Case Title: Generating Higher Value at IBM

Generating Higher Value at IBM (A)

Major Case Questions:

1. Why did IBM create and publicly announce the 2010 EPS Roadmap in May 2007?

2. How would you assess IBM’s financial performance both before (from 2004-2006) and after (from 2007-2009) announcing the 2010 Roadmap? Analyze case Exhibits 1, 2, and

3 for levels, trends, and changes in financial performance. Hint: What has happened to

IBM’s ROE (return on equity) and cash flow over the 10 years? Why and how did they

change?

3. Was the 2010 Roadmap successful?

4. How does the 2015 Roadmap differ from the 2010 Roadmap? Has the 2015 Roadmap been successful so far (up to May 2014)?

5. What should CEO Rometty and CFO Schroeter do as of May 2014: affirm the 2015 EPS Roadmap (and the $20 target), adjust it, or abandon it?

6. What should Sofia Johnson recommend to her clients—buy, hold, or sell IBM shares?