In my view, 09 looks pretty grim for Big Blue here in the States.
Global Services, the revenue flagship, is in deep doo doo here in
Texas. After Global Services bid approx $850M for a job that should
have been bid at about twice that figure, IBM is now getting bad
press all over Texas and every State agency in 49 other states knows
all the details. Recently the State sent a warning letter to IBM
that could lead to cancellation of the contract and fined IBM $2M for
non-performance. I would guess that HP/EDS are chomping at the bit
to take advantage of IBM's blunders. In addition to the drastic bid
error, IBM is fighting State employees that do not want the contract
to succeed and we are using band 4/5 employees for much of the work.
It doesn't look good for IBM. This is the biggest mess with a
customer I have seen in my 45 years of IBM experience.

On the margin side, as you know IBM Software/Middleware contributes
about 1/3 of IBMs' total gross margin dollars. Mills has been buying
other software companies at an agressive rate to make it appear that
IBM's software is growing at a steady clip. Lotus has very little
upside left, but Tivoli is adding some real growth to IBM software
with smart new products. WebSphere is doing well but with declining
host sales, operating system revenue doesn't appear to have much to
grow on. I fail to see how "smoke and mirrors" numbers can make
software targets for too much longer.

All in all it looks like tough sledding to me for 09 for Big Blue
here in the States. As a stockholder and pensioner it doesn't look
good to me. I can only hope my outlook is wrong.