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  • Writer's pictureJeff Matthews

Activist Targets IBM: “Bring Out the Belgian Waffle!” (reprint from 2014)

Updated: Dec 12, 2019

Editor’s Note: In light of the recent KHC disclosure that the geniuses at 3G have been underinvesting in brands, over-stating earnings, and milking their businesses for short-term earnings at the expense of long-term results—everything Warren Buffett professes to despise—we thought it worth reprinting this commentary on the 3G methodology from 2014—JLM. IBM trades to highs on activist related speculation (161.85 +0.95) —, November 23, 2014

IBM Chief Counsel: “Ginni? Fred here.”

IBM CEO Ginni Rometty: “What’s wrong?” Chief Counsel: “Activists are circling.”

Rometty: “Oh geez.”

Chief Counsel: “Yeah. I’ve got the biggest shark of all on hold. He wants to talk.”

Rometty: “Carl Icahn??”

Chief Counsel: “No. Icahn watches Netflix and uses an iPhone. He thinks we’re ‘old economy.’ Worse than Icahn.”

Rometty: “Donald Trump?”

Chief Counsel: “No. Even worse.”

Rometty: “Worse than Donald Trump? How is that possible?”

Chief Counsel: “It’s possible. It’s those guys from 3G.”

Rometty: “Yikes. The Brazilians? The ones who took over Burger King and slashed and burned?”

Chief Counsel: “Yeah. And they bought Heinz with Warren Buffett—your pal.”

Rometty: “Well, he’s not my pal after we had to reset the ‘earnings roadmap’ and the stock tanked. Stupid roadmap. How did Palmisano ever come up with that idea?”

Chief Counsel: “It worked, didn’t it?”

Rometty: “Only long enough for Sam to exercise his stock options. Not me.”

Chief Counsel: “Well your options may be in the money soon enough, if these 3G guys go ahead. You want to talk to them?”

Rometty: “Put ‘em on.”

Chief Counsel: “Right now?”

Rometty: “It’s better than watching these Fast Money yahoos trash talk me on CNBC.”

Chief Counsel: “Hold on… Okay, here we go. Oscar? You there?” Oscar: “Yes. I have seven minutes before I have to fire 37 people and figure out how to convince young males to buy hamburgers made with wood shavings. Let’s get going.”

Rometty: “What do have in mind?”

Oscar: “We at 3G would like to buy IBM—”

Rometty: “Outright? That’s not activism, that’s a hostile takeover!”

Oscar: “Call it what you like. We see great opportunity to run IBM more efficiently.”

Rometty: “Oh yeah? Starting where?”

Oscar: “Layoffs. IBM has too many employees.”

Rometty: “Says who?”

Oscar: “You have over 400,000 employees!”

Rometty: “That number is so last week.”

Oscar: “You’ve had layoffs in the last week? Well then, I must congratulate you.”

Chief Counsel: “Careful, we haven’t publicly disclosed anything.”

Rometty: “Okay. So what else does 3G think we need to change?”

Oscar: “Well, according to our internal due diligence you have a very inefficient field staff reporting structure. At Burger King we have 14,000 field staff reporting to seventy-five MBAs who all work out of their cars.”

Rometty: “That’s nothing. At IBM our entire field staff of 80,000 reports to three college grads and a transfer student.”

Chief Counsel: “Ginni, that’s never been disclosed—”

Rometty: “Relax, Fred. The transfer student doesn’t even speak English.”

Oscar: “Somehow our due diligence did not discover that. Well played.”

Rometty: “Thank you. What else you got?”

Oscar: “Well, corporate overhead. At Burger King we eliminated all corporate jets except mine, and everyone takes a Greyhound bus when they travel more than 300 miles.”

Rometty: “What do they do under 300 miles?” Oscar: “They hitch-hike.”

Rometty: “That’s nothing. All travel requests at IBM have to get approved by a cardboard cut-out of Dilbert.”

Oscar: “Brilliant!”

Rometty: “It’s called returning value to shareholders, not employees.”

Oscar: “And we admire that. But your headquarters staff appears bloated to us—” Rometty: “That’s because it doesn’t exist.”

Oscar: “Doesn’t exist?”

Rometty: “No. It was outsourced to India years ago.”

Oscar: “Then why do our satellite images of the IBM headquarters parking lot show so many cars?”

Rometty: “That’s my security detail. And my lawn service.”

Chief Counsel: “Ginni, I really think this is inappropriate—”

Rometty: “Not at all. If this guy thinks he can tell me how to run IBM even less for employees and customers than we already do, he’s got another thing coming. He’s a piker.”

Oscar: “Well let’s discuss your taxes. We at 3G know how to operate tax-efficiently across all multi-national jurisdictions—”

Rometty: “Our tax rate was 15.6% last year. How do you beat that?”

Oscar: “We think applying a ‘Dutch Sandwich’ could move billions in pre-tax income to a lower tax rate nation without any change in your corporate headquarters—”

Rometty: “Been there, done that.”

Oscar: “Well, a ‘Double Irish’ would reduce taxes on intellectual property by shifting—”

Rometty: “You’re five years too late pal. Next?”

Oscar: “A ‘French Cuff’?”

Rometty: “So ’90s.”

Oscar: “The ‘Jamaican Bobsled’?”

Rometty: “Who do you think invented the ‘Jamaican Bobsled’?”

Oscar: “What about a ‘Hong Kong Stir-Fry’…a ‘Singapore Sling’…a ‘Portuguese Man-O-War’?”

Rometty: “Is this the ’80s calling now? Puh-leeze.”

Oscar: “Well, I must say, your tax avoidance strategies seem quite advanced. I’ve run out of options.”

Rometty: “You didn’t ask about the ‘Belgian Waffle.’”

Oscar: “Fala sério! We heard the rumors about it, but believed it to be a myth, like Bigfoot. You mean there is such a thing?” Rometty: “Wouldn’t you like to know?”

Oscar: “Please? I beg of you.”

Rometty: “If you guys drop this takeover idea, I might—.” Oscar: “Consider it dropped.” Rometty: “Alright. But first, make sure your door is closed, your auditor is nowhere nearby, and listen carefully… Now just imagine you found a way to merge with an entire country, whose citizens could be made to unwittingly pay your taxes for you—.” Chief Counsel: “This conversation is finished! Ms. Rometty has nothing further to add!”

Oscar: “El Diablo!”


Jeff Matthews

Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett”

(eBooks on Investing, 2014) Available now at

© 2014 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

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