they decided to try and get Lynch actual jail time.

      FTFY

    2. Lord Elpuss Silver badge

      Re: Autonomy

      The IBM board has nothing to do with Autonomy.

  13. WokeUpThisMorning

    And does anyone believe this wasn't going on before 2017 under Rometty? Of course it was which is why there were so many layoffs and unpaid sales commissions. I truly hope there is karma.

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