Activist funds snub call to shake up IBM
Print Edition
SOME top shareholders of IBM, disappointed by 11 straight quarters of falling revenues, are seeking help from activist investors to shake up the company, but have been turned down by both Bill Ackman’s Pershing Square and Jeffrey Ubben’s ValueAct, said people with knowledge of the matter.
International Business Machines Corp is concerned about a possible attack by prominent activist hedge funds, and is working with two investment banks to draft a defense plan, said the people, who declined to be identified.
When asked for comment, IBM said: “IBM is continuing to execute on our strategy — making investments in growth areas such as analytics and cloud, reinventing our core franchises, and returning capital to shareholders. We are managing the company for the long term.”
IBM, worth US$157 billion, has struggled to transform itself from a low-margin hardware maker into a cloud-based software and services company.
When Virginia Rometty took over as chief executive at the start of 2012, Wall Street was hopeful that she would be able to revive growth. Analysts praised the former systems engineer for her strategic thinking in guiding IBM’s acquisition of PricewaterhouseCoopers Consulting in 2002.
As revenues continued to decline year on year, however, some IBM investors began to lose confidence in management, said people familiar with the matter. Last year, IBM withdrew its long-term operating earnings target for 2015, and shares of Big Blue have fallen about 25 percent from a March 2013 high.
Pershing Square and ValueAct Capital both recently looked at IBM, but passed on making a move, the people said.
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