From other sites
at CNBC.com (Tue, 5:36PM)
at Fox Business (Tue, 12:30PM)
at CNBC.com (Tue, 9:01AM)
at Zacks.com (Mon, 4:35PM)
at CNBC.com (Mon, 11:50AM)
at Fox Business (Mon, 10:37AM)
at Zacks.com (Fri, 5:55PM)
at CNBC.com (Fri, 8:58AM)
at CNBC.com (Fri, 5:30AM)
at Fox Business (Thu, 6:00PM)
- IBM is now dirt-cheap, priced at a fraction of its key competitors in technology.
- The history of the company shows it needs a strong entrepreneur to succeed.
- Activist investors can have a field day here, and you should join them.
IBM Fundamental And Algorithmic Analysis: Will Big Blue Bring Big-Time Blues?
- IBM revenue hasn't grown for the last 10 quarters; this Q3, the company experienced its worst earnings miss in recent history, and consequently, dropped its long-anticipated 2015 growth plan.
- Currently, IBM faces criticism: specifically, revenue stagnancy, poor international growth, inaccurate performance estimates, late transition to modern sectors, and stock buyback dependency have all been deemed problematic.
- Nevertheless, IBM still has strengths; analysts and investors feel its past rebounds, legendary current status, strong leadership, novel-sector growth, cutting-edge research, and recent partnerships make it worthwhile despite the drop.
- I Know First's algorithm predicts a bullish forecast for IBM in the 1-month and 3-month time frames.
Why Did Buffett Invest In IBM, And Should You Follow?
- Since the beginning of the year, IBM's share price has declined to a level that is below Buffett's purchase price of IBM shares in 2011.
- Buffett invested in IBM likely because the company has wide economic moats, a strong management team, increasing dividends and share buybacks and a good return on invested capital.
- Although IBM is likely undervalued, the company's businesses are too mature to have consistent revenue growth.
- IBM delivered disappointing Q3 financial results, recording a $3.4 billion after-tax loss on discontinued operations.
- Revenue and operating income from continuing operations declined 4% and 12%, respectively.
- Management responded to Q3 results with more financial engineering.
- With cloud computing encroaching on its mainframe business and a lack of innovation to spur growth, IBM's demise may not be over.
ModernGraham Annual Valuation Of International Business Machines
- IBM is not suitable for Defensive Investors or Enterprising Investors following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is undervalued at the present time.
- The market is implying 1.3% earnings growth over the next 7-10 years, considerably lower than the rate the company has seen in recent years.
- A bulls vs bears debate has raged on the pages of Seeking Alpha on IBM for the past month and more.
- Economics value added analysis looks at the profits accruing to the shareholders after subtracting the cost of capital.
- My economic value added analysis shows that IBM is adding over $12 billion in value per annum.
- A recent earnings miss has pushed IBM shares down significantly, but the stock appears to have bottomed-out.
- Investors can now buy IBM for less than what Warren Buffett paid.
- IBM continues to grow and innovate, which could result in new products or licensing revenues.
- IBM is also a solid pick for income investors thanks to an above average yield and a history of raising the payout.
Bulls Vs. Bears: A Survey Of Recent Seeking Alpha Articles On IBM
- In my article on IBM published last week I explained my rationale why IBM was a buy at this price.
- Since then, and before this month, much digital ink has been spilled on IBM. In fact 37 Seeking Alpha articles appeared in October alone on IBM.
- Herein I present a synopsis of IBM articles for the edification of readers and perhaps to make a little sense of this blizzard of opinions.
- I have divided these articles as mainly bullish, neutral or bearish and added my takeaway from the articles.
- Full disclosure: I myself am of the bovine persuasion with respect to IBM. Please don't mind if I poke a little at my ursine cousins.
- In a steadily inflating market with increasing amounts of volatility, IBM stands out for precisely the opposite reasons: It's been dropping in price and it's boring.
- The market is punishing IBM for "dead" revenues while earnings per share and dividends are steadily increasing.
- IBM is a tech industry outlier because it's lasted so long through decades of innovation, yet the short term market perceives it's different this time.
- Ultimately, the long term view of IBM is bright because it's rather dull and continues to lumber on cloaking the flood of cash returning to shareholders.
- It's easy to get emotional about any one "hot button" but overall IBM's been heading in the right direction, and should continue to do so.
- IBM’s continued acquisitions are being overlooked as a realistic detractor from free cash flows.
- Revenue issues are well known, but the depth of their problems is being hidden by capitalizing their R&D.
- I recommend avoiding IBM shares, not disregarding the value trap warnings and searching for reasons why IBM "could work.".
- IBM shares dropped more than 10% following its Q3 Earnings Announcement.
- Many investors are trying to determine if now is the time to buy the stock.
- My margin of safety analysis, based on the Benjamin Graham's definition, shows there is sufficient margin of safety at a price of $165 per share.
- IBM has a long history of navigating changing business environments.
- IBM is undervalued yet has some of the highest free cash flow in the market.
- New partnerships and oversold conditions mark a potentially good entry point for long-term investors.
- The lower stock price for IBM produces higher yields for investors.
- The $5 billion added to the stock buyback authorization is very positive.
- Investors need to focus more on the buyback yield than the concept of stock buybacks.
Despite The Recent Correction, IBM Shares Are Not Yet An Attractive Investment
- IBM shares now trade at less than 10 times forward earnings after a disappointing quarterly earnings announcement caused the shares to decline by more than 10%.
- However, IBM's competitive position has weakened in recent years and its balance sheet is becoming stretched after years of share buybacks.
- Despite an above average dividend, a DRAG analysis shows that IBM warrants a discounted earnings multiple and the shares are still overvalued by more than 15%.
- IBM's famous buyback program has inflated EPS over recent years.
- This strategy only works if there is FCF to support the buybacks.
- With dividends making up an increasingly large portion of IBM's FCF, buybacks are in serious jeopardy and with it, IBM's only source of EPS growth.
- IBM's third-quarter earnings were surprisingly disappointing and severely missed analyst estimates.
- Share prices have been in a protracted period of decline, and are substantially below some fair value estimates.
- IBM is a massive, wide-moat business that has weathered previous storms and turned itself around.
- Should you buy shares now, or is it better to wait a bit for calmer waters?
Despite What Berkshire Holds, IBM Is Still Not A Buy
- IBM dropped sharply after reporting weak third-quarter results.
- The firm abandoned its earnings goal for 2015.
- 3 considerations: the last 20 years, innovation, and the consulting division.
Tue, Nov. 18, 5:17 PM
- Hoping to differentiate itself from Microsoft, Google, and other business e-mail rivals, IBM has launched Verse, an e-mail solution that integrates calendar data, IMs, social media updates, video chats, and file-sharing tools. The product will be offered both through the Web, and via Android/iOS apps, on a freemium basis.
- Verse relies on integrated analytics to learn a user's priorities, and to quickly provide important material (e-mails or otherwise) in an "at-a-glance" view. IBM will also include an option to conduct Watson queries (previous).
- Exec Carolyn Pampino says IBM is trying to differentiate Verse by having "more of a focus on people" and relevant conversations than rival solutions. "[Verse is] an easy and fast way to immediately filter on a person’s name."
- The product has some things in common with Google's recently-launched Inbox app, which tries to intelligently place e-mails into bundles and surface content such as photos, phone numbers, and appointment times. However, Google's solution is consumer-focused for now.
- Shares fell 1.4% today, and remain close to a 52-week low of $160.05 The Nasdaq was up 0.7%
Tue, Nov. 18, 6:44 AM
- IBM (NYSE:IBM) has won a €1B ($1.25B) outsourcing contract from Lufthansa (OTCQX:DLAKY), as the latter looks to restructure and cut costs to compete with fast-growing rivals in both Europe and the Gulf.
- Under the seven-year deal, IBM will take over the airline's information technology infrastructure services division, saving Lufthansa ~€70M a year. Around 1,400 Lufthansa Systems employees will now transfer to IBM.
- Previously: Lufthansa, IBM in talks over IT infrastructure unit sale
Fri, Nov. 14, 11:34 AM
- The Department of Energy has awarded $325M in contracts to IBM (IBM +0.6%) to create two GPU-accelerated supercomputers declared to be at least 3x more powerful than any existing system.
- The systems will rely on IBM's Power CPUs, Nvidia's (NVDA +0.5%) Tesla GPUs and NVlink GPU interconnects, and Mellanox's (MLNX +2.1%) 100Gb/s InfiniBand interconnects. Installation is expected in 2017.
- IBM asserts the systems will lower energy consumption by limiting data movement. The deal acts as a nice reference win for Power - Big Blue is trying to stem Power's share losses to Intel's Xeon CPUs by selling to 3rd-party server OEMs and licensing the architecture to other chip developers. Its powerful Power8 CPU (12 cores supporting 96 simultaneous threads) began shipping earlier this year.
- Separately, the DOE says it will invest $100M in FastForward2, an R&D program to create more powerful/energy-efficient supercomputers. IBM, Nvidia, Intel, AMD, and supercomputer maker Cray (CRAY +0.1%) are among the companies taking part.
- PRs: IBM, Nvidia, Mellanox
Tue, Nov. 4, 2:13 AM
- IBM (NYSE:IBM) is replacing the head of its struggling technology-services unit, the latest move by CEO Ginni Rometty to get Big Blue growing again.
- Martin Jetter, who currently heads IBM's operations in Japan, has been named head of its global technology services unit, effective immediately.
- Last month, IBM paid $1.5B to Globalfoundries to take over its loss-making semiconductor unit.
Mon, Nov. 3, 3:38 PM
- 11 days after Amazon (NASDAQ:AMZN) disclosed its main AWS reporting segment saw revenue rise 15% Q/Q and 40% Y/Y in Q3, Synergy Research estimates the company's combined cloud infrastructure (IaaS) and app platform (PaaS) revenue share totaled 27% in Q3, still more than 2x that of any rival.
- Nonetheless, competitors are gaining ground. Synergy thinks Microsoft (MSFT +0.9%), which saw 128% Y/Y Commercial Cloud growth in Q3 (covers both Azure and other services), saw its share rise above 10%. IBM (IBM -0.1%), which reported an 80% Y/Y Q3 increase in "cloud delivered as a service" revenue, is assigned a 7% share. Google, Salesforce, and Rackspace are close behind.
- In a PR, IBM states Synergy declared it to be "the #1 hybrid and private cloud provider for the enterprise." Big Blue has committed $1.2B to building up to 15 new data centers from which to deliver IaaS/PaaS services.
- Hybrid clouds are also pivotal to Microsoft's efforts to gain ground against Amazon. Last month, the company unveiled a new hardware platform (to be sold by Dell) that can handle Azure private cloud services, and link with Microsoft's public cloud services to create a hybrid cloud.
- Synergy thinks industry IaaS/PaaS revenue rose 49% Y/Y on a rolling annualized basis, and that trailing 12-month revenue has topped $14.5B. IDC expects public IT cloud services revenue (IaaS, PaaS, and SaaS) to post a 22.8% CAGR from 2014-2018, growing from $56.6B to over $127B.
Fri, Oct. 31, 6:49 PM
- Tencent's (OTCPK:TCEHY) MyApp Android app store is now seeing 100M daily downloads, up from just 76M in July. The figure covers both apps downloaded directly from the MyApp store, and from Tencent's WeChat and Mobile QQ messaging platforms.
- Qihoo and Baidu's 91 Wireless unit remain the leaders in China's fragmented Android app store market - 91 Wireless averaged 130M downloads/day in Q2. But the near-ubiquitous reach of WeChat/QQ within China, together with Tencent's mobile gaming clout, is helping Tencent gain ground.
- Separately, Tencent, which is best known for its consumer offerings, has signed an MOU with IBM to jointly sell cloud apps and related services to Chinese SMBs. Tencent's cloud services unit will host the apps, and IBM will provide consulting and IT services.
Wed, Oct. 29, 12:10 PM
- The partnership will allow businesses to "incorporate Twitter (TWTR -2.1%) data into their decision-making through an established set of IBM (IBM +0.1%) tools, solutions and consulting services." (PR)
- IBM plans to "offer Twitter data as part of select cloud-based services, including IBM Watson Analytics," and allow 3rd-party developers to integrate Twitter data into services they're creating via IBM's cloud app platform (PaaS) offerings.
- The first joint solution will involve IBM's ExperienceOne customer engagement software/services. Eventually, the companies will offer "solutions for specific industries such as banking, consumer products, retail, and travel and transportation."
- Twitter: "While companies have long listened to what their customers are saying on Twitter, complex enterprise decisions often require input from a lot of different systems. IBM’s expertise is in integrating complex systems and data to make better decisions."
- While IBM's total revenue fell 4% Y/Y in Q3, its business analytics revenue was up 8%; Big Blue has made a string of acquisitions to bolster its analytics portfolio.
- No details are given on the revenue Twitter will receive for providing its data. Twitter's data licensing/other revenue rose 171% Y/Y in Q3, and made up 11% of total revenue.
Tue, Oct. 28, 12:37 PM
- Along with declaring its regular dividend, IBM (IBM +0.2%) has announced it's adding $5B to its buyback plan, raising its total authorization to $6.4B. The company expects to request a new authorization at its April 2015 board meeting.
- With free cash flow declining - it's down 13% Y/Y over the first 9 months of 2014 - IBM has slowed its buyback pace in recent quarters. Big Blue spent $1.7B on buybacks in Q3, down from $3.7B in Q2, and stated earlier this year it would spend less on buybacks in 2014 than the $13.9B spent in 2013.
Tue, Oct. 28, 12:27 PM| 2 Comments
Wed, Oct. 22, 4:15 AM
- Lufthansa (OTCQX:DLAKY) is close to selling its IT infrastructure unit to IBM (NYSE:IBM), including an outsourcing agreement for the services, as part of a restructuring to better position itself to compete with low-cost carriers and Gulf rivals.
- The move will reduce Lufthansa's annual IT costs by around €70M a year, but will result in a €240M ($305.2M) charge this year.
- Under the planned deal, Lufthansa will outsource all of its IT infrastructure services to IBM under a seven-year agreement. A final price for the sale is still being negotiated.
Tue, Oct. 21, 10:54 AM
- Evercore has downgraded IBM (IBM -4.2%) to Hold a day after the company missed Q3 estimates, offered light full-year guidance, pulled its 2015 EPS target, and reported a 7% Y/Y services backlog drop. Not surprisingly, many other firms have cut their targets.
- Credit Suisse's Kulbinder Garcha, bearish for some time, has slashed his target by $35 to $125. Though calling the resetting of expectations a positive and noting a mainframe upgrade cycle is on the way, Garcha argues IBM "continues to face multiple issues to revenue growth including high mainframe exposure, negative cloud impact and weak IT spending."
- BofA/Merrill's Wamsi Mohan tries to find a silver lining. "In our opinion, the reset in expectations provides an opportunity for IBM to redefine the broader strategy without the rigidity of near term targets. We expect a detailed business strategy update at the Analyst day in 2015 but near term headwinds will likely keep the stock range bound and we remain Neutral."
- The WSJ observes IBM could lose its status as one of the S&P 500's 20 most valuable companies for the first time in history.
- Yesterday's earnings coverage
Mon, Oct. 20, 12:03 PM
- After badly missing Q3 EPS estimates (in spite of backing out the losses of its soon-to-be-sold chip unit), IBM (IBM -6.7%) guided on its Q3 CC for 2014 EPS from continuing ops. to be down 2%-4% Y/Y. That implies a range of $15.97-$16.30, soundly below a $17.87 consensus.
- Big Blue also says it took a $3.3B Q3 post-tax charge related to the chip business; the figure includes the $1.5B payment to Globalfoundries.
- During a CNBC interview, CEO Ginny Rometty suggested fresh layoffs are on tap. The company recorded a $1B workforce rebalancing charge back in Q1; its headcount was at 431K at the end of 2013.
- IBM's closely-watched services backlog fell 7% Y/Y in Q3 to $128B, a much sharper drop than Q2's 1%; the company declares it saw "insufficient" services productivity. Also worrying investors: Gross margin fell 90 bps to 49.2%, ending a long string of Y/Y gains.
- Other pressures on EPS: 1) The non-GAAP tax rate rose 80 bps Q/Q and 320 bps Y/Y to 20.8%. 2) Buybacks fell to $1.7B from Q2's $3.7B. 3) Opex for continuing ops rose 2% Y/Y, while revenue from continuing ops fell 4% (helps explain the job cut talk).
- Hardware revenue (excludes chips) -15% Y/Y; software -2%; global tech services -3%; global business services -2%; financing -3%. Within hardware: Mainframes -35%; Power systems -12%; x86 servers (just sold to Lenovo) -10%; storage -6%.
- Two strong points: "Cloud delivered as a service" revenue is up over 80% YTD ($3.1B/year run rate), and security revenue is up over 20% YTD.
- Americas revenue -2%; EMEA -2%; Asia-Pac -9%. "Growth markets" -6%, with BRIC countries down 7%.
- Free cash flow ($2.2B) was once more well below net income ($3.7B). IBM ended Q3 with $9.6B in cash, and $17.1B in non-financing debt.
- Q3 results, details, PR
Mon, Oct. 20, 9:21 AM
Mon, Oct. 20, 7:30 AM
- "We are disappointed in our performance," says CEO Ginni Rometty. "We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry."
- Non-GAAP operating income from continuing operations (excludes semiconductor business whose acquisition by Globalfoundries was announced today) of $3.7B is off 18%; operating EPS of $3.68 is lower by 10%. Gross profit margin of 49.2% down 90 basis points.
- Guidance will be discussed further in the 8AM ET conference call, but the presentation slides say the company no longer expects to deliver at least $20 in operating EPS in 2015.
- More from Rometty: "We again performed well in our strategic growth areas cloud, data and analytics, security, social and mobile - where we continue to shift our business. We will accelerate this transformation."
- IBM -8% premarket
- Previously: International Business Machines misses on revenue
Mon, Oct. 20, 7:09 AM
- International Business Machines (NYSE:IBM): Q3 EPS of $3.68 misses by $0.64.
- Revenue of $22.4B (-4.0% Y/Y) misses by $970M.
- Shares +1% PM.
- Press Release
- Previously: Globalfoundries to take control of IBM's semiconductor operations
Mon, Oct. 20, 1:40 AM
- IBM (NYSE:IBM) has reached an agreement with Globalfoundries to take over its loss-making semiconductor unit, WSJ reports.
- Under the terms of the deal, IBM will pay Globalfoundries $1.5B to take the chip operations off its hands, a source says.
- IBM is scheduled to report Q3 earnings premarket.
- Previously: IBM to make 'major announcement,' release earnings Monday morning
IBM vs. ETF Alternatives
International Business Machines Corp is an Information Technology (IT) company. It creates business value for clients and solves business problems through integrated solutions that leverage information technology & knowledge of business processes.
Other News & PR