IBM took a big charge and paid to offload a business. Antony Currie and Robert Cyran explain why the company's decision to stick with a questionable strategy is the longer-term concern.
So bleak day for big glee this morning IBM is announcing really cool set of results yet again this time. Made worse by. How to take a hit a tone of his business has rolled you've been looking at this company for quite some time been tracking the declining sales what are they done today humbled Sydney to the company. Book sales declined for the tenth quarter around so it's it's not it. It to me that's the president's surprise to anyone yet I mean it's a lot of longstanding problems were and what they've done is they've they've had this. Medicine basically they've done for the past twenty years when they do is they take some of the lower earning businesses. They sell them they take the money and they put it and buy back stock. I refuse software companies and then the margin to go up some which sounds like he should be a good decent strategy right is it worked for a long time. Promised they just did everything to such and access you know you can't just this forever because eventually. You can't earnings higher than expected in revenue for or against him and the thing is they kind of ignored them they're existing businesses like the services business. And that but the bigger problem however is that technology moves along IBM is. Hasn't had a conference yes you. There cloud companies offers alternatives to their software much cheaper. People are buying as much hardware so items with the kind of like a possible. I doubt China fixes and setting off not much business is I think. But it's a day edging your message to see I was saying that we. We go over it with getting rid of seven billion of applauding what she called deadly calorie you'll back calorie learning example revenue this year. So we switch some gumshoe it's on tonight. 'cause services 'cause getting data service is getting better yes we just a bit slow and other things going in the Wayne's ten that was back. I dust some I can listen here excuse is that she's at least soaking in some respects the right gangs so when it wasn't going wrong. What the promise they're. This idea that it got this company and they're they're trying to do these things but they they can't do this past month the thing is that got a legacy business and it's very hard simply say OK I don't want be in this position and warm and it's time switch and buy an entirely new business and human they're like they're soft provisions that should be the one that should be a really steady kind of growing business enough. Sales declined the last quarter that's not a good that you know if you pinning your hopes on its offer and that is also climbing that's really bad months and then there are the problem of course like China for instance that said you know we don't want IBM equipment and our company isn't so self hardware sells them and in China which put should be one of the great growth markets that are trying. Yeah I again remedies to map by getting better eventually but it sounds like there's a lot of I can give us a bit more time but here we are full is in what was a five year plan. And finally asked plays in some respects is kidney she said I can we ditching next his earnings and yet his. IBM for years and years of that if it were and are twenty dollars a share. And nevermind the fact that these these weren't actually counting hearings as they were being discarding all the bad stuff and I'm cereal you know all these things every time they they sold something it would take a charge. So these earnings were very very high quality in front. But the company's finally forced to admit I you know we're not gonna make twenty bucks a share price promise. They can't keep on doing this because they they're they're remedies or reclining on the said ten quarters in a row via the coupon declining you're not gonna earnings he can't bring transfer rule also and also as a declining. Make the fast talking us through that problem will be back with more breaking these tomorrow.