IBM returns to the Charleston region
as a much different company
By John McDermott firstname.lastname@example.org
IBM chief executive
Ginni Rometty gave the opening keynote address at the 2019 CES,
formerly the Consumer Electronics Show. She’ll be in North
Charleston in April for Big Blue’s annual meeting of
IBM Corp. is set to score a Wall Street
version of a hat trick in South Carolina.
As it approaches its 108th birthday, the
ever-evolving technology pioneer is bringing its shareholder meeting
back to the Charleston region for the third time in the past 14 years.
The 2019 gathering will be held at the
Charleston Area Convention Center, where investors once again will
pick a slate of directors, vote on executive pay, express their
opinions about the business and hurl a few questions at management.
The global Fortune 20 company known as
Big Blue expects a turnout of at least several hundred based on past
North Charleston is among the few cities
where the IBM road show has ventured to more than twice. The previous
South Carolina meetings were held in 2005 and 2012, at the same venue.
“We look for locations that have a
significant number of shareholders within a 50-mile radius of the
location we choose,” IBM spokesman Doug Shelton said last week.
It’s a tried-and-true tradition for the
Armonk, N.Y-based company that got it start in June 1911 as
Computing-Tabulating-Recording Co. It switched its name in 1924 to
International Business Machines.
“Since 1961 we have moved our annual …
meeting to a different location from the year before so that IBM is
accessible to more of its shareholders,” Shelton said.
While it prides itself as an innovator,
the company hasn’t joined the small but growing number of firms that
have moved their annual investor summits online. Former investment
banker Gary Lutin of New York-based Lutin & Co. likes the idea of
itinerant meetings because they give stockholders of all stripes from
different places a rare opportunity to size up and question
decision-makers in the flesh.
“I’d look at it as enlightened, fair
practice,” said Lutin, who’s also chairman of the Shareholder Forum,
which organizes workshops to help investors decide on corporate
The last time IBM brought its directors
and investors together in South Carolina, stockholders showed up from
far and wide. One retired couple traveled to Charleston from Mobile,
Ala., eager to hear what newly minted CEO Virginia “Ginni” Rometty was
bringing to the table.
Rometty — a onetime IBM engineer and the
tech giant’s first female chief executive — laid out a plan for
growth, including a bet on the future of “big data” as a major profit
center. She stated that her goal was to “constantly reinvent” a
company that by then was starting to move beyond hardware and personal
computer sales. It was her first annual meeting as the top boss, and
for the most the early reviews were glowing.
“I think IBM’s got a great future,” an
optimistic shareholder told The Post and Courier that day.
Seven years on, Rometty is still in the
corner office — she was paid $16.45 million in cash and stock last
year — and has since added chairman to her business card. She’ll be
taking center stage again at the convention center next month.
But she could face a more skeptical
audience in her encore performance in North Charleston. Among other
complaints, longtime investors are frustrated that the stock price has
under-performed the broader market while Rometty has been running the
It’s undeniable that the IBM of 2019 is
a different and smaller animal compared to the 2012 version, in almost
every way. Sales have skidded almost 26 percent over the past seven
years to about $79.6 billion in 2018, partly because the company
jettisoned its PC division and other legacy businesses it has decided
were no longer a strategic fit. Net income has dropped by nearly half
to $8.7 billion over the same period. The company’s global workforce
has been pared by about 80,000 to about 351,000 employees.
The painful slog was enough to drive off
legendary buy-and-hold investor Warren Buffett, who bought a big slug
of IBM stock in 2011. He delivered a no-confidence vote by unloading
most of it by early last year.
Rometty, who’s known for her mastery of
MBA buzzwords, will come to North Charleston with her sales hat on.
She’ll likely urge investors to hang in there, that the transformation
plan she hinted at in the exact same room in 2012 is finally starting
to show results, as IBM makes inroads in areas such as artificial
intelligence and blockchain technology.
She’s also sure to point out that 2018
was the first year Big Blue grew on the revenue side since 2011, when
sales peaked at $107 billion.
She’ll also be pitching “Chapter 2,” her
term for the next phase of the cloud-computing gold rush. Rometty sees
big businesses shifting to a “hybrid” model that combines their own
private data centers with the capacity they rent from off-site
servers. IBM’s role would be smack in the middle, providing the
technical expertise and services for those high-tech infrastructure
That vision is driving Big Blue’s
planned buyout of Red Hat Inc. The $34 billion acquisition of the
Raleigh-based company is said to be the biggest-ever acquisition in
the software industry. But it’s peanuts compared to the amount of
money Rometty estimates is up for grabs.
“That’s a $1 trillion market, ‘Chapter
2,‘” she told Fox Business News in late January. ‘“We will be number
one in what the world calls hybrid cloud. That is ‘Chapter 2’ and
we’ll be number one.”
Investors can decide for themselves when
Rometty and IBM make their return engagement to the Lowcountry on
April 30. The show starts at 10 a.m.
Contact John McDermott at 843-937-5572
Post and Courier, an Evening Post Industries company.