Cringely: The Decline and Fall of IBM

The rumor I’ve heard is that IBM, which not long ago changed its 401K contribution policy to push what had been a biweekly payment into an annual one right at the end of the year, may have decided this year (and in the future?) not to make any 401K contribution at all. Since IBM’s U.S. employees can divert up to eight percent of their gross compensation into the 401K and IBM has traditionally made a comparable matching payment, this possible change in compensation policy could save the company close to $1 billion.

In one sense one might ask what’s wrong with that? Companies have to do what they have to do in this economy and workers sometimes suffer. But for IBM it indicates the company is getting near the bottom of its bag of tricks for maintaining earnings growth toward that ambitious 2015 goal of $20 per share. Management seem to be down to three ideas to improve the numbers: 1) savage the 401K plan; 2) sell the low-end server business to Lenovo for a reported $2.5 billion, and; 3) expect a miracle called PureSystems.

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2 Responses to Cringely: The Decline and Fall of IBM

  1. Tom says:

    While I realize some stories can be very one-sided, Cringley tends to research his material pretty well. Furthermore, this seems to sync with what we’ve seen and heard from (current and former) IBMers over the last couple of years.

    It’s sad that IBM is trying to meet their insanely high financial goals on the backs of their rank and file workforce. I understand that companies want to show a positive growth pattern, but to do so by accounting tricks like the 401K/pension program changes is immoral. If they truly tend to make major cuts (again) in the 2nd quarter and not pay out the (now) annual matching funds, that descends to a new low of corporate accountability… especially measured against what types of raises and bonuses the executive offices have received during that same time period.

    And corporate America wonders why workers have no trust and loyalty towards their employers?

  2. darrenduke says:

    There is a comment in there a few pages down, “You have just described Computer Associates. Is this what it comes to? Dirty financial games? Very sad.”

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