IBM - dinosaur or future growth

[Byb747]

Hello all, wanted to get thoughts on IBM...relatively disappointing earnings yesterday pushed stock to 2 year lows. They have potential growth areas such as AI and Blockchain, but also have a slowing legacy business. Patient investors collect a juicy and relatively safe yield of more than 4%. I own some shares at $142 so was thinking of adding a bit. Would love to hear your thoughts and if you already own shares what your plan is of anything. Thanks!

 

[Spock]

• Their AI is more hype than reality.
• They are borrowing to pay the dividend (though at low rates that may not be a bad thing)
• IBMs mid to upper management is absolutely clueless technically and on how to manage people or business - they can only parrot buzzwords.
• IBM invented "cloud" and virtual machines 40 years go, lost the transition to distributed computing, and then got run over by Amazon, VMware, etc when the technology cycle circled back around to cloud and VMs.

The head is brain dead, the rest of the body is running on reflexes.

 

[Freedom56]

IBM has been greeting customers into the Jurassic era for decades now. They have been playing games with their earnings by buying back stock and taking on debt. They need new leadership and they need it quickly. The CEO is one of the highest paid in the industry and should be the lowest. Even Warren Buffet has given up.

 

[target2019]

Yield is at 4.7%. I would wait for 5%.
Growth estimates for IBM look very poor.

 

[kcowan]

I have a huge legacy capital gain and it will go tax free to charity so the stock performance is secondary to the dividend. I think they lost their way when they tried to transition to services in the 90s. They got into the custom development business instead of capitalizing on cloud (except for AI). When Buffett gave up on them, that was a kiss of death.

 

[Fedup]

I’ve heard they are also into blockchain too. It seems like they like to dibble a lit bit in everything. No idea about the stock. But I tend to think it’s in the category of GE and Ford now. Not touching it.

 

[Hamlet]

• Their AI is more hype than reality.
• They are borrowing to pay the dividend (though at low rates that may not be a bad thing)
• IBMs mid to upper management is absolutely clueless technically and on how to manage people or business - they can only parrot buzzwords.
• IBM invented "cloud" and virtual machines 40 years go, lost the transition to distributed computing, and then got run over by Amazon, VMware, etc when the technology cycle circled back around to cloud and VMs.

The head is brain dead, the rest of the body is running on reflexes.

Why do you think they are borrowing to pay the dividend?

They have essentially the same debt and cash levels that they had last year.

 

[Blueskies123]

IBM and GE are already in the dustbin. The companies survive just to pay the dividend like ATT, GM, Ford etc... History is littered with decaying giants that fell behind. They are OK for a specutlative short trade but invest at your peril.

 

[Vincenzo Corleone]

All of the reasons mentioned in the replies to the OP are the reasons why I sold the bulk of my holdings back in 2014. Also the fact that they don't want to retain their most experienced technical staff. They'd rather replace them with young, cheaper, inexperienced workers in order to bolster their numbers.

 

[Fedup]

All of the reasons mentioned in the replies to the OP are the reasons why I sold the bulk of my holdings back in 2014. Also the fact that they don't want to retain their most experienced technical staff. They'd rather replace them with young, cheaper, inexperienced workers in order to bolster their numbers.

They pay ok, not great. My daughter got an offer from IBM at a job fair even after she told them she was not interested. They sent her one anyway for the location in Boston.

 

[aja8888]

Our big spender Robbie is an investor in IBM. Maybe he will post in here about his experiences. Old Shooter also commented on IBM in a thread a while back.

 

[MRG]

• Their AI is more hype than reality.
• They are borrowing to pay the dividend (though at low rates that may not be a bad thing)
• IBMs mid to upper management is absolutely clueless technically and on how to manage people or business - they can only parrot buzzwords.
• IBM invented "cloud" and virtual machines 40 years go, lost the transition to distributed computing, and then got run over by Amazon, VMware, etc when the technology cycle circled back around to cloud and VMs.

The head is brain dead, the rest of the body is running on reflexes.

++

 

[jazz4cash]

But, but,but....Watson!

 

[Vincenzo Corleone]

But, but,but....Watson!

I have to LOL at that because that's what I usually say to myself whenever I hear their revenue dropped yet again.

But, but, but....Watson!

But, but, but....Cloud! THE CLOUD!

But, but, but....Blockchain!

Pffft.

 

[GrayHare]

IBM is considered a leader, perhaps the leader, in quantum computing hardware. Quantum computing looks poised to disrupt conventional computing, and whichever company gets to define the new standards in that area will do very well. Will that be IBM? I'll be watching.

 

[Fedup]

After reading this thread, I wonder is there anything else that IBM is not involved in.

 

[jazz4cash]

I have to LOL at that because that's what I usually say to myself whenever I hear their revenue dropped yet again.



But, but, but....Watson!



But, but, but....Cloud! THE CLOUD!



But, but, but....Blockchain!



Pffft.

No No No. it’s not THE CLOUD, it’s THE IBM CLOUD!

 

[BeachOrCity]

Long term I am not optimistic. The capital investment just isn’t there versus the competition.

 

[Totoro]

IBM is considered a leader, perhaps the leader, in quantum computing hardware. Quantum computing looks poised to disrupt conventional computing, and whichever company gets to define the new standards in that area will do very well. Will that be IBM? I'll be watching.

Quantum computing is nowhere near practical rollout for a billion dollar business.

 

[target2019]

After reading this thread, I wonder is there anything else that IBM is not involved in.

Growth?

"A relationship [company], I think, is like a shark, you know? It has to constantly move forward or it dies. And I think what we got on our hands is a dead shark." Woody Allen

 

[LiveBelowMeans]

With all the negative, could be an interesting contrarian play......

 

[Spock]

With all the negative, could be an interesting contrarian play......

Contrarian investing is an approach to macro market trends. The concept does not apply to individual stocks unless you want to twist the definition of value investing.

 

[Montecfo]

I have begun to look at it.. Lots of negativity suggests most people have sold.

I like the position in the cloud, particularly the private cloud where they leverage their relationships with their existing customer base. The blockchain and AI pieces are also interesting. It has eeked out some revenue growth recently and single digit earnings growth.

With the generous cash flow it is interesting. I look for a lower entry point and I think that will happen.

 

[Totoro]

I like the position in the cloud, particularly the private cloud where they leverage their relationships with their existing customer base.

They don't have the lowest cost nor the best solution.

The blockchain and AI pieces are also interesting. It has eeked out some revenue growth recently and single digit earnings growth.

Blockchain is imploding, and their AI pieces are subpar. Company I work at checks it regularly. The healthcare AI is getting backlash from overpromising, and their other stuff is not competing with Microsoft, Google and Amazon.

Caveat emptor.

 

[MRG]

I have begun to look at it.. Lots of negativity suggests most people have sold.

I like the position in the cloud, particularly the private cloud where they leverage their relationships with their existing customer base. The blockchain and AI pieces are also interesting. It has eeked out some revenue growth recently and single digit earnings growth.

With the generous cash flow it is interesting. I look for a lower entry point and I think that will happen.

I was employed by a big blue shop, some wore IBM underwear. A couple of tier 5 data centers full of big iron.

When we went to cloud for some workloads they were considered and easily beaten.