IBM Nearing 52-Week Highs

Big Blue – International Business Machines (IBM) – just delivered a duo of impressive back-to-back quarters with Wall Street applauding the results. This pair of consecutive quarters has elevated the stock and is now testing its 52-week high. These results solidify IBM’s long turn back to growth after posting revenue declines for 20-plus consecutive quarters. IBM has accomplished this nascent pivot back to growth via focusing on high-value faster-growing business segments while embracing the future of technology with AI and hybrid cloud architecture (i.e., Red Hat acquisition). Investors are ostensibly being appeased with the blended approach of M&A, realigning it business mix to current and future trends, maintaining its dividend payout and continuing to buy back shares until the Red Hat acquisition closes. IBM’s stock has been on an upward trend after investors decided to move past its initial displeasure of announcing its Red Hat acquisition when shares were sold-off and traded down to ~$108. IBM's executive leadership has set the growth and value narrative, and investors are quickly realizing the value that Red Hat brings to the table while washing away fears that IBM overpaid for the $34 billion acquisition. From the $108 dip, IBM has been in a position of strength and has broken out past the $150 level after its recent Q2 2019 earnings. Long-term imperatives are beginning to bear fruit in emerging high-value segments that has fundamentally changed its business mix while evolving its offerings to align with new age information technology demands. The Red Hat acquisition will augment its transition away from its dependence on legacy businesses to the future of hybrid cloud, artificial intelligence, and analytics. IBM presents a compelling long-term opportunity with a 4.3% dividend yield, P/E ratio of ~11, share buyback program, and continuously acquiring companies to drive the business into the future.

Q1 2019 + Q2 2019 Earnings – Growth Narrative

IBM reported Q2 earnings, and investors applauded the results by lifting the stock immediately post-earnings. IBM reported EPS of $2.81 and revenue of $19.61 billion, which was a -4.2% year-over-year decline while missing analysts’ targets. IBM shares quickly rose near its 52-week, breaking out to $150 per share. The company laid out its growth narrative and Red Hat acquisition catalysts. Continue reading "IBM Nearing 52-Week Highs"

IBM Continues To Win Over Investors

International Business Machines (IBM) continues its long turn back to growth, focusing on high-value faster-growing business segments while embracing the future of technology with AI and hybrid cloud architecture via the Red Hat acquisition. Investors are ostensibly being appeased with the blended approach of M&A, realigning its business mix to current and future trends, maintaining its dividend payout and continuing to buy back shares until the Red Hat acquisition closes. IBM’s stock has been on an upward trend after investors decided to move past its initial displeasure of announcing its RedHat acquisition when shares were sold-off and traded down to ~$108. IBM's executive leadership has set the growth and value narrative, and investors are quickly realizing the value that Red Hat brings to the table while washing away fears that IBM overpaid for the $34 billion acquisition. From the $108 dip, IBM has been in a position of strength and has broken out past $140 after its recent Q1 2019 earnings. Long-term imperatives are beginning to bear fruit in emerging high-value segments that has fundamentally changed its business mix while evolving its offerings to align with new age information technology demands. The Red Hat acquisition will augment its transition away from its dependency on legacy businesses to the future of hybrid cloud, artificial intelligence, and analytics. IBM presents a compelling investment opportunity with a 4.5% dividend yield, share buyback program and continuously acquiring companies to drive the business into the future.

Q1 2019 Earnings – Solid

IBM reported Q1 earnings that were solid, not great and investors seemed content. IBM reported EPS of $2.25 and revenue of $18.2 billion which was a -4.7% year-over-year decline while missing analysts’ targets. IBM slide the following day initially however quickly arrested that decline to rise above the $140 again. The company laid out its growth narrative and Red Hat acquisition catalysts. IBM's revenue was flat across most of its business segments; however, its Cloud revenue grew by 10%.

"In the first quarter, our cloud revenue growth accelerated, and we again grew in key, high-value areas in Cloud and Cognitive Software and in consulting,” "IBM’s investments in innovative technologies coupled with our industry expertise and our commitment to trust and security position us well to help clients move to chapter two of their digital reinvention."
Ginni Rometty, IBM chairman, president, and chief executive officer

IBM has slipped back into a revenue contraction in its last few quarters however I think there’s a lot to like moving forward. There’s a reassurance that the dividend is safe, stabilizing revenues and a lot of shots on goal for future growth especially with Red Hat coming into to fray and strategic imperatives becoming a larger segment of IBM’s overall revenue pie as this is a higher growth business (Figure 1). Continue reading "IBM Continues To Win Over Investors"

IBM Finally Delivers Robust Numbers

International Business Machines (IBM) finally delivered the long-awaited robust quarterly numbers that retail investors and Wall Street had been craving, lifting the stock by 10% in a single session post-earnings. IBM had been trading in the doldrums for months as the bear market in Q4 2018 took the stock down to the sub $120 level, where it traded for months until its Q4 earnings release broke this negative trend. IBM suffered a stock implosion after its Q3 earnings release that fell short of expectations coupled with its announcement that it will be acquiring Red Hat (RHT) for $34 billion. The combination of bad news in conjunction with the bear market backdrop yielded an IBM stock that traded at a 5-year low of $106 with a 5.9% dividend yield. IBM has had a long turn in restoring growth after posting 20+ consecutive quarters of declining revenue however IBM had posted quarters of revenue growth as of late. This growth has come on heels of its long-term imperatives beginning to bear fruit in emerging high-value segments that has fundamentally changed its business mix while evolving its offerings to align with new age information technology demands. The Red Hat acquisition will ostensibly augment its transition away from its dependency on legacy businesses to the future of cloud, artificial intelligence, and analytics. As IBM transitions to quarterly revenue growth, in the backdrop of its evolution to emerging high-value segments (i.e. blockchain) and bringing the Red Hat portfolio into the fold, IBM presents a compelling investment opportunity, despite its recent pop after earnings were announced. In addition to the evolving business mix in strategic imperatives, IBM offers a great dividend, share buyback program while continuously acquiring companies to drive the business into the future.

Q4 Earnings – 10% Post Earnings Pop

IBM reported Q4 earnings of $4.87 EPS and revenue of $21.76 billion which was a -3.5% year-over-year decline however beat analysts’ targets by $30 million on revenue. IBM popped the following day as the company laid out its growth narrative and Red Hat acquisition. In its faster-growing business segments such as strategic imperatives and Cognitive Solutions, revenue grew by 9% and 2%, respectively. Continue reading "IBM Finally Delivers Robust Numbers"

Will IBM's Red Hat Acquisition Finally Move The Needle?

International Business Machines (IBM) had been trading range bound for five months from mid-April through mid-September, trading between roughly $140 and $145. Before its Q3 earnings, IBM had finally broken out to $154 with a subsequent implosion after its earnings release that fell short of expectations coupled with its announcement that it will be acquiring Red Hat (RHT) for $34 billion.

IBM’s stock is now at a 52-week low after the company missed revenue targets, notably a drop in Cognitive Solutions and server weakness implying that its revived nascent growth earlier this year will be subdued moving forward. IBM’s stock has been decimated and now trades at ~$115 per share or down over 30% from it's 52- week high of $171. IBM has had a long turn in restoring growth after posting 20+ consecutive quarters of declining revenue however IBM had posted back-to-back quarters of revenue growth as of late.

This growth has come on heels of its long-term imperatives beginning to bear fruit in emerging high-value segments that has fundamentally changed its business mix while evolving its offerings to align with new age information technology demands. The Red Hat acquisition will ostensibly augment its transition away from its dependency on legacy businesses to the future of cloud, artificial intelligence, and analytics. Continue reading "Will IBM's Red Hat Acquisition Finally Move The Needle?"

IBM – Blockchain Technology Becoming Ubiquitous

Noah Kiedrowski - INO.com Contributor - Biotech - Blockchain Technology


“What the internet did for communications, blockchain will do for trusted transactions.”
— Ginni Rometty, IBM Chief Executive Officer

Introduction

I introduced International Business Machines Corporation (IBM) as a play on the emerging blockchain technology segment earlier this year to augment its transition away from its dependency on legacy businesses to the future of cloud, artificial intelligence, and analytics. IBM has struggled to restore growth, posting 20+ consecutive quarters of declining revenue however IBM has posted back-to-back quarters of revenue growth as of late. This growth has come on heels of its long-term imperatives beginning to bear fruit in emerging high-value segments that has fundamentally changed its business mix while evolving its offerings to align with new age information technology demands. A new frontier of growth lies in the nascent blockchain technology as IBM is a first mover in this promising, emerging technology. As IBM transitions to quarterly revenue growth, in the backdrop of its evolution to emerging high-value segments (i.e., blockchain) the company presents a compelling investment opportunity considering its suppressed valuation. In addition to the evolving business mix in strategic imperatives, IBM offers a great dividend, share buyback program while continuously acquiring companies to drive the business into the future. Continue reading "IBM – Blockchain Technology Becoming Ubiquitous"