Lou Gerstner wrote, "People truly do what you inspect, not what you expect." … Lest we forget, these "inspection pages" exist because chief executives are "people" too.

Peter E. Greulich

Arvind Krishna's Overall Performance Through 2021

Published April 11, 2022

Arvind Krishna's performance in his first one-hundred days is here, and his first-year's performance is here. 

This page and associated links cover the overall performance of IBM's tenth Chief Executive Officer, Arvind Krishna. They will be updated once each year after the publication of IBM's Annual Report. These pages are not intended for the short-term investor who makes investment decisions based on the latest news or quarterly revenue results. These pages are for the long-term investor who would like to understand IBM's current year-end results within the context of its overall twenty-first-century performance. "A peek into the past to visualize the future," so to speak.

To set expectations, IBM released is 2021 Annual Report in March 2022 and these pages were updated in April 2022. The next set of updates should be in April 2023 after the release of the IBM 2022 Annual Report.

Arvind Krishna’s Overall Performance Numbers: 2020-21

• Summary of Arvind Krishna's Overall Performance
• Latest Links to Arvind Krishna's Overall Key Performance Indicators (KPIs)​

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Summary of Arvind Krishna's Overall Performance as IBM's CEO

In April 2020, IBM installed its tenth chief executive officer: Arvind Krishna. ​How has Arvind Krishna performed since taking over the corner office?

​Arvind Krishna's performance numbers at the end of 2021 were as follows:

• ​IBM Revenue was down $20 billion since the end of 2019, falling ​$3.5 billion in 2020 and falling $16.3 billion in 2021 to $57 billion—a 26% decline in revenue from the $77-billion corporation he inherited from Virginia (Ginni) M. Rometty. [Details here]
• IBM Revenue Growth, with Kyndryl in the picture, was down 5% in 2020 and down 22% in 2021; considering the Kyndryl divestiture, the corporation says revenue growth was down 4% in 2020 but increased 4% in 2021. [Details here]
• IBM Revenue or Sales Productivity was down 7.2% since the end of 2019, falling 2.4% in 2020 and falling 5% in 2021. [Details here]
• IBM Net Income or Profit was down $3.7 billion since the end of 2019, falling $3.8 billion in 2020 but increasing by $.15 billion in 2021. [Details here]
• IBM Net Income or Profit Growth was down 40.7% in 2020 but increased 2.7% in 2021.​​​ [Details here]

• ​IBM Net Income or Profit Productivity was down 24% since the end of 2019, falling 39.4% in 2020 but increasing 25.3% in 2021. [Details here]
• IBM Market Value was flat with an overall .9% increase since the end of 2019, falling 5.5% in 2020 but increasing 6.8% in 2021. [Details here]​
• ​Shareholder Returns increased 7.2% since the end of 2019. [Details here]
• Shareholder Risk increased since the end of 2019 as intangible assets surpassed 50% of total assets in 2021 because of the Kyndryl divestiture. [Details here]
• IBM Full-Time Worldwide Employment was down 80,100 employees since the end of 2019, falling by 1.6% to 356,400 employees in 2020, and falling 20.8% to 282,100​ ​in 2021 with the Kyndryl divestiture . These numbers do not include contractors (complementary employees) which increased to 25,500—up from 18,900 in 2020 and 21,600 in 2019. [Details here]

So, at the end of Arvind Krishna’s second year as chief executive officer his performance markers were nineteen downers, six uppers, and a flat note. It is important to note that most of the 2020 increases, such as profit and profit growth were miniscule increases when compared to the 2019 decreases. This is another poor performance on top of a not-very-impressive first-year start.

What is provided through the links below are graphs of Arvind Krishna’s 2020-21 performance in these key performance indicator (KPI) areas. Charts are also provided for historical context that document the joint performance of Arvind Krishna and Virginia (Ginni) M. Rometty from 2011-2021, and IBM's overall twenty-first-century performance from 1999-2021 under the leadership of Louis V. Gerstner, Samuel J. Palmisano, Virginia (Ginni) M. Rometty, and Arvind Krishna.

As you will see, Mr. Buffett corrected his mistaken investment in IBM by selling his holdings. Now is probably not the time to be an IBM stakeholder: shareholder, customer, employee or supportive society. IBM hasn’t been a battleship turning; it has been a battleship taking on water faster than the crew can pump it out. The men and women in the pilot house have ignored, abused and failed to invest in the tools the men and women need to "man" the boiler rooms for more than two decades.

The company is fast approaching a point at which it will be powerless to control its fate.
​
Soon, it may find itself dead in the water.

Links to the Details of Arvind's Overall Key Performance Indicators (KPIs)

Select any of the buttons or images below to read the evaluation of Arvind Krishna's performance in the highlighted area.

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Revenue and Profit

Corporations, within a capitalist economy, are worth an investment if they fulfil their main purpose: moving products of competitively higher value off the showroom floor into a customer’s waiting hands while generating enough profits to build, grow and protect a self-sustaining stakeholder ecosystem.

A corporation needs to generate enough money (revenue and profits) to invest equitably to attract, hold and grow its stakeholder community of customers, employees, shareholders and their supportive societies.

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Revenue and Profit Growth

​IBM positions its divestiture and acquisition strategy as moving the corporation into higher-value, higher-margin markets. The underlying assumption is that through these strategies the executive team will deliver increased revenues and higher profit margins: revenue and profit growth!

Is Arvind Krishna delivering? How about his twenty-first-century predecessors?

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Revenue and Profit Productivity

​​In a corporation of 307,600 employees, it is critical that each and every individual maximizes their productivity in generating revenue and net income.

​Sales and profit productivity are critical chief executive officer measurements.

When considering these two metrics, how is Arvind Krishna performing?

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ibm Market Value

In IBM's 1990 Annual Report, Lou Gerstner wrote that market value was the corporation's “most important measure of progress to investors.” ​Louis V. Gerstner used market value as one of his key business metrics to evaluate his success as chief executive officer.

Has IBM's market value grown in the twenty-first century? How is this "most important measure of progress" for investors performing?

​Using this measurement, how is Arvind Krishna performing?

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Shareholder Returns and Risk

Since 1995, IBM has spent $201 billion on share buybacks. Since 1999, the corporation has spent $176 billion on share buybacks. ​Of course, the shareholders should be happy with this reduction in the number of shares, right?

So, why have the last two chief executive officers—Virginia M. Rometty and Arvind Krishna—buried their shareholder results in the last few pages of each years' 140-46 page annual report? Has the expenditure of $91 billion for 207 acquisitions affected shareholder risk?

Is IBM a risky investment? Shareholder equity less goodwill says, "Yes!" ​Buried at the end of IBM's 2021 Annual Report is a chart that also says, "Yes!"

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Employment Security

Being of service or caring about stakeholders other than customers—especially when it concerns employees, is sometimes called paternalism. When Watson Jr. talked about employment security, he did not view it as paternalistic but as a means of increasing employee loyalty, goodwill, and diligence on the job.

Employees are less efficient when worried about their employment. Maybe that is why sales and profit productivity keeps dropping when IBM's 2021 Annual Report states, "In response to changing business needs, the company periodically takes workforce reduction actions to improve productivity."

​The words they left out were improve "short-term profit" productivity.

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