Cash Outflow
IBM Korea, once a leader in the domestic IT market, is continuously falling. The company lost consumer trust after the controversy over the change of the main computers of KB Kookmin Bank last year. Also, there is growing suspicion about it transferring funds worth 2.5 times more than its earnings to headquarters regardless of its business lump.
Industry sources said that IBM Korea is now in crisis, as the company saw a series of business slumps and a loss of customer trust. Also, foreign branch managers cut down costs through layoffs rather than investment and increase the amount of money to transfer to its headquarters.
According to the Data Analysis, Retrieval and Transfer System of the Financial Supervisory Service, IBM Korea recorded 1.0544 trillion won (US$982.02 million) in sales and 47.8 billion won (US$44.52 million) in net profits last year. Both figures decreased by 14 percent and 59 percent, respectively, compared to a year earlier. This was largely due to the slump in the hardware business that affects software and even service sales.
In fact, IBM Korea ranked 2nd six years after the company saw its sales cut down by half in the fourth quarter last year in the UNIX server market, where the company continuously took the top position. Also, its sales in the dying mainframe business plunged by nearly 100 percent. While the company saw sales of storage drop as much as 34 percent compared to 2013, it closed the X86 server business after it was sold to Lenovo.
The bigger problem of IBM Korea, which has now become a paper tiger in the domestic corporate hardware market, is that the company has even lost customer trust. IBM Korea succeeded in getting financial interest by keeping the installation of mainframes in the controversy caused during the change of the main computers of KB Kookmin Bank last year. However, it made finance customers turn their backs on the company.
Previously, IBM Korea paid 11 billion won (US$10.24 million) a for settlement in 2011 due to Nonghyup computer network disruption.