Imagine your revenues decline 3% and your earnings per share shrink 5% yet the market smiles upon you because it could have been worse. Welcome to IBM a former tech company turned marketing spin master extraordinaire.

Last week IBM announced its 4th quarter earnings with revenue and earnings declines but the stock jumped up 7%. What the…? Analysts were worried it could have been worse. Just a year ago IBM announced that it had finally broken 22 straight quarters of revenue declines with a measly 1% increase over the prior quarter. But, now it has racked up another two quarters in a row of declining revenues. Oh, and even with the 7% bump the stock is still down almost 25% from a year ago. What keeps people invested – the promise of tomorrow.

Poor Ginni Rometty, IBM’s CEO, her promotion in 2012 looks like she was handed a poisoned chalice. What could she do? Sell off the old and promise the new (except for those cash cow mainframes). Unfortunately, the “new” doesn’t seem to be getting any real traction. So, sell the “new, new” and spin it hard in order to look like you are a forward-looking organization with great growth prospects.

The company is a marketing powerhouse but is it a tech leader anymore? Let’s look at just three of the flagship technologies that were, and are, being touted. First cloud: Rometty came in late on this one. She became CEO six years after Amazon launched AWS and shook up the entire tech world. At first IBM tried to do its own cloud solution internally. But that was bound to struggle given the company’s historic commitment to on-premise hardware and software.

So it went shopping outside and in 2013 IBM acquired SoftLayer – a fairly reasonable cloud provider at the time. Predictably, internal struggles muddled the offering and it wasn’t until 2017 that some focus was brought to bear and IBM unified its offering under the “IBM Cloud” brand but there is still no joy.

It’s tough to tease out an apples-to-apples comparison from IBM’s cloud numbers but it appears to be way behind the leaders AWS and Microsoft. Desperate to boost the cloud business IBM just made its largest acquisition, paying $34 Billion for Red Hat. Some analysts are scratching their heads since this will give it very little top-line growth and is dilutive to the EPS – earnings per share.  But IBM’s logic is: if you can’t actually provide the cloud it could be the manager of multiple private and public clouds for its customers. If you believe IBM’s ads the IBM Cloud is everywhere and used by everyone. Yes well, I guess we will just wait and see but prospects are iffy to say the least. BTW, it looks like cloud revenues were down last quarter.

If you thought cloud was a stumble take a look at IBM’s approach to artificial intelligence, or as they like to call it “Cognitive Solutions”. Spotlight IBM’s Watson! (Do you hear the theme from the Jeopardy game show?) Watson made its splash in 2011 – one year before Rometty became CEO – and the company has been beating that horse ever since.

Right away IBM touted that it was going to change healthcare by assisting physicians to make more accurate diagnosis. By 2016, IBM claimed Watson was incorporated into 17 different industries and the company was working with more than 500 partners to build Watson cognitive applications in retail, law, music, image recognition, the hotel business, and even cooking. It seemed you could not get away from an ad or commercial beating Watson’s drum.

How are things working out? Well last year it was revealed that Watson gave unsafe recommendations for treating cancer patients – Ooops! The report is the latest sign that Watson, once hyped as the future of cancer research, has fallen far short of expectations. Today, AI capabilities far more powerful and flexible are available from Google and AWS. Looks like strike two: great hype but not much in the way of deliverables.

Cloud is wimpy, AI is wimpy – what should you do? Aha! Tout the next frontier: Quantum Computing! That’s the somewhat difficult to understand computing technology that promises almost miraculous capabilities. Late last year IBM claimed a breakthrough in quantum computing and just last month at the 2019 CES it announced – drum role, please – the “first fully-integrated commercial quantum computer,” the IBM Q System One. It’s great copy but will this lead to new revenues? Not according to one report by the National Academy of Science, Engineering and Medicine, which asserts that, a commercially relevant quantum system is at least 10 years away.

GE was also once a storied technology company and its marketing messages were powerful. Then its mistakes caught up with it and now it is just an echo of its former self. What do you think? Is IBM following in those footsteps? Does anybody really think of it as a tech leader anymore? Big companies are like fly wheels: after being spun up it takes a long time for the momentum to dissipate but eventually it does. Remember companies called Motorola, or Kodak?

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