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- 2014 - April - 30th -
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IBM CEO and Chairman Ginni Rometty

IBM CEO: ‘We have only just begun’

By Mark Basch, Contributing Writer

IBM has been a part of the Jacksonville business community for a long time.

“We have a 95-year history in Florida. Our first office opened in Jacksonville in 1919,” IBM Chairman, President and CEO Ginni Rometty told shareholders Tuesday as the technology giant held its annual meeting in Jacksonville.

However, today’s IBM is far different than the company that came here 95 years ago and is, in fact, a much different company than it was even a decade ago.

As Rometty explained at the meeting at the Prime Osborn Convention Center, IBM is constantly reinventing itself as the world of technology changes.

“This is not the first transformation this company has gone through and it’s not the last transformation this company has gone through,” she said.

“I believe that if you understand our strategy, you will share our confidence in IBM’s prospects, for the near term and beyond,” she said.

Rometty said IBM’s current business strategy is centered on “the shifts of data, cloud and engagement.”

IBM’s focus on data and analytics is perhaps best illustrated by its Watson system, which took on some of the top players on the TV game show “Jeopardy” three years ago.

“Watson has since matured from a research grand champion into a commercial business platform, accessed via the cloud,” Rometty said.

Watson is IBM’s answer to a new “cognitive era” in computing, she said. Traditional computers can only do what they are programmed to do, but “cognitive systems learn from the vast quantities of information they ingest, from their own experiences and from their interactions with people.”

One area in which this technology is being used is in cancer research, helping analysts interpret the data they collect to find possible cures.

“We are going to change the face of so many industries,” Rometty said. “We have only just begun. That is why it’s called an era.”

The second strategic shift is “to remake enterprise IT for the era of cloud,” Rometty said.

She said IBM is a leader in cloud computing, which is basically offering computing services through the Internet. IBM’s cloud services are used by 80 percent of Fortune 500 companies, she said, and its cloud business grew revenue by 69 percent in 2013 and by 50 percent in the first quarter this year.

The third strategic shift is a focus on engagement, which describes how clients connect with their customers, employees and other stakeholders.

“To address this, we have built the leading portfolio of mobile and social technologies, underscored by security,” Rometty said.

While looking forward in these three strategic areas, IBM “must also address those parts of our business that are holding us back,” she said.

Rometty said that focus is on two main areas, including a retrenchment in the hardware business. As an example of that, IBM recently agreed to divest a computer server business to Lenovo.

“This is consistent with our continuing strategy of exiting lower-margin businesses, such as PCs, hard-disk drives and retail store solutions,” she said.

The other area is taking better advantage of growth opportunities in some overseas markets where IBM has not been strong.

Rometty said 2013 was a successful year “by many measures,” as IBM grew operating earnings per share for the 11th straight year. However, she also acknowledged that the company’s performance did not meet its expectations, with revenue down 5 percent at $99.8 billion.

Still, the company is giving back to shareholders. Rometty announced Tuesday that the board of directors approved a 15-cent increase in the quarterly dividend to $1.10 a share. This is the 19th straight year that IBM has increased its dividend.

“This speaks to the financial strength of the company and our commitment to delivering value to you,” Rometty said.

She believes the “103-year-young” company is well-positioned for the future.

“We are working to make this not just a successful business, but an essential institution to the entire world,” she said.

mbasch@baileypub.com

(904) 356-2466

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