WHEN: TUESDAY, JUNE 20 AT 6PM ET
WHERE: CNBC'S "MAD MONEY W/ JIM CRAMER"
Following is the unofficial transcript of a CNBC interview with IBM Chairman, President and CEO Ginni Rometty on CNBC's "Mad Money w/ Jim Cramer" tonight at 6PM ET. Video of the interview will be available on CNBC.com.
All references must be sourced to CNBC.
JIM CRAMER: Ginni, I don't want to bury the lede I am a journalist. You were at The White House yesterday.
GINNI ROMETTY: Yes.
JIM CRAMER: What did you talk about? And what can IBM do for our country?
GINNI ROMETTY: Yeah, well, look, this is part of a series of meetings we've had, actually. And there have been about modernizing the IT that is in our government. And there's so many opportunities. So it's about modernizing the systems and my-- we work in many of them. We do a-- much work in DHS. We do work around things like the Veterans Administration. You might know that we're doing work there around helping our vets using Watson. Actually sequencing the genome. But that wasn't what it was a day. It was a--day not about what any individual company did. This is about what are ideas on how to modernize the work-- modernize the IT that runs the country. And then I participate, and you know I've been quite focused on how, for a country, we have got to work on our skills and prepare not only this current generation, anyone for work. Because all work's going to include technology. To me, it's the root of many issues in this country that has to be addressed. And it is the basic skills. We've got open jobs, and we need to fill them. So we've been working on that.
JIM CRAMER: Okay, so when you tell the president that, I'm sure he says, "That's a very good idea." What's the follow-up? Has there been follow-up with IBM?
GINNI ROMETTY: Yeah. I think there's been very good follow-up. And as you know, I know you've been out to see some of our pathway to technology schools. So two big areas of follow-up that I'm optimistic about. One is last week you saw that the administration signed an order on apprenticeships, to get that moving at scale. That is one really great way for public private to come together. And we do that for students around the world and in this country. The second thing is that we're made a lot of great progress and will, in fact, be sponsoring a governor's meeting-- come this fall. Which is this idea to scale ideas like pathway to technology schools, that you were so gracious to host some of our-- students who graduated.
JIM CRAMER: Terrific kids.
GINNI ROMETTY: But see, idea is a six year high school. We coined something called New Collar Skills of the Future. Which is not white collar, not blue, like you have on. But it is the new, fresh, contemporary schools. I mean, you're surrounded by folks and kids like this in many IBM, you know, centers around the world. And that idea is what we're working to scale that education across this country. And it's the simple idea. A six year high school. You work with public high schools, help them with curriculum. Our employees are mentors. And we've now been at it several years. Great track record. We'll be at 50,000 kids by the end of next year. It is a soluble problem.
JIM CRAMER: All right, so we--
GINNI ROMETTY: That's what the discussions were about--
JIM CRAMER: Right well, I think that's I look around here and I think of old school image of IBM at versus what you've done particularly with the six year. And I think that it would be great to hear from you what is the new, new IBM, since IBM has repeatedly invented itself. Lots of people have bet again and again that it can't. But it's doing it right now. I'm looking at it, tell me about it.
GINNI ROMETTY: Yeah, look, what makes IBM, to me, one of America's greatest technology companies is it's not reinvented itself once, not twice, three, four, five, six times. And that is what we are right in the middle of right now. And for this era, it's the era where the technology is around cloud, around cognitive, our word for AI. There's a reason we call it cognitive. It's about augmenting what you and I do so we can do what we're supposed to our best. And then that's the IBM that takes that technology and the know-how about how the world works and puts that together. And actually changes business. We are the champion for business. And so what you see here is part of that. Boy, half a billion a year in retraining. You were saying my I look around, some of the faces here. I said, "Well, Jim, h-- 50% of IBM is millennials that are here." And these are contemporary working spaces that, of course, because if you're big and people say, "How can big companies be fast?" You have got to modernize how people do that work. That means things you're in the middle of a design thinking lab, that's take everything about you love about the consumer, ease of use, and put that in business. That's what design labs we have 35 around the world do. You're in the middle of one of them. And interactive studio. They work with clients, right? So the first city Apple watch, you name it, comes out of these places. So you change the design thinking, you-- put them on agile, which is co-location. Change the tools. Multidisciplinary. Minimum viable products. Small teams. And then you give them contemporary tools, co-location. So that's what you're seeing here. And, boy, we've been at that. We've done this to workspaces in 300 places around the world.
JIM CRAMER: Okay, so as someone who's interested in the stock, as well as the company and the institution that and it is an institution like no other. You have to turn the battleship around, to some degree. Because the world's changed. And that means that, at given times, analysts might say, "Well, wait a second, it's got flat revenues for a long time. Wait a second, it's got this legacy business." How do you deal with the legacy business and the strategic imperatives to make it so strategic imperatives is the big growth business without having the other business drop off?
GINNI ROMETTY: Yeah. So a couple different things. One is, like I said, what we need to do is reinvent for every era. So when you do that, you do divestitures, you do acquisitions, you change, you introduce new products and services. So I wouldn't call it legacy. I mean, this is we are the incumbent. We are the one that hosts most of the world's processes, their data that's important. And if I had to pick one word that IBM's reinventing around, it's data. And we should come back to this point. And so--
JIM CRAMER: Well, that's why you bought Weather, right--
GINNI ROMETTY: Absolutely--
JIM CRAMER: And it's just more data than--
GINNI ROMETTY: Actually--
JIM CRAMER: It's most access data--
GINNI ROMETTY: Actually, Weather most people think we bought it just for the for the data. And Weather does impact it is the number one influencer of everything. So The Weather Company. It is on every phone you touch, right? To get your weather. Every Apple phone soon, will soon be on every Samsung phone. But what's under it is a wonderful internet of things platform. And so we do serious internet of things work with Watson and the internet of things. So elevators, Coney, Whirlpool, right? Devices. We are all about--
JIM CRAMER: Whirlpool, what? To be able to make it so that a repairman knows--
GINNI ROMETTY: A repairman--
JIM CRAMER: --what you have?
GINNI ROMETTY: --ahead of time knows what the issue is--
JIM CRAMER: So then--
GINNI ROMETTY: So when he shows up--
JIM CRAMER: --doesn't get there--
GINNI ROMETTY: --the device is--
JIM CRAMER: --doesn't have the device.
GINNI ROMETTY: How many times has that happened, right? And so this is why we say IBM reinventing it to the IBM cloud with Watson. It's together. It's why Watson will touch a billion people by the end of the year through these things. So whether it's through your appliance, through your elevator that's there. So-- just to frame back to your question about the reinvention, right? When you said, "What is it? And what is it--" the two businesses. They're not two businesses. These are the same clients, new products and services. So we help with one set of clients, the same client-- the productivity we give them. And then reinvest into the new-- in the new products and services, which is our around cloud, around mobility, artificial intelligence, security. And, as you know, while they're called strategic imperatives, that's what those businesses are. And they're in health, they're in financial services. And those have grown to be 34 billion, 42% of IBM. Double digit, those products and services. And it's the same clients. So every client comes to me says, "Look, you got to help transition me." That's the other thing that makes us so different. We transition them from one era to the other. So our whole transformation is IBM to the next era, and then how to transform and transition our clients. That's where they need the help.
JIM CRAMER: Now, on my Twitter feed I said, "Please questions for Ginni."
GINNI ROMETTY: Yeah.
JIM CRAMER: Two people said instantly, "How can I use Watson?" We had Bill Cobb on recently, who has done a remarkable job transforming H&R Block. Perhaps people don't realize that they may be using Watson.
GINNI ROMETTY: That's right. And that is very much the case. Because many different things, I'll come back to about it. But when you said H&R Block, so this tax season. So what did Watson do that makes it different than what I consider consumer AI? Consumer AI, in your home, it's typically speech to text--
JIM CRAMER: Right--
GINNI ROMETTY: --to a search.
JIM CRAMER: Which has some value--
GINNI ROMETTY: That's fine. That's great. That's great. But we deal in the enterprise world. So this is training Watson. Watson is trained in industries. What does underwriting do? What does a tax preparer do? What does a doctor do? What does a customer service agent do? What does a repairperson do? And it helps them be better. And, in fact, helps them do their job. Makes them be the best. So what you saw, I think H&R is a great one. So it actually touched all these consumers. And, in fact, for H&R Block, it was the best NPS net promoter score they've had. It was market share gain. First time in years for market share gain. All due to this. And it was Watson reading the tax code then helping you with, "What would people like you do? And did you miss this? Did you miss that? Could you have made more money?" And I have to tell you a funny side story. I can't tell you how many things we learned about the tax code. All the states and the federal, how many conflicting things there are. Which we turned in to the government for some help them out there.
JIM CRAMER: But I do feel that when you're with President Trump, and 3-4% of our nation of the federal government is on the cloud. I mean, I felt like saying, "I hope Ginni says that we could help the IRS." But--
GINNI ROMETTY: Absolutely--
JIM CRAMER: --then you'd be helping both sides.
GINNI ROMETTY: We help both--
JIM CRAMER: Can you do that--
GINNI ROMETTY: --sides. We help both sides. But, by the way, and we're a big cloud provider to the government, as well, right? So, I mean, the cloud is a really important part of where we're going. But, I have to tell you, the cloud is in its early stages and it's changing. And so when I mentioned about IBM reinventing for data I want you to think of this any company out there I said we're the champion for business.
JIM CRAMER: Okay.
GINNI ROMETTY: 20% of the world's data is searchable. Anybody can get to that 20. Okay. But 80% of the world's data, which is where I think the real gold is, whether it's decades of underwriting, pricing, customer experience, a risk in loans, that is all with our clients. You don't want to share it. That is gold. So I feel so many clients that ask for help on all this, this is what we do. And this is-- I say, "You go on the offense now. This is about what our role is. To help you use that." And you're going to need artificial intelligence. But you're going to need one where Watson's differentiated. And we are trained in an industry. And more important than anything, Jim, you hear this from clients, it's artificial intelligence says you can't send all your data to someone else's cloud. You'll use some out there, some on. And we do the job of don't make you move it. Because not all data can be moved. And the other thing we do, which I think differentiates us from everyone in this area of artificial intelligence, built for business, is that I can guarantee you as a customer that your insights, your personal data is not training that data for someone else to use it. That's not true with others.
JIM CRAMER: No, it's not--
GINNI ROMETTY: And so that, to me, is really the game, if you're in enterprise.
JIM CRAMER: All right, well, we're going to take a break for a minute. This we're talking with Ginni Rometty, who is the chairman, president, and CEO of IBM. Thank you, Ginni.
JIM CRAMER: Ginny, it's a remarkable story, but, at the same time, it's not for everyone. We had Warren Buffet sell down the stock. It seemed like he said there's too much competition. He felt that the situation had changed as he came in. Is this both free to do more for you? Or is it a kind of, a check that maybe I'm not delivering what some of these big investors want?
GINNI ROMETTY: No, look, I think, look, we've traded publicly 100 years out there. And the trick to being a company in tech, which is a viciously competitive environment, that's absolutely right, is you got to keep reinventing. And what IBM is for is for someone who values high value as a company. And so because we continue to divest some businesses, create new, move forward. Jim, it is always about moving to where the profit and the value is. And what that does for an investor is that always gives us the ammunition to reinvent ourself. Those profits do. And then with that, continuously raise your dividend. And so you will be there the next time, and the next time, and the next time. And you have the firepower to do that.
JIM CRAMER: Well, did you speak with him—
GINNI ROMETTY: That, to me, is what makes us valuable.
JIM CRAMER: Well, did you speak to him about that? Because that's a very – to me, you get almost 4% yield.
GINNI ROMETTY: Yeah.
JIM CRAMER: You've got a fabulous balance sheet.
GINNI ROMETTY: Yeah.
JIM CRAMER: You are generating a gigantic amount of cash.
GINNI ROMETTY: Yeah.
JIM CRAMER: I don't understand why he did so.
GINNI ROMETTY: Well, I let every investor speak for themselves, right? But and I'm very appreciative of all our investors there.
JIM CRAMER: Okay. Now let's talk about the dividend. You generate a gigantic amount of cash even though you're making this transition to strategic imperatives. Can that be imperiled if the older business, I'm just calling it that, older business goes down? Or strategic imperatives is so successful that you make less money on strategic imperatives than you would on the older businesses?
GINNI ROMETTY: Yeah, so listen, this is an important point. They're not separate businesses.
JIM CRAMER: Okay.
GINNI ROMETTY: And, in fact, a very interesting point of how we share with investors, it's part of every business we have. So they're different products and services as you reinvent them inside of each other. So that's one really key point that's here. And as we move to the new products and services, they are of higher value. I mean, that's always been IBM's business model. Move to higher value. And it's really, I think, the only way to exist 100 years. So others will get their chance to go through two, three, four, five renovations and reinventions. That's what makes us different.
JIM CRAMER: All right, but let's talk about where you're way ahead. I look at patents. These some of these analysts say, "Oh, well, that's one off." But it's been a fabulous business. I look at Blockchain. What you're doing there.
GINNI ROMETTY: Absolutely.
JIM CRAMER: I think sometimes I envision that all of bitcoin could run on IBM's Blockchain. So talk about the businesses that you're so far ahead on. And why, maybe, Wall Street's not giving you enough credit. But the people at home who are watching this show will understand.
GINNI ROMETTY: Yeah. So let me start with Blockchain, and then I'm going to go backward to those patents.
JIM CRAMER: Sure.
GINNI ROMETTY: Because they are underlying it. To me, and there'll be another technology that comes. And, again, greatness is having a technology, but the know how to do something with it. So when I say Blockchain, I don't mean bitcoin. I'm not talking about a virtual currency. It's a really important point. And my simple definition of Blockchain is it's a technology that allows you to exchange information – anything between two parties who may not know each other, but it's a trusted – I can do it with trust. That's really all it does. So any exchange of anything you could make trusted. That's how I think of it. And then you say, "Whoa, I could do lots of things." Such as Walmart. So Doug McMillan and I are working on food safety. $100 billion a year on food safety on recalls wasted. And so in production in China, pork, from farm to table, going. We've done mangoes. We're spreading it in with many other food producers. A simple example. Another one would be Maersk shipping. 20% of the world's shipping. Cargo shipping. And so, boy, if you've ever seen the chain of information, the paperwork with a cargo to ship flowers, a big container, you know, for that goes on a cargo ship, the paperwork costs more than just even the goods inside of it. And so perfect example, and we're working on that. DTCC, an industry you know well. Derivatives and financials. Going up on a Blockchain. I do it myself. My own financial ledger. So it is endless. We have over 400 different – think of these though as applications. So we build applications. Can build them on anything. And then underneath it, I make it the analogy is like the internet. The internet – what the internet did for communications, I think Blockchain will do for trusted transactions. That's maybe an analogy that'll work. And then we work on that underlying fabric to make it so that it can do tens of thousands of things a second. Not like some of the other versions out there. And we've been to plenty of the governments for Blockchain to really take off, the technology it's on, which, by the way, we've helped open source so everyone can use it, It has to have permission to access. Meaning a federal bank has to be able to see certain things. Et cetera. So it is trusted. So now, I circle back then to your question of that's just an example. But back to the patents. That is not a one time. So 24 years, as of right now, we have been the number one patent producer. I am very confident number 25 will come along. And it was 8,000 patents in a year is what we just did. And if you even look at the last couple years, it's been, let's see, 5,000 patents in cloud, I think. We're almost 4,000 patents in artificial intelligence. And so, we monetize and commercialize many of those. Not all. And so, for those we may license others, because we're prolific inventors. We are the ones that woke up the AI world here, again. Blockchain another. I said we've outsourced that – or open sourced that, in that case. And then there are times, you know, as we move out of businesses, we have this wealth of patents. Then we license to people. PC. Semiconductor. I mean, you just look at the list. And, to me, that is a wonderful thing to do. At the same time, back to that reinvention, we're moving to the next thing. The ability to share with others the N minus one behind it.
JIM CRAMER: All right, let's just in the time we have remaining, just talk about you. This is not an easy mission to change. You've – a lot of these younger people, that means there were older people who had to leave, you've had a very tough job. A very difficult transition. Stock's been tough. Isn't it just hard on you every day?
GINNI ROMETTY: No. I mean, I look at and I have been part of this company, as you know, it's been 36 years, actually. And it's in my DNA, and I think it's in IBM's DNA to keep changing. And this is just what you do. And I'll tell you the part that does not make it hard: there is not a day that I don't talk to five clients, ten clients, and it is what we do. What we do to keep the banks, the airlines, the railroads running in this world. And to take them to the future. If there's nothing as motivating as that, and I believe we'll do our part to change healthcare, right? When you think of new IBMers, 10,000 in healthcare I have. And we are making progress. By the end of this year, boy, with Watson, 20,000 cancer patients. We'll be able to address, diagnose, and treat 80% of what causes 80% of the cancer in the world. If that's not motivating, I don't know what is.
JIM CRAMER: No, that is. All right, so the last thing. I have two daughters. And they say, "Dad, why don't you ever put women executives on? Why don't you have enough – why aren't there more CEOs on that are women? What are you doing? You're not making enough calls." I have to tell you, there are not enough women CEOs, as you know. Why is that? Because you are a role model for 51% of the country. How do we change things?
GINNI ROMETTY: Yeah. This is important and I tell you, one of the most important things I think we all have to do is I've worked on this problem, and I agree with you. There are not enough. You've got to keep women in the workforce. Whether it's through having children, caring for elder parents, all the things. And not that husbands and spouses or partners don't do those things, too. But it's often what takes them out. And then to get them back in is hard. So we've done a lot of things. Whether it's as simple as if someone has a baby, wants to keep working, we ship their breast milk to where the mother's traveling, right? To the baby. I mean, you keep them in the workforce, your odds are much higher. And that's just one of the many things we do.
JIM CRAMER: And this is not a stranger to you. It wasn't like you were born to the – you've had not as easy a life as many people think. You don't talk about, but it's true.
GINNI ROMETTY: Yes. Yeah, well, I say the other thing I learned, and it's really about our whole talk today, I learned from my mom, do not let someone else redefine you. And this goes back to when I was young, my father left. And he left my mom with four of us. And no money, no house, no food. And my mom really, without a college degree, went back to school, showed us, "Hey, this is not going to end like that. And every one of you are going to have a chance." You know, she went back to school, got a job, got us through school. And I say my brothers and sisters are more successful than I am. And so this is that idea, do not let someone else redefine you. Like, don't let someone else redefine your company.
JIM CRAMER: Well, I think that's important. Because a lot of people, you know, you've got almost 4% yield, got good growth. People would define you as a company that is not on the move. That is static. And that is certainly not what I'm hearing at all.
GINNI ROMETTY: Couldn't be further than the truth, right? This IBM will change the world one more time.
JIM CRAMER: All right. Thank you so much to Ginni Rometty, who's the IBM chairman, president, and CEO. Great to talk to you.
GINNI ROMETTY: Thank you. Thank you my friend.
JIM CRAMER: Thank you.
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