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IBM reassures shareholders at North Charleston meeting of a turnaround

ginni rometty

Ginni Rometty, CEO of International Business Machines Corp, addresses shareholders Tuesday at the Charleston Area Convention Center in North Charleston. Provided/IBM

IBM Corp. executives assured investors in North Charleston on Tuesday that growth is coming soon as some stockholders expressed doubt about the company's recent financial performance.

Big Blue, as the technology giant is known, held its annual shareholders meeting at the Charleston Area Convention Center, the third time in 14 years it has brought the gathering to the Lowcountry.

International Business Machines, which has offices in Columbia and Greenville, is a different company today than it was the last time its meeting came to town.

An 108-year-old company, IBM's history is in machines. It sold its first personal computer in 1981. Now IBM is trying to compete with the giants of cloud computing, namely Amazon and Google. 

The services it offers today range from blockchain to artificial intelligence to quantum computing. The company has invested about $55 billion in its new products during the last several years.

"It's been the most extensive reinvention the company has ever gone through," CEO Ginni Rometty said Tuesday. 

But revenue growth has been a struggle for IBM, which reported a third quarter in a row of declining sales in April.

Rometty fielded only a handful of questions from the audience. One shareholder asked whether the company needed new stewardship. A conservative activist investor who participates in many shareholder meetings questioned IBM's corporate partnership with the left-leaning Human Rights Campaign.

Seventy-seven shareholders attended the event, less than the several hundred the company expected. Low attendance and the brevity of the roughly 30-minute meeting are signs that investors are not concerned, a spokesman said.

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IBM's board also bumped up the quarterly cash dividend by a nickel, to $1.62 a share. It's 24th consecutive year the company has increased its payout to shareholders.

Voters also rejected two shareholder proposals. One would have allowed stockholders to raise matters outside of the annual meetings. The other would have blocked future CEOs from holding a dual role as board chair. Two stockholders who made the proposals each noted company stock has fallen to $127 from $179 in the last five years.

Several former "IBMers," as they called themselves, were in attendance Tuesday morning. One, Jim Obi of Charleston, said he had lost confidence in the company's leadership. 

Obi was not feeling optimistic about the company's performance after the meeting. He said he has heard many promises that the company will improve in the future.

"All we get is the same ol,' 'Tomorrow it's going to turn around,'" he said. 

Obi was also concerned IBM may have overspent on its planned acquisition of Raleigh-based Red Hat Inc., an open-source software company. The $34 billion deal, which will close in the second half of this year, is IBM's largest purchase of another company in its history. 

IBM is banking on the Red Hat acquisition to be able to offer more hybrid cloud services. With cloud solutions, data is maintained at centers owned by the provider. The hybrid model would allow customers to house some of their information themselves, and some in off-site data centers. Some analysts have said they're optimistic about how the Red Hat purchase may benefit IBM.

Another investor felt more positive about his former employer. Ezell Pittman was an IBMer for a few years in the late 1960s and early 1970s. His job was to help the Armonk, N.Y.-based company recruit a more diverse workforce. He has watched over decades as the company has changed.

"The IBM today is totally different," he said.

Reach Mary Katherine Wildeman at 843-937-5594. Follow her on Twitter @mkwildeman.

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