Chris Jenkins News editor

Chris works from BRW's Sydney newsroom. He has previously written and edited in print and online for titles including The Australian Financial Review and The Australian.

View more articles from Chris Jenkins

You’re too slow: IBM chief gives staff a whack via video

Published 26 April 2013 09:07, Updated 29 April 2013 12:37

+font -font print
You’re too slow: IBM chief gives staff a whack via video

IBM chief Virginia Rometty says the company is losing sales because it is too slow to respond to the market. Photo: Bloomberg

IBM chief executive Virginia Rometty has used a five-minute video to admonish staff at the IT multinational for being too slow to respond to customers.

The reprimand came just days after the company’s stock fell 9 per cent after it uncharacteristically missed Wall Street earnings estimates.

Rometty told staff that IBM was missing out on deals because it was too slow to respond to customers and opportunities.

She announced a new company-wide rule that client requests have to be turned around in 24 hours, the Wall Street Journal reported.

“Where we haven’t transformed rapidly enough, we struggled,” Rometty reportedly said in the video. “We have to step up with that and deal with that, and that is on all levels.”

A week ago IBM announced its first quarter profit was up 3 per cent to $US3.4 billion, or $US3 per share. A Reuters poll of analyst estimates had predicted a $3.05 per share result.

IBM’s revenue fell 5 per cent to $US23.4 billion for the quarter. Analysts had expected revenue of $US24.6 billion.

In a conference call with analysts following the results announcement, IBM chief financial officer Mark Loughridge blamed poor sales execution as one of the reasons for the slide in revenue.

In the video Rometty referred to a software deal with a major retailer that fell through because the company was too slow to respond to the opportunity.

But while IBM executives are concerned about execution and speed to market, analysts say the company is facing a wider problem – that its traditional, hardware-driven “big IT” approach is being challenged by cloud computing.

“The IBM miss is a decidedly negative read-through for the entire IT hardware segment and we are incrementally more cautious on the sector, particularly those with a March quarter end,” Deutsche Bank analyst Chris Whitmore said in a note to clients.