International Business Machines Corporation (IBM) Earnings Call Transcript & Summary

[Presentation] Welcome. I'd like to bring this meeting to order and, again, welcome you to the 2020 IBM Annual Stockholders Meeting. Let me thank you for joining us today, in particular, at this moment. I certainly hope that you and your families are staying healthy and safe. It is an extraordinary time, which is why we began with the small video that we began with. My name is Ginni Rometty, and I'm the Executive Chairman of the IBM Board, and I will be the Chairman of this meeting. Joining me today on the webcast is Arvind Krishna, our new Chief Executive Officer of IBM and IBM Director; Jim Kavanaugh, our Chief Financial Officer; Michelle Browdy, our General Counsel; and Frank Sedlarcik, our Corporate Secretary. Now we're also joined by all of the members of IBM's Board of Directors. I hope you agree with me, IBM has an exceptional Board. Our members bring a diversity of views and perspective that come from private and public sectors. They're from a variety of industries, and they've got business and operations around the world. So what I'd like to do -- you can see their pictures, but I'd like to virtually introduce you to each of them as each of them is on the line today with myself and Arvind. So first, Thomas Buberl. He is the Chief Executive Officer of AXA. And he is joining us as a new director effective today. Mike Eskew, the retired Chairman, Chief Executive Officer of the United Parcel Service, UPS; David Farr, Chairman and Chief Executive Officer of Emerson Electric; Alex Gorsky, Chairman and Chief Executive Officer of Johnson & Johnson; Michelle Howard, retired Admiral, United States Navy; Andrew Liveris, retired Executive Chairman and Chief Executive Officer of The Dow Chemical Company; Bill McNabb, retired Chairman and Chief Executive Officer of The Vanguard Group; Martha Pollack, President of Cornell University; Joe Swedish, Senior Adviser as well retired Chairman, President and CEO of Anthem; Sidney Taurel, Chairman Emeritus of Eli Lilly and Chairman of Pearson; Peter Voser, retired Chief Executive Officer of Royal Dutch Shell and Chairman of ABB; and Rick Waddell, he's the retired Chairman and CEO of the Northern Trust Corporation. Now before I begin with the order of business, I have a bit of news to share with you. Just a few minutes ago, the Board of Directors approved an increase to our quarterly dividend, bringing the quarterly dividend to $1.63 per common share. This is the 25th consecutive year that IBM has increased its quarterly cash dividend, and our dividend is now up 2.5x, 2.5x times over the past decade. And IBM has paid a consecutive quarterly dividend since 1916. Now the dividend increase, particularly in this time of the global health prices, we hope it speaks not only of our commitment to deliver value to our stockholders, but it's also about the strength of our balance sheet, which our new CEO, Arvind, is going to also touch on shortly when he gives his report. So let me now move on to the official notice of our meeting. All our stockholders of record on February 28, 2020, were given notice of our meeting by mail. Copies also went to the financial press. And then on April 10, as obviously you know by joining us on the phone here, we issued a press release that moved our original location to a solely virtual meeting due to the health guidance all around coronavirus. Now Michael Barbera, [ Henry Warnicke ] and [ Doug Sarsniki ] of First Coast Results, they've been appointed by the Board to serve as our inspector of the elections for this meeting and in accordance with our bylaws. The inspector of the elections sent me report this morning, we do have a quorum and the quorum is in attendance. Now so we're going to dispense with the reading of the minutes of last year's stockholder meeting, and I'm going to move right to the items of business and they're set forth in the proxy statement, hopefully you have in front of you. So item 1, our first item is the election of directors. The 14 people named in the proxy statement are nominated for election as directors of the company, and they'll serve then until our next annual meeting. Item 2 is the ratification and the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm. You will see our proposal for that set forth in the proxy, find it on Page 73. Item #3 is our advisory vote on executive compensation and IBM's proposal, you'll find on Page 74. Now let me move on to the stockholder proposals. We have 3 stockholder proposals, and you'll find them as items 4, 5 and 6 in our proxy. As you would guess, other proposals, of course, are not considered at today's meeting. Our Board does recommend a vote against all 3 of the stockholder proposals, and there's no need -- as each speaker comes up, there's no need to read the proposal or the supporting statement as all that information is put forth in the proxy. And also, please note, just out of respect for the stockholders, the rules of conduct, they will publish in advance of the meeting, require that each of our speakers presenting stockholder proposals limit their comments to a period of 3 minutes per proposal and, of course, limit their comments to the subject of the proposal. And in addition, please note, of course, this isn't the time for other questions or grievances or other matters that would not be suitable for an annual meeting. So we actually can move right on to the stockholder proposals. And the first stockholder proposal is what I call out as item #4. You'll find it on Page 75 in your proxy statement. It is from James McRitchie and Myra Young, and it is on the right to remove directors. Our statement and opposition is on Pages 75 and 76, and I'll now ask the operator to open the line. And if Mr. McRitchie or Ms. Young is on the line to present their proposal. Operator?

Hello, this is James McRitchie. Can you hear me?

Yes, I can. Yes, I can, Mr. McRitchie. Feel free to go ahead.

All right. Thank you. So this proposal is for the right to remove directors, a good governance proposal. It seeks to allow shareholders to remove -- the ability to remove directors without cause. Demonstrating cause is next to impossible absent a clear showing of illegal or wrongful conduct. In Delaware, where many corporations are incorporated, shareholders have the right to remove annually elected directors without cause by a majority vote of the outstanding shares. Specifically Section 141(k) of the Delaware General Corporation Law provides that, "Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors." As a result, shareholders of Delaware corporations can exert pressure on annually elected Board with their ability to seek to remove directors without the need to show cause, especially they are also permitted to call special meetings or take action by written consent for such purpose. IBM allows shareholders to call special meetings. The typical reason for doing so, to remove and replace directors. Other companies where I submitted this measure, State Street, S&P Global, Johnson & Johnson, simply agreed to implement the proposal. I was very surprised to see IBM simply opposed without even discussing it with me. IBM argued shareholders should only be able to remove directors for cause, which essentially means for committing crimes. Underperformance for 1, 2, 5, 10 years should not be a reason to remove nor should any other measure not involving criminal activity. That policy makes no sense to me. Please vote for Proposal #4, right to remove directors. Thank you very much for your attention.

Okay. Thank you, Mr. McRitchie. I'll now move on to the next proposal. And the next stockholder proposal is item 5 on Page 76 in the proxy statement from John Chevedden on the right to act by written consent. Our statement on opposition is on Page 77. And operator, I'll now ask you to open the line for Mr. Chevedden to present his proposal.

Hello. This is proposal 5, right to act by written consent. This is John Chevedden. Can you hear me okay?

Yes. Yes, Mr. Chevedden, I can.

Shareholders request that our Board of Directors take the necessary steps to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting. Our company requires 25% of shares to combine their holdings to call a special meeting, a higher level than the 10% of shares permitted by many states of incorporation. Dozens of Fortune 500 companies provide for both shareholder rights, to act by written consent and to call a special meeting. Our higher 25% threshold for shareholders to call a special meeting is one more reason that we should have the right to act by written consent. Plus our higher 25% threshold has bureaucratic pitfalls that trigger minor shareholder errors that could mean that 50% of shares would need to ask for a special meeting in order to be sure of obtaining the threshold of 25% of requests without errors. One can be sure that management will have a sharp eye to spot any errors. Hundreds of major companies enable shareholder action by written consent. This proposal topic won majority shareholder support at 13 major companies in a single year. This includes 67% support at both Allstate and Sprint. This proposal topic would have received still higher votes than 67% at Allstate and Sprint if more shareholders had access to independent corporate governance recommendations. Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director. This is important to consider after our Lead Director, Mr. Michael Eskew, received the highest negative votes of any director in 2019. With long tenure of 15 years, Mr. Eskew can hardly be considered independent. As IBM Lead Director, Mr. Eskew should have one of the best voting records of all our directors. It was not a surprise that Shirley Jackson, who chaired our Governance Committee, received the second highest negative votes in 2019. Ms. Jackson has had high negative votes for many years at a number of large companies. Our Chairman, Ms. Rometty, received our third highest negative votes in 2019. Meanwhile, IBM stock fell from $170 to $125 in 5 years of a mostly robust market. Please vote yes, right to act by written consent, proposal 5.

All right. Thank you, Mr. Chevedden. I'll now move on to the third stockholder proposal. It's item 6 on Page 78 in the proxy statement from Kenneth Steiner regarding having an independent Board Chairman. Our statement of opposition is on Page 80. I'll now ask the operator to open the line, and I believe Mr. Chevedden, you're going to present again. Is that right?

Yes. This is John Chevedden. Can you hear me okay?

Yes, you still can be heard clearly.

Okay. The topic is independent Board Chairman and sponsored by Kenneth Steiner. Shareholders request our Board of Directors to adopt a policy and amend our governing documents as necessary to require that the Chairman of the Board be an independent member of the Board whenever possible. Although it would be better to have an immediate transition to an independent Board Chairman, the Board would have the discretion to phase in this policy for the next Chief Executive Officer transition. This proposal topic won an outstanding vote of 52% support at Boeing yesterday. This proposal topic also won 50% plus support at 5 major U.S. companies in 1 year, including 73% support at Netflix. These majority votes would have been still higher if all shareholders had access to independent proxy voting advice. This proposal topic won 41% in 2019 at IBM, which was up substantially from 29% support in 2015. It is possible that this 41% support translates into majority support from the IBM shareholders who had access to independent proxy voting advice. It's unfortunate that Ms. Shirley Jackson, who chaired our Governance Committee, had responsibility to review this proposal. Ms. Jackson received the second highest IBM negative votes in 2019. Ms. Jackson had an established track record of high negative votes for many years at a number of large companies. In regard to Ms. Jackson's role in selecting new directors, 2 recent additions to the IBM Board had no major company director experience. And IBM, in spite of its stagnation, still has a market capitalization of more than $100 billion. The roles of Chairman of the Board and CEO are fundamentally different and should not be held by the same person. There should be a clear division of responsibility between these 2 positions to ensure a balance of power and authority on the Board, and this should be a permanent requirement. Please vote yes, independent Board Chairman, proposal 6.

Thank you, Mr. Chevedden. At this time now, I declare the polls are now closed. And I'd like to ask Arvind, our new Chief Executive Officer, to proceed with his report on the company for you. Arvind, please take it away.

Hello, everyone. I would like to start by saying that my heart goes out to all those dealing with COVID-19. It is my honor and privilege to share with you my first report on your company and our progress in 2019 as the new CEO of IBM. Today, I intend to cover 4 key topics: the impact of COVID-19 on IBM, our financial performance in 2019, our investments and progress and the importance of trust and responsible stewardship. First, I will begin by talking about COVID-19 and its impact on IBM. In this difficult time, the physical health and mental well-being of employees is our top priority. We are doing all we can to protect our employees and to help our clients. Very quickly, we moved nearly all of our 350,000 global employees to work remotely. For those who remain at client facilities or IBM centers, we are providing the masks and have put in place social distancing protocols. I'm extremely grateful to them all. Before I delve into the specifics of our performance, I have to pause for a moment and give my respect and gratitude to Ginni. Ginni has been a remarkable leader. She mobilized and reinvented IBM for this era and has been an incredible steward of this company. She grew the cloud business to become a $22 billion business and has made significant investments in AI. Now I'll move on to discuss our financial performance in 2019. In 2019, IBM delivered a second consecutive year of revenue growth, excluding the impact of currency and divestitures. We ended the year on a strong note with accelerating revenue growth and our strongest year-to-year increase in gross profit margins in over a decade. For the full year, the company achieved $77.1 billion in revenue, operating gross profit margins of 48% and operating earnings per share of $12.81. We had strong cash generation with net cash from operating activities of $14.8 billion and free cash flow of $11.9 billion. We returned $7.1 billion in capital to our shareholders, including dividends of $5.7 billion. And as you heard, we have once again raised our dividend this year, marking the 25th consecutive year of raising our dividend. Our strong balance sheet allows IBM to return dividends to you, our shareholders, but also to divert significant capital to strengthening IBM's position in the marketplace. To that end, let me walk you through some of our investments and progress in key areas. I will start with cloud. Cloud has grown to be a more than $22 billion business, offering enterprises public, private and hybrid cloud solutions. Last year, we have completed a 2-year journey to rebuild the IBM Cloud and launched an impressive array of new cloud products and services in hybrid cloud. 2019 was also the year IBM introduced the world's first financial services-ready public cloud. The result is that clients with the most demanding regulatory and resiliency requirements like Bank of America and BNP Paribas are moving their most critical workloads to the IBM Cloud. 2019 was also a watershed moment in our journey. It was the year we completed the largest acquisition in our history, Red Hat. In Red Hat, we acquired a powerful growth engine and a company synonymous with the cloud and open source. Red Hat technology enables the seamless integration of multiple clouds from any vendor, addressing a hybrid cloud market opportunity of over $1 trillion. We've had a strong start. We significantly accelerated Red Hat's performance from mid-teens revenue growth before the announcement to 24% revenue growth on a normalized basis in the fourth quarter. Red Hat eclipsed $1 billion in quarterly revenue in the fourth quarter for the first time. Meanwhile, Red Hat backlog continues to grow, up approximately 20% from the same period last year. And we ended the year with more than 2,000 clients using OpenShift and IBM's hybrid cloud platform. AI, too, is a major focus of the company. On that front, IBM has strengthened its leadership position and bolstered its capabilities. We have more than 30,000 Watson client engagements across 20 different industries. We're helping clients like Yara build a digital farming platform; Woodside Energy to optimize its operations; and Vodafone Idea to transform its core IT infrastructure. On systems, we launched IBM Z15, which is our most secure and capable mainframe ever. In the area of security, IBM helped secure 95% of the global Fortune 500 and manages more than 70 billion events every day. On blockchain, IBM is the global leader in enterprise blockchain solutions with more than 20 large consortium networks that are reshaping into our industries like the IBM Food Trust for reliable food supply and TradeLens for shipping. On Quantum, IBM introduced a 53-qubit quantum computer in 2019, the largest universal quantum computing system available for commercial use. Since the first quantum computer launched as the IBM Cloud 4 years ago, over 200,000 users have registered to execute over 140 billion circuits across our 16 open and premium quantum systems. I'm convinced that quantum computing will be a truly important part of the future, and IBM is the leader. Altogether, these important investments have positioned IBM for sustainable growth as we emerge from the pandemic. Combined with our deep industry expertise, IBM has distinct capabilities to help our clients in their digital transformation journeys. This next technological era that IBM is building offers large new opportunities, but to unleash them, it takes more than technology and more than business. It will take trust and positive societal impact. This brings me to the next point. IBM's unwavering commitment to be a trusted partner and responsible steward. Trust is indeed our license to operate, and we have earned that across our over a century. Diversity and inclusion are also essential to our business. In that regard, we have made strong progress. In 2019, we achieved record diversity across all representation groups and best-in-class inclusion scores. P-TECH, our 6-year high school education model, doubled the number of participating schools to 220 in 24 countries with a pipeline of 150,000 students. Finally, I cannot talk about responsible stewardship without mentioning the incredible work that IBM is doing to help tackle COVID-19. A few examples: the computing power, over 360 petaflops; as well as the platforms like Micromedex we have made available for researchers to develop new drugs and vaccines; the weather channels, county-by-county interactive map of COVID-19 cases; the AI assistance that answers citizens' questions about COVID-19; and the educational resources that we have now made available to anyone anywhere. Let me close by saying this. I love this company. In my almost 30 years with IBM, I have seen firsthand the tremendous talent and dedication that IBMers possess. IBM is a strong company. In our 109-year history, we have weathered numerous crises. Today, we are financially strong, and we have a loyal client base. When this crisis ends, I'm confident that IBM will grow strong, and we will be focused on growth. Let me end by thanking you, our shareholders, for your continued confidence in IBM. I'm grateful for your support during this time as we embark on the next chapter of our journey together.

All right. Very good. Thank you very much, Arvind. And so now let me move on. The inspector of elections sent me report this morning on his preliminary count of the votes cast, and on the basis of that report, I can declare the following for you. The 14 nominees listed in the proxy statement standing for election have all been elected as directors. Each of the management proposals, including say-on-pay, all received strong majority support. The stockholder proposal on the right to remove directors received 54% support. And then the remaining stockholder proposals presented today did not receive a majority vote. So with that, we can now move on to the question-and-answer period for our meeting. Now something we've done for many years, we posted an invitation on the portal on the Investor Relations website and started back in March, where we gave all stockholders the opportunity to submit questions well in advance of today's meeting, in fact, almost 2 months. So for stockholders who signed in today with a control number, you too can submit questions if you'd like throughout this meeting or during this time. So Arvind and I, given the number of questions, we went through them, and we'll both answer a few of these. And you can see they've come in sort of different clusters of topics that we'll take on. So as you might expect, even though Arvind just made comments on COVID-19, there were a number of questions related to IBM's response to COVID-19. So I'd like Arvind to go into a little bit more detail on our efforts around what is happening at this point in time and what we're doing. So Arvind, can I turn it over to you.

Yes. Thanks, Ginni. And I'm going to build on what I stated during my report on the company. So I'll restate. I'm extremely proud of our response. From the start, we have been steadfast in our commitment, not only to employees but also to clients, partners and communities. And as I described, we have also joined the global fight against COVID-19, bringing to bear our best technology. We've committed $200 million in technology, services and money to help society fight COVID-19. Our senior executives have also made significant personal contributions. First, we put together a consortium with the White House, National Labs and other technology companies to try and find a cure for COVID-19 through high-performance computing. We pulled together an unprecedented amount of supercomputing, 360 petaflops to be exact. If you just think about that and you take the population of the earth, that means a machine like this can do 1 billion calculations per person per second. That tells you the amount of computation that we have brought to bear. We have also worked with the United States Department of Energy to steer IBM Summit, the world's most powerful supercomputer, to find drug compounds to fight COVID-19. We have already seen progress with target compounds being found by the machine. And we've added the brainpower of dozens of our top data scientists to help tackle COVID-19. You also heard me describe what we're doing with the weather company, which we own, to put trusted data at the fingertips of citizens and health experts. Let me explain a bit more. We created a new and precise incident map. This gives users details and local understanding of the outbreak with health data updated every 15 minutes on the IBM Cloud, of course, when that data is accessible and available and trusted. All of this is done on a county-by-county level in the United States, both in English and Spanish. We are also expanding to Europe, Italy, U.K., Germany, France to be available in their native languages. It's a free service, and it's a huge asset for people who want immediate and trusted data. The third one, the IBM Watson Assistant for Citizens. This was created for local and regional governments as well as health agencies. And the IBM Watson Assistant for Citizens brings together our years of investment in AI and speech recognition to help guide citizens and help governments and health care systems to free up important resources. IBM Research offered free resources, some in early stages of research to help health care scientists and researchers use AI on the IBM Cloud so that they can both gather insights and apply the latest virus genomic information to identify treatments. We also started an employee campaign, working with global citizen and the World Health Organization to help raise funds for first responders and hospital workers. IBM provided resources to create donation portals for other companies to raise funds as well. You may have seen acknowledgments by Lady Gaga and several late night television show hosts regarding IBM's involvement. In our home of New York, we are helping the New York City schools to provide 300,000 students with the equipment they need for online lessons. If I just take all that collection, I'm really proud of the way IBMers all over the world has stepped up and helped. This is IBM at its best. Back to you, Ginni.

All right. Thanks, Arvind. Now several of the questions that came in were all about the dividend. Now while we announced our dividend increase this morning, I thought I'd take the opportunity as Chairman just to put a little bit more color on the topic of dividends because, obviously, we evaluate all the options that we have to drive shareholder value -- shareholder returns for you. And of course, we're always balancing that need of a return with our investment needs in the business. Now there are 2 -- or I should say, there are more than 2, but 2 of the ways to drive a return, our share repurchase and then, of course, the dividend return for you. Now you know that we made the decision to suspend share repurchase when we completed the acquisition of Red Hat. And that was to give ourselves the financial flexibility for what is really one of the most important acquisitions we've ever done and off to a fantastic start. But at the same time, as we did that and planned for Red Hat, we also planned for and maintained our commitment to the dividend. We know how important it is to so many of you. I had mentioned as I started that IBM's paid that dividend uninterrupted since 1916. There are not many companies that can claim that distinction, and it is also one of the things we're really proud about. So today, when we approved the increase, it brings it, as I said, to $1.63 per share. And we're extremely pleased. That means we've raised the dividend 25 consecutive years, and as I said, it's up 2.5x. Now what I wanted to add is that we've been able to consistently increase the dividend for you, our shareholders, and that's because of our financial management and our strong balance sheet. We have an investment-grade bond rating, and we have plenty of liquidity. Now we've reduced our debt since the close of Red Hat by $9 billion already. Our free cash flow is $11.6 billion over the last 12 months. And at the same time, we are also able to invest billions in R&D for all the priorities Arvind covered around hybrid cloud and AI, and we continue to do so every year. So I want you to know we're very comfortable that IBM has the financial strength needed in these uncertain times and that we remain very committed to our dividend. So let me jump now to the third question. Actually, Arvind and I both mentioned Red Hat and there were a number of questions on the progress we've made on the acquisition of Red Hat. And so Arvind, you have been my partner in the acquisition of Red Hat. So why don't you cover this topic?

Proud to do so, Ginni. Red Hat has been both an excellent and an important addition for IBM, and I'll explain why I use both those terms. The addition is off to a really strong start. Last week, we announced Red Hat had a second straight quarter of more than $1 billion in revenues on a normalized basis, something Red Hat had not yet done before the acquisition. The revenues were up 20% normalized and at constant currency, and the number of Red Hat large deals was up 50%. And by large deals, I mean, deals over $10 million. So I call that the excellent. Now Red Hat plays a critical role in our ability to innovate and lead in the transformational journeys our clients are on, those journeys being, respectively, hybrid cloud and AI. IBM, together with Red Hat, has unique sources of competitive advantage: open source, security leadership with our deep expertise and trust. For perspective, IBM has already built 3 enduring platforms. The first is the mainframe platform, the second on IBM Services and the third on middleware. All 3 continue to serve our clients. The mainframe has provided value to us and our clients for more than 50 years and is still going strong. Hybrid cloud will be the fourth platform. Red Hat provides some of the key underlying technologies for this platform. Our goal is building an essential, ubiquitous hybrid cloud platform that our clients will rely on to do their most critical work in this century. Doing this allows us to give our clients enormous value and to extend our staying power in the marketplace for years to come. And this new platform will last even longer than the 3 that came before. As the world moves through and then beyond COVID, we believe that we are going to see clients move with even more speed to become a digital business. And as this move into the cloud accelerates to make applications and data more accessible, it will get built on this fourth platform. The move towards automation is also going to be accelerated. And so we have taken concrete steps to bundle many of our existing offerings on these platforms from Red Hat to give our clients more value. So as we emerge from this crisis, we believe Red Hat, coupled with our technology and expertise, helps drive sustainable growth for IBM. That's why it's such an important addition to our portfolio. Back to you, Ginni.

Yes. Well, Arvind, you mentioned the second -- or the other side of the coin, I should say, and we did get a lot of questions about our AI technology. So not just about cloud, about AI, and what is IBM doing to improve trust and transparency in that area, which, as we both see, is really critical, even more so now during the COVID-19 crisis. So why don't you grab and handle that one as well about AI and trust and transparency.

Absolutely. As you said, we both believe strongly in this, and we both mentioned it in our opening comments also. So as I said before, this is going to be the decade of trust for the technology industry. As technology plays an even more critical role in our daily lives, especially during a global pandemic, trust in technology as a force for good becomes even more important. Look, IBM has always believed that organizations bringing powerful new technologies into the world have an obligation to do so responsibly and with clear purpose. And that includes helping propel society for the changes those technologies will bring. We need to be honest and open about how innovations are used. Every one of the technologies that we have seen debated in the last few years can do wonderful things, but they need to be done carefully. And we must have a technology community that is upfront with people, not just when the data is being collected but for what purpose. Over the last few years, we saw this broader discussion about trust in technology and data practices coming hard and fast. We made a decision to publish our principles of trust and transparency that have long guided our company. They make clear that the AI we develop and deploy will augment, not replace, human expertise. Data belongs to its creators, not their IT partners, and that we should go to great lens to protect the privacy and security of data entrusted to us. Powerful new technologies like AI must be transparent and explainable. And we have to constantly find new ways to address issues stemming from harmful or inappropriate bias, which is entirely unacceptable. We have established an AI ethics governance system that helps us ensure all technologies, especially AI, aren't used in ways that would conflict with our values. If there's a concern, we generally tend to walk away from it. Last year, we developed and released tools like our AI Fairness 360 toolkit that lets organizations check for and correct bias in AI systems. In January, we launched the Policy Lab, a new forum to advance public policies and balance the potential of new innovations with the need to minimize negative societal impacts. This Policy Lab has already given a playbook to government officials for precision regulation of AI. So when we think about these steps, we also look at the ways technology is being used right now in this global emergency. You heard me talk about the Watson Assistant for Citizens earlier to help governments and other organizations. It is dealing with everything from details on health, to testing and symptoms, to how to file for unemployment claims. It brings together Watson technology and speech analytics in a chat bot, making it easy for citizens to use. These are some of our biggest competitive differentiators. Voice recognition tied to analytics, along with our natural language processing capabilities. A couple of quick examples. In Atlanta Children's Hospital, the COVID-19 pediatric assessment tool walks parents through a series of questions and results and suggested next steps that a parent should take. This really helps mitigate parents' concerns but also offloads workload from overloaded medical professionals. The Polish Ministry of Health is using it to give their citizens answers to common questions such as symptoms and recommended procedures to follow in case of infections, also freeing up government and health care workers for more critical matters. I stood this technology up really quickly to meet society's needs in a trusted way. This is an example of what AI should do, and it also shows how critical the technology can be to people globally. So Ginni, hopefully, that gives our shareholders a better sense of what we're doing on these topics.

Thanks, Arvind. And as I'm scanning the queue here and on questions, let me just pick one last one because as you would guess, many of the questions do either talk about efforts around COVID-19 or the post-pandemic world. So let me pick one on the post-pandemic world, which says stockholders have asked what steps IBM plans to help -- it would take to help clients and communities emerge successfully in the post-pandemic world itself. So let me take this and maybe broaden it as our last question here of the day. As Arvind just stated, IBM has always believed it had a duty of responsible stewardship. If you build the technology, you better be sure it can safely come into the world and that it can have a great impact in a positive way on the world. And if this was pre-pandemic and you had asked me that question, I would have said to you that our focus is in 4 areas: trust, as Arvind just went through; preparing society to have the skills to use these new technologies; third, diversity and inclusion for everyone to have a job; and then fourth, respecting the planet. Well, post pandemic, it's very clear to us that this is going to put a premium on our efforts to help society build the skills for this digital era because employment, employability will be the #1 issue. And it will take things like public-private partnerships to really address that in the years to come in front of us. And so you will see us doubling down on our efforts to help society build the skills so that it can have a very good -- as individuals, people can have a very good future in the digital era. And you'll see those kinds of efforts span a wide spectrum. So for one, right now with COVID, just think about students having access to distance learning. Arvind mentioned a couple of those cases, but it's around the world, whether it's 1 million students in Madrid that we've helped or hundreds of thousands in Latin America just get access to distance learning. But it's also going to be even more important that in the digital era, we find a way for everyone to have a good job, even those who don't yet have or don't have a 4-year university degree. That is what was behind P-TECH. It was a pathway to technology early career high school is what P-TECH stood for that Arvind mentioned. These are 6-year high schools and now 24 countries with hundreds of thousands of kids coming through with 600 other companies partnering with us. That was a 6-year degree, an associate degree, but actually very capable to be employed in many of our companies. But another program is apprenticeships. And think of that for mid-career. So this will come into play now very clearly in this era in front of us where people look to switch careers. We've put up apprenticeships, call them 21st century apprenticeships. They're growing twice as fast as we expected. They're registered with the Department of Labor, 23 tracks. We will do hundreds a year, and it's now a foundation for others as well. We've put in a program called returnships for women who's left -- it's primarily women, can be men as well as caregivers to their family, to come back into the workforce. And collectively, all these actions have already led to our hiring in the United States being 15% of our hiring, which is awfully large coming from these types of programs. We've collectively called that new collar, not blue collar, not white collar, new collar. So in short, as we look forward post-pandemic world, I do think all of our workaround skills will be essential as well our efforts around trust, diversity, inclusion, and they will be shining examples of what good tech is. You should continue to expect IBM to behave as the gold standard for good tech as the world emerges here. So with that, let Arvind and I thank you for joining us today for our 2020 Stockholders Meeting. I thank you for your support of IBM. And on behalf of myself, Arvind and the IBM Board of Directors, I'll now adjourn the meeting.