AI Eats IBM
The computing giant spent three years serving investors an artificial intelligence feast. This week, it found itself on the menu.
This Week In Blunders – July 12-18
“Risk comes from not knowing what you're doing.” — Warren Buffett
IBM CEO Arvind Krishna talked up the computer giant’s stock to an all-time high this year, hyping the promise artificial intelligence and quantum computing.
Then its stock plunged 25% on Tuesday after Krishna admitted the promise wasn't paying off. About $70 billion in market value vaporized, and analysts don't expect a quick recovery from this historic wipeout.
Now Big Blue is black and blue.
It was just a few months ago when the company announced:
“CEO Arvind Krishna opens IBM Think 2026 and explains how AI is becoming the defining force in business, what it takes to lead, and how quantum computing is emerging as the next frontier.”
On Tuesday, though, Krishna had this to say in a surprise letter to investors:
“What played out was worse than our expectations …
“We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.”
IBM said its largest customers put mainframes and consulting projects on hold to fund AI investments, leaving Big Blue on the losing end of the AI spending boom.
IBM spent years feeding the AI monster. Now it’s learned the monster gets hungry. And it won’t be its last meal.
What’s next? A cover charge at the dollar store?
Consumers go to outlet malls to save money. But when they go to the Fashion Outlets of Chicago in suburban Rosemont, Ill., the first thing that taps their wallets is parking.
Parking is free for the first hour, then $13 for up to three hours, $20 for up to 12 hours, and $50 for up to 24 hours.
Rosemont Mayor Brad Stephens continues raising a stink about it, the Daily Herald reported this week because he says store owners are losing revenue.
Foot traffic had been increasing steadily until mall owner Macerich started charging for parking in February, Stephens said.
According to Stephens, the mall’s own numbers show traffic fell 17% in March, compared with the same period last year 14% in April, 12% in May and 14% in June.
“That’s not good business,” he said.
He said he’s met with Macerich, but the mall owner isn’t budging.
No surprise its stock has spent years in the bargain bin. E-commerce, a pandemic, and all that. But, as usual, the biggest real estate blunder is a heavy debt load that the revenue stream struggles to keep afloat.
Most malls in America don’t charge to park unless they are in dense urban areas where parking is an expensive amenity to provide shoppers. But there is a growing industry of profiteering parking garage operators approaching mall operators for business.
Like AirGarage:
“As cities urbanize and real estate owners look to optimize revenue, shopping center owners are taking a fresh look at an often-overlooked part of their portfolio: the parking garage.”
And they will have you believe it’s all for an enhanced customer experience. Lucky you. Here’s a statement Macerich sent to NBC Chicago in February:
“We are introducing a new paid parking program and transitioning parking operations to Metropolis, a best-in-class operator known for its customer-friendly approach. … This update is designed to ensure convenient access for our guests while maintaining a positive overall experience at the center.”
So far, its just another reason NOT to go to the mall.
How do you feel about paying to park at a suburban mall?
No scoundrel left behind
Please welcome Russell Wasendorf Sr. to the Business Blunders Hall Of Shame.
Beginning in the 1990s, the founder of Cedar Falls, Iowa-based commodities broker Peregrine Financial Group managed to fool regulators and steal $215 million from his customers using a copy machine.
In 2013, a federal judge sentenced Wasendorf to 50 years in prison, the maximum allowed by law.
Read More: Russell Wasendorf Sr. – Peregrine Financial Group (Business Blunders Hall Of Shame)
Read More: Jordan Belfort – Stratton Oakmont (Business Blunders Hall Of Shame)
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