IBM ( IBM) will no longer report employment numbers in the United States. The company has traditionally reported employment by country and by local regions within the U.S. It has often announced employment levels by work location. This action comes as IBM continues to reduce U.S. employment while growing world wide. Many U.S. work locations, where IBM has been a decades-long community business anchor, have been losing jobs over the past 20 years as the company continued growing overseas. Communities like Poughkeepsie, East Fishkill, Endicott and Owego in New York now have a fraction of former IBM employees. Other communities affected during globalization include Essex Junction, Vt.; Austin, Texas; Rochester, Minn.; Tucson, Ariz.; San Jose, Calif.; and many smaller locations. IBM completely left Lexington, Ky., years ago when it sold its printer business to Lexmark ( LXK). IBM employment in Research Triangle Park, N.C. has been affected since 2000 because IBM has sold its personal computer business to Lenovo. Facilities have also been closed in Kingston, N.Y.; Boulder, Colo.; Greencastle; Ind.; and Mechanicsburg, Pa. Smaller communities where IBM has facilities were, in many cases, essentially company towns for the second half of the last century. For decades, the local economies of towns like Poughkeepsie and Endicott in New York and Essex Junction, Vt. revolved around the company. IBM is still important to those communities, but its dominant role in the local economy has diminished over time. In Poughkeepsie, many acres of land that IBM had owned around the main plant for future expansion have been sold off for commercial development by others. The former Thomas J. Watson Research Laboratory in Poughkeepsie is now occupied by Our Lady of Lourdes High School. The IBM development lab and manufacturing facility in East Fishkill is now only partly occupied by the company. The facility is now called the Hudson Valley Research Park with a number of other companies in residence. Recent tenants at the park include NXP (formerly Philips Semiconductor), a Global Foundries R&D facility, eMagin, Second Source, Pentagon Technologies and Hudson Valley Blood Services. The facility has also been the site of joint R&D efforts involving IBM, Sony ( SNE) and Toshiba ( TOSBF.PK).
A Poughkeepsie Journal report dated March 18 states that the combined employment at Poughkeepsie and East Fishkill is now less than 9,000, compared to 10,700 at the end of 2008. This would be a decline of more than 25%. According to a report in the Burlington Free Press, employment is down 41%, from 8,500 in 2001 to about 5,000 today.
Negative metrics for IBM include a decline in revenue for 2009 (-7.6%), a PEG ratio of 1.45 (using 2009 earnings and Yahoo consensus for earnings growth for the next five years), and a dividend rate of only 1.7% The PEG ratio is 1.15 using estimated 2010 earnings. This is better and more than the ratio of 1.0 that value investors often look for as a desirable upper limit. IBM is a stock that should be on growth and income watch lists. It is not a good prospect for pure growth portfolios or for dividend value investors, in this analyst's opinion.