The New IBM in 2004

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Case Details:

Case Code : BSTA107
Case Length : 14 Pages
Period : 1993 - 2004
Organization : IBM (International Business Machines Corporation)
Pub Date : 2004
Teaching Note :Not Available
Countries : Global, USA
Industry : Information Technology

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"We remember when IBM was viewed as the greatest company in the world; then we went into the crapper. Today, before they retire, people want to remember the old feeling. ¹"

Introduction

In early 2004, two years after taking charge of IBM, CEO Sam Palmisano had reasons to feel good. Palmisano had taken charge when things had not been looking good. In early 2000, the dot-com bubble had burst. By the time Palmisano became CEO, revenues were down by $5 billion and still declining. IBM found itself in the worst tech downturn in recent history. After taking charge, Palmisano had continued to emphasize services that helped buyers cope with complicated technology. This was a continuation of predecessor, Lou Gerstner's strategy. Palmisano had also been tackling IBM's three problem areas²: PCs, disk drives, and semiconductors.

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

Many investors and analysts, believed that during his tenure, Gerstner had pushed and pulled on a variety of levers -- including gains from an over funded pension plan, income from one-time asset sales, and $44 billion in share repurchases -- to generate double-digit growth in earnings per share and an annual average of 5% sales growth. Now that these financial engineering opportunities had been exhausted, Palmisano would find it more challenging than ever to meet analyst expectations. Would Palmisano be able to put IBM on a growth path at a time when most technology companies were struggling?...

Excerpts >>

1] Fortune, 14th June 2004.

2] Ante, Spencer E; Sager, Ira. "IBM's New Boss,"Business Week, 11th February 2002, Issue 3769, pp.66-71.

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