24/7 Wall St.

International Business Machines Corp. (NYSE: IBM) is the only very large tech company that can do nothing right. IBM’s latest earnings report shows that it has been unable to dig out of a mess that has lasted for years. The cloud was supposed to save IBM. Its results for that part of its business are barely mediocre.

IBM has two problems. One is that it is an also-ran in the cloud, sitting behind leaders Microsoft and Amazon. Second, it also carries several legacy businesses, including its mainframe and consulting operations. IBM operates in five divisions. Revenue was down in three of them in the quarter it just reported. Overall, revenue was $18.0 billion for the period, down from $18.8 billion in the same quarter a year ago. Net income dropped from $2.4 billion in the third quarter of 2018 to $1.7 billion this year.

Global Technology Services, IBM’s largest division, posted a drop of 5.6% to $6.7 billion. The division includes IBM’s infrastructure and cloud services and its technology support services. The cloud is supposed to be the key to IBM’s turnaround. Its Cloud & Cognitive Software division posted a sales increase of 6.4% to $5.3 billion. Once again, the cloud computing sector is growing quickly at its competition. IBM’s growth rate in the business is unusually slow. IBM puts its cloud revenue into several places in its earnings. Overall, the company said it had “Cloud revenue of $5.0 billion in the third quarter, up 11 percent.” Even counted this way, the growth is dismal.

It is impossible to find a big tech company that has given investors an uglier ride. IBM’s stock is down more than 12% in the past five years. The Nasdaq is up 81% over the same period. Microsoft’s shares are higher by 204% and Amazon’s are up 520%. An investment in IBM over the period is as close as big tech investors could come to setting their money on fire. IBM management makes the case that share buybacks and dividends have added value for investors. Based on the stock itself, that is cold comfort.

IBM’s problems belong at the feet of CEO Ginni Rometty, who has held the job since January 2012. She has serially tried to reinvent and rebrand the company. Its Watson brand is nearly as well known as IBM itself and is at the center of IBM’s long-term effort to be something other than IBM anymore. Yet, the value of the IBM brand recently dropped 6% to $40 billion on the Interband list of the 100 best brands. It also missed the list of companies with the best reputations. Even with the growing visibility of Watson, which the company has created as the holding brand for its machine learning and multi-cloud platform operations, there is no disguising how much trouble IBM is in.