Nice letter, Mike!
DECEMBER 9, 2002
Just How Good Was Gerstner at IBM?
Louis V. Gertsner Jr., in his nine years at IBM, forced out
thousands of loyal employees with layoffs and forced retirement in
their late 40s and 50s. ("Lou takes the gloves off," Information
Technology, Nov. 18). The object was not to "save the company." IBM
has thousands of large corporations throughout the world using
operating systems and hardware developed over many decades that is
difficult or nearly impossible to replace, and IBM averages $14
billion in profits every year.
Gerstner used $43 billion from profits to boost the share price at
IBM with stock buybacks in his nine years at IBM, used the $17
billion in the "old money" pension surplus to boost the annual
profits by 20% with "vapor profits" that boosted the share price of
IBM stock. This same pension surplus is now less than $500 million
today. Meanwhile, retirees received one cost-of-living adjustment in
10 years, the same year IBM did away with promised medical coverage
Rather than rescuing a company in trouble, how about an "accounting
illusion" to effect radical change? This is my opinion as an
employee who worked at IBM for 32 years and fell victim to
Gerstner's methods of wealth accumulation at the expense of a once