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.
Arvind Krishna: 2020-21 Revenue and Profit Growth
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Published April 11, 2022
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Arvind Krishna's 2020-21 Revenue and Profit Growth Performance
- The Importance of Revenue and Profit Growth
- Arvind Krishna's 2020-21 Revenue Growth by the Numbers
- Arvind Krishan's 2020-21 Profit Growth by the Numbers
Evaluating Arvind Krishna's 2020-21 Revenue and Profit Growth
What were Arvind Krishna's second-year 2020-21 revenue and profit growth performance numbers? Revenue was down 5% in 2020 and down 22% in 2021; but, when considering the Kyndryl divestiture, the corporation writes in its 2021 Annual Report that revenue growth was only down 4% in 2020 and revenue actually increased 4% in 2021.
Although the previous revenue and profitability charts documented these chief executive officers’ critical metrics, the following charts analyze their respective year-over-year growth rates. They present a case that a corporation can pad short-term profitability numbers through financial engineering or aggressive bookkeeping, but that sales performance is much harder to game.
These charts show revenue growth is a serious problem, and that profit growth has been propped up with some serious financial engineering—following short-term, financially expedient paths at the expense of the long-term health of the business. These charts challenge the perspective that IBM has been divesting and investing to move into higher-value markets with higher profit margins. If it was, customers would be buying into the corporation's newest solutions.
The 1999-2021 profit growth chart documents a few of the financial engineering “projects” the corner office implemented through their financial and human resource divisions: workforce rebalancing, resource actions, divestiture of critical assets, and employee benefit reductions. This is critical to highlight because these are unsustainable processes that can spike short-term profits but can also drive long-term negative consequences for any corporation. As can be seen in the profit growth charts below, some of these activities—like the divestiture of the x86 Server Division—had an almost immediate negative growth consequence which has never been highlighted in the press.
Many of these highlighted activities to prop up short-term profits are causing of a long-term downward trend in employee revenue and profit productivity that is covered in the next key productivity performance metric, which also seems to need more discussion within the press and more in-depth, long-term research by the analyst communities.
These charts show revenue growth is a serious problem, and that profit growth has been propped up with some serious financial engineering—following short-term, financially expedient paths at the expense of the long-term health of the business. These charts challenge the perspective that IBM has been divesting and investing to move into higher-value markets with higher profit margins. If it was, customers would be buying into the corporation's newest solutions.
The 1999-2021 profit growth chart documents a few of the financial engineering “projects” the corner office implemented through their financial and human resource divisions: workforce rebalancing, resource actions, divestiture of critical assets, and employee benefit reductions. This is critical to highlight because these are unsustainable processes that can spike short-term profits but can also drive long-term negative consequences for any corporation. As can be seen in the profit growth charts below, some of these activities—like the divestiture of the x86 Server Division—had an almost immediate negative growth consequence which has never been highlighted in the press.
Many of these highlighted activities to prop up short-term profits are causing of a long-term downward trend in employee revenue and profit productivity that is covered in the next key productivity performance metric, which also seems to need more discussion within the press and more in-depth, long-term research by the analyst communities.
Arvind Krishna's 2020-21 Revenue Growth by the Numbers
- Krishna 2020-21 Revenue Growth
- IBM Revenue Growth, with Kyndryl in the picture, was down 5% in 2020 and down 22% in 2021; considering the Kyndryl divestiture, the corporation writes in its 2021 Annual Report that revenue growth was down 4% in 2020 but increased 4% in 2021.
- Krishna & Rometty 2011–21 Revenue Growth
- IBM Revenue Growth in this decade-long, revenue-growth snapshot is not a pretty picture. Annual revenue growth was only positive one time—barely. Considering the Kyndryl divestiture, the corporation writes that revenue growth was only down 4% in 2020 but increased 4% in 2021. As we say in Texas, "This is putting lipstick on a pig."
- Krishna, Rometty, Palmisano & Gerstner 1999–2021 Revenue Growth
- IBM Revenue Growth in this twenty-first-century chart is a picture of inconsistency. Annual revenue growth was negative twelve out of the last twenty-two years and, given the benefit of the Kyndryl divestiture, only positive two out of the last ten years.
Arvind Krishna's 2020-21 Profit Growth by the Numbers
- Krishna 2020-21 Profit Growth
- IBM Net Income or Profit Growth was down 40.7% in 2020 but increased 2.7% in 2021 with the Kyndryl divestiture.
- Krishna & Rometty 2011–21 Profit Growth
- IBM Net Income or Profit Growth was down five years and up five years. This seesaw picture of inconsistent profit growth and the lack-of-growth, revenue chart above should cause any analyst to question the corner offices' on-going premise that they are focusing on building products of higher value that are in demand by their customers.
- Krishna, Rometty, Palmisano & Gerstner 1999–2021 Profit Growth
- IBM Net Income or Profit Growth was supported in the first decade of the twenty-first century by financial engineering and aggressive bookkeeping as annotated on this chart. These tactics appear to have reached their limits in 2011-2012.
