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back to article The only way is up, baby: IBM UK sales down, profit down, headcount down

IBM UK split with more than 1,000 employees in 2017 but the reduction in overheads only went so far: the bottom line was bashed mostly by an impairment of investment charge and falling services sales. For the calendar year (PDF), Big Blue pulled in £3.713bn in revenues, down 4.76 per cent on the prior 12 months. Broken by …

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  1. 45RPM Silver badge

    Possibly unsurprising…

    …given the poisonous Accountant Mantra ‘A penny saved is a penny earned’. Poisonous because they save money by cutting projects, cutting staff, cutting hardware expenditure - and then pat themselves on the pat, claiming to have ‘earned’ millions.

    A more forward thinking mantra is ‘you have to spend a penny to earn a penny’ or ‘as ye sow, so ye shall reap’. In other words, invest, invest, invest - and then you’ll see the pennies come pouring in.

    12 3 Reply
    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      Re: Possibly unsurprising…

      In other words, invest, invest, invest - and then you’ll see the pennies come pouring in.

      You can invest all you want, but unless it is wisely targeted you may get nothing back. And even if wisely targeted, if it isn't carefully cost-controlled, the product or service will be too expensive for some buyers, reducing the addressable market, and making the returns thinner against a higher than necessary investment.

      There's plenty of companies that have invested so much that they've gone bust before the pennies started rolling in (if ever they might have).

      5 1 Reply
      1. 45RPM Silver badge
        Reply Icon

        Re: Possibly unsurprising…

        @Ledswinger

        True enough. And many more which have gone bust by being starved of investment and resources. "A penny saved is a penny earned" has got to go down in history as one the most fat headed, fatuous sentiments ever uttered.

        The sentiment of the original maxim, "a penny saved is two pence clear", is abused beyond its capacity in order to fit it into an accountants excuse for not investing in a business.

        3 2 Reply
        1. AMBxx Silver badge
          Reply Icon

          Re: Possibly unsurprising…

          Depends upon your business and where it's heading. If you're in a downward spiral and all your customers and employees hate you, you might as well just maximise profit by cutting costs and screwing your customers and employees.

          Oracle are pastmasters at this. IBM too. SAP are learing rapidly.

          5 1 Reply
          1. 45RPM Silver badge
            Reply Icon

            Re: Possibly unsurprising…

            @AMBxx

            But how did you get into that spiral?

            Let’s not forget that Apple was in that spiral once. Sure, to get out of it they had to slash product lines - but they didn’t put the money ‘saved’ into the bank. They invested it in their core business.

            But even if your brand is so far gone, so toxic, that it’s beyond redemption, you can still rebrand and invest to pull back from the brink. Even IBM tried it once, with a cheap PC sub-brand - Ambra. Actually forget that one. It didn’t work out so well either!

            0 2 Reply
  2. Anonymous Coward
    Anonymous Coward

    Pan-Am used to be huge too, time moves on and new species fill the gaps.

    9 0 Reply
    1. Flakk
      Reply Icon
      Joke

      True, but it's nevertheless crushing that there will be no Pan-Am to take Dr. Floyd to Space Station V seventeen years ago.

      2 0 Reply
      1. Ken 16 Silver badge
        Reply Icon
        Windows

        I was re-watching that over the weekend, I'd forgotten how slow moving the film is or how incidental to the plot are the most memorable scenes.

        0 0 Reply
      2. Ken 16 Silver badge
        Reply Icon

        and HAL 9000 will be called Watson?

        0 0 Reply
  3. Anonymous Coward
    Anonymous Coward

    If you outsource to save money, give the contract to the cheapest vendor, then constantly try to drive the price down further at every turn, guess what. Your service will suck. The vendor will send the work to the cheapest, (ie worst) locale they can, and won't spend a dime on developing your environment. So after 5 years your IT shop hasn't moved forward 1 iota and your company has nothing but contempt for IT. Then a major project fails, a major IT outage occurs, a major security breach happens, and there's fingers pointed all over. The CIO quietly departs and there's renewed interest in bringing IT in house and regaining control. That lasts until the memories fade and a new CFO realises how expensive this IT service is and suggests going to market.... tell me if you've heard this story already :/

    33 0 Reply
    1. steviebuk Silver badge
      Reply Icon

      To many fucking times. There are a lot of cocks in management.

      4 0 Reply
    2. FozzyBear
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      Coffee/keyboard

      I'm almost certain this is Admin/Mgt 101 in any MBA course nowadays

      0 0 Reply
  4. Anonymous Coward
    Anonymous Coward

    What a surprise, cut staff, provide almost non-existent or extremely poor offshore service, then wonder why people aren't signing up for more.

    19 0 Reply
    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      cut staff, provide almost non-existent or extremely poor offshore service, then wonder why people aren't signing up for more

      I suspect that IBM are knowingly "adjusting their customer portfolio". Put simply, some customers pay a lot, ask little, and are highly profitable. Some ask a lot, have a bargain basement deal that they've managed not to screw up with variations, and provide little profit. IBM know exactly who makes them money, and I believe are happily surrendering low margin customers when their deal comes up for renewal.

      That looks like decline because the top line goes down, and often there is an impairment charge on dedicated assets. In this case, if you follow the link to the Companies House accounts you'll see that the operating profit increased by a very impressive 180% from £65m to £182m. I would suggest that when these results became clear, the champagne was being broken out at IBM UK Towers.

      4 0 Reply
      1. Hans 1
        Reply Icon
        Holmes

        IBM know exactly who makes them money, and I believe are happily surrendering low margin customers when their deal comes up for renewal.

        Look at their cash-flow and their profits, I doubt this is the case!

        2 1 Reply
  5. Anonymous Coward
    Anonymous Coward

    Does anyone remember that film with Michael J. Fox in The Secret of My Succe$s (1987) where he works in a big corporation and they keep cutting staff because profits keep falling so they cut more staff which results in a lots less done and less sales so profits keep falling and in the end the top guy gets fired and replace with some one that stops firing people and instead focuses on competition and making customer happy.

    8 0 Reply
  6. Anonymous Coward
    Anonymous Coward

    The beatings will continue...

    ...until morale improves.

    18 0 Reply
    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      Re: The beatings will continue...

      At IBM the beatings can only continue whilst there are some staff to beat.

      I suppose they could advertise on Indeed for whipping boys (and girls and others).

      9 0 Reply
      1. Anonymous Coward
        Reply Icon
        Anonymous Coward

        Re: The beatings will continue...

        At IBM the beatings can only continue whilst there are some staff to beat.

        I suppose they could advertise on Indeed for whipping boys (and girls and others).

        Maybe that explains why there are *STILL* people who will willingly take jobs at IBM...

        4 0 Reply
  7. IGnatius T Foobar !

    India Business Machines?

    Weren't they some sort of 20th century technology company or something?

    7 0 Reply
  8. steviebuk Silver badge

    Do a contract for TSB...

    ...allow everyone to see their systems still go down. Everyone then thinks "IBM must be shit then? Not the same as they were in the 80s". Word spreads and no one buys your service.

    5 0 Reply
    1. Hans 1
      Reply Icon
      Coat

      Re: Do a contract for TSB...

      ...allow everyone to see their systems still go down. "IBM must be shit then? Not the same as they were in the 80s".

      And that is down to: "Those highly knowledgeable veterans are expensive, let's hire the interns and make the veterans redundant, no, too expensive, let's make them ask for retirement, have them resign or resign them against their will."

      3 0 Reply
      1. Anonymous Coward
        Reply Icon
        Anonymous Coward

        Re: Do a contract for TSB...

        And if that fails, we'll just push compulsory redundancies at the statutory minimum payout, amirite?

        4 0 Reply
    2. KitD
      Reply Icon

      Re: Do a contract for TSB...

      Erm, IBM didn't write the TSB systems. They were acquired by a Spanish bank that did it themselves.

      IBM were called in to investigate the mess.

      https://www.bbc.co.uk/news/business-44562229

      0 0 Reply
  9. TolerantViews

    There is really no longer any reason to work for IBM. Poor service backed only by CIO's who don't know how to run their own IT. If your IT leadership has IBM in, start to get out, your management do not know what they are doing other than lengthening their own large salaries by a bit.

    5 0 Reply
  10. Anonymous Coward
    Anonymous Coward

    Is IBM still a thing?

    Wasn't sure.

    2 0 Reply
    1. Yes Me Silver badge
      Reply Icon
      Unhappy

      Re: Is IBM still a thing?

      Well, I sold my last few shares recently and the pension fund appears to be more or less solid. So I don't really care any more, but yes, apparently they still have a few employees and even some actual customers. It's a shame, but although Gerstner did get the ship to turn 20 years ago, his successors have failed. He listened to technologists; his successors only listened to accountants, and even believed their own hype.

      12 1 Reply

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