Happy 100th. Birthday IBM!

This week on Thursday (June 16, 2011), IBM will celebrate its centennial birthday. How many companies in the US are of that age of 100 years? Very few.

I have to write this because like many thousand folks, I spent the early part of my career as an employee of IBM in two countries. First five years in Canada followed by next eleven years in the USA. During my sixteen years of work at IBM (mostly in software development labs), I had the opportunity to interact with many colleagues and many customers worldwide. It is indeed a remarkable company! During my days at IBM from 1975 till 1992, I observed first hand the values of the company which begins with “respect for the individual” as the first principle. One respects IBM more when working for other companies often less mature and treating employees like disposable commodities.

I left before the worse time IBM faced at the end of 1992 when its business suffered and the CEO had to let go. Under a new leader Lou Gerstner, IBM got back its mojo again and under the current CEO, it has revitalized itself to the new challenges of the market. It has focused on solving the real-world problems as evidenced by its focus on four areas: Cloud Computing, Growth Markets (BRIC countries), Business Analytics, and Smarter Planet. For example, IBM expects 30% of revenue to come from the BRIC (Brazil, Russia, India, China) countries in 2015, compared to 21% in 2010. It has been aggressively pushing solutions in Cloud Computing via products and architectures. The strong services organization delivers such solutions to global clients. Its EPS is forecast to grow 12% through 2015, which is quite remarkable. At the same time, when you see valuations of start-ups like Groupon or Facebook, IBM’s P/E is a mere 13.8 after a dividend yield of 1.8%. Yes, it is a stock to own for next 100 years!

Contrast that to so many companies (much younger in age) who have come and gone or struggling. Here are three companies: IBM-compatible PC maker Compaq, Networking pioneer 3Com, and IT outsourcing company EDS. What is common across these three? They are all owned by HP now, which is struggling and its stock is not doing very well, just like yesterday’s high-flyer  Cisco. Microsoft has lost its glow with its poor show in cloud computing and mobile platforms.

IBM has out-shined all by re-inventing itself. Its management rank should be the envy of any large company.Sam Palmisano has multiple choices to pick from inside IBM as his successor.

Well done and happy birthday IBM.


One response to “Happy 100th. Birthday IBM!

  1. IBM has always taken the lead role. They have limited there focus to primarily computing rather than spreading thin in all fronts like other companies do.
    Other core values like investing on R&D and maintaining a right engineering culture spurs the environment for innovation and growth. Like you mentioned some company management now treats the engineers like disposable commodities and make a supposedly technology company a place like a manufacturing environment.
    Either because of arrogance or lack of experience.
    I think the culture is the reason for IBM’s longevity.

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