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IBM Falls - I Told You So
Some fair points but IBM trades now at the same level of when you last told us it would drop, so what exactly did you tell us?
I am not sure how you define "industry" in your multiples comparison.... IBM has a P/E of 13, MSFT 15, ORCL 15, ACN 16, INFY 14, CSCO 12, HP depends on what they write off next... don't tell me you compare with DELL!
Apr 24, 2013. 03:54 AM
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Is IBM In Trouble?
I am sorry to say your analysis is flowed. You ignored that since 2004 IBM divested from PCs, printers and retail store solutions which in total used to generate more than $13 billion in annual sales for very little profit. They gradually replaced these revenues with mostly high margin software sales.
You totally missed this in your "2012 revenue will come in at the same level it was in 2008, about $103 billion. It's certainly a red flag, and it suggests that IBM's vaunted sales force is having a tough time convincing customers to sign new contracts". What you should have concluded from flat revenues and increasing margins is that IBM constantly divests from low margin products and invests in high margins ones. This by the way explains why margins have expanded which is what you fail to understand in your next paragraph about outsourcing and wrong guesses on HW margins.
As a result the comparison with Costco may be more appropriate for HP which is chasing revenue growth at shareholder's expenses.
Next time please research your facts, which are:
- in 2005 IBM sold its PC business to Lenovo. It was generating US$ 10 billion in annual revenues
- in 2007 IBM sold its printing business to Ricoh when it was generating US$ 1 billion in sales
- in 2012 the retail store solutions to Toshiba (US$ 1.15 billion in annual revenue)
Dec 30, 2012. 11:45 AM
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