Big Shrink Bulks Up in India, Guts US Jobs, to Please Wall Street

wolfstreet.com / by Wolf Richter / Sep 28, 2017

But IBM’s strategy isn’t working out. 

In its long and illustriously checkered history as technology pioneer, IBM has more recently become famous for three things:

1. Apparently endless revenue declines.

IBM has booked 21 quarters in a row of year-over-year revenue declines. Annually, revenues peaked in 2011 at $106.9 billion and have now dropped relentlessly five years in row, for a total decline of 25%:

2. Massive share repurchases and soaring debt

Over the past 10 years, even as revenues have been swooning, IBM has repurchased $116 billion of its own shares.

To counter falling revenues, IBM has become an expense-cutting machine, thus generating cash flow, but not enough to pay for the share buybacks. So it has been borrowing to buy back its own shares. In 2006, IBM had $22 billion in debt. In 2011, it still had about the same, $23 billion. But then revenues began to decline, and IBM tried to prop up its shares by increasing its share buybacks, borrowing ever more to do so. From 2011 to 2016, even as revenues fell 25%, its debt nearly doubled to $42 billion.

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