Earlier this week, the IBM group (still known as Big Blue) reported disappointing earnings. It had to withdraw its targets for the financial year 2020 because of Covid-19.
We would of course particularly monitor the company’s projects that aim to diversify its range as this is currently one of the major risk factors for IBM. The group possesses the ability to solve this problem and enable it to take position on other markets in order to gain new clients.
We would also attentively follow the strategic alliances and partnerships that IBM may implement with companies in different activity sectors. The objective here of IBM would of course be to position itself on other markets than that in which it is currently active but that it considers to be future expanding markets. This concerns for example smart vehicles as the automobile constructors have an increasingly reliance on information technologies.
IBM’s R & D is also a major development point. The competitiveness of the company does of course depend greatly on innovation in this activity sector so it is important to monitor different projects and research investment undertaken by the group as well as patents deposed and any increase in its intellectual property portfolio.
It goes without saying that you should also follow all the financial results publications of the company and notably monitor the achievement of objectives announced in the company’s strategic plans. This data is in fact often followed by investors and bears a strong influence on the IBM share price over the short and medium term.
The general economic health of the IT sector upon which of course the orders from IBM depend greatly is therefore another extremely important factor which should therefore be included in your fundamental studies as well as the growth levels of the more developed countries.
Finally, you should of course complete a comprehensive study of the competition and movements in the market share of each large company in the IT sector as well as new products, market innovations and new contracts that could favour one group or company over another.
The IBM, or International Business Machines, Company is a giant American IT company that is one of the leaders of this market on the international level. Its activity, that generates a turnover of several dozen million Euros per year, covers a diversity of sectors but is mainly directed towards the supply of computer services but also includes the development of software, the manufacturing and sales of computer equipment and the financing of computer equipment.
Although the company achieves the larger part of its turnover in the United States it also covers Europe, the Middle East, Africa and Asia Pacific.
IBM is one of the pioneers of new technology development and retains a prominent position in this sector. However, with the numerous and continuous technological advances made in this sector over recent decades an increasing number of companies are competing with this global giant. Here are the major competitors of the IBM group:
It is highly important that you are knowledgeable about these competitors if you plan to invest in the IBM share price as their financial results and economic news and events could strongly influence this asset price and this information will therefore be very useful to you for refining your strategic positions.
IBM has heavily invested in the creation of strategic partnerships in the new technology sector and in fact created IBM Partner World for this reason. This group aims to unite a number of different specialised companies to pool their knowledge and skills and thereby offer clients services that are specially adapted to their requirements.
In this way IBM has partnered with a number of internationally renowned companies such as CapGemini, Honda Cars, the PSA Group and Petrobras.
These partnerships have often been subject to controversy in the economic sector.
Of course, IBM is also the partner of numerous other smaller businesses.
As with the majority of companies in this sector, the IBM Company suffered from the repercussions of the internet bubble bursting in the years around 2000 but for the last few years its share price, quoted on the Dow Jones Index, has followed a rising trend with a difference of 89% over the last 5 years.
Despite a slight drop in 2014, a long term rising trend is still forecast for this asset.
It can be beneficial to particularly look at the financial movements of the IBM Company over the last few years as these have of course highly influenced the movements in its share price on the stock markets. Here therefore you will find some key information and dates relating to the financial results of this group.
This financial data is of course susceptible to modifications over time and should therefore be monitored regularly.
All the information we have provided up to this point has been related to the historical movements of the IBM share price, the activities of this American Company and its recent financial history which are necessary for a good understanding of the dynamics that influence this share price. But it is also important to take into account other more general data such as the following:
Above all and to enable you to speculate on the rise in the IBM share price over the long term you will of course need to understand the positive aspects of this company and its ability to continue its growth and development over the coming years. Here you can learn about the advantages of the IBM Group that retain and attract investors and thereby enable its share price to gain points on the stock markets.
Firstly, the IBM brand is of course one of the strongest in the information technologies sector on an international level. The reputation and popularity of the brand is due to the popularity of the products developed and commercialised by the group as well as its expertise relating to the satisfaction of its clients requirements in terms of cutting edge technological software and material solutions. Due to these abilities the IBM Group has managed to attract new clients and retain existing ones through its successful range of existing products and the consistent introduction of new ones.
The IBM Group also benefits from long experience and great expertise relating to the management of its manufacturing procedures and materials. The group is in fact one of the most innovative worldwide and has been for a long time now which has allowed it the time necessary to implement effective commercial strategies and human resources development programmes for talent creation and permanent development of its workers skills and abilities at the heart of the business. The group is also a leader in the development and innovation of the Information Technologies industry. In addition, IBM draws a major part of its strength from its organisational culture.
Another major strong point of the IBM Company that it is important to underline here relates of course to its intellectual property portfolio. The company continues to file new patents and takes strength from its major patents that reinforce the company and make it more competitive.
Finally, this group continues to demonstrate that it can achieve significant savings that enable it to remain competitive while also enabling its industrial clients to benefit from low cost products and thereby allowing it to remain competitive despite the major cost of new technological products.
The combination of these elements and strong points show us how IBM possesses the strength necessary to maintain its growth over the medium and long term despite significant competition.
Although it appears that the IBM Group has all the advantages it needs to ensure future success it should still not neglect its negative aspects and weak points which certainly exist. In fact, to be sure you do not take any imprudent risks you should also be aware of the disadvantages of this asset and any possible setbacks to the continued success of this group. This is what we offer you now, an explanation of the weaknesses of the IBM Group.
The primary weakness of the IBM Group relates to the possible imitation of its products. To lessen this risk the company must rely on a cost leadership strategy. This strategy consists of concentrating its efforts on cost reduction throughout its processing procedure. Nevertheless, IBM experiences great difficulty in producing unique products that are difficult to copy and its competitors are rapidly able to produce similar technological solutions thereby countering the innovations of this American giant.
Although the IBM Group has recently decided to refocus its activities on its most profitable products and services this decision does present a problem for the diversity of its products and services. The group is in fact separating itself from the less profitable of its activities such as its personal computers division that was sold to Lenovo in 2005 for the benefit of certain specialties. This however does expose the company to certain risks as now only a few activities generate the majority of the group’s profits.
In the same way and due to this lack of diversity, the markets targeted by IBM are also limited and only related to the IT industry. The risks here are of a major and direct over exposure to a single activity sector and a strong dependence on the continuity of this sector’s growth level. The recent decrease in the range of products from IBM again accentuates this problem that could, under certain market conditions, weigh heavily on the company’s financial results.
As we have just examined, the IBM Group does not only offer advantages, it also has certain identifiable weak points that could imperil its position on the market and also worry investors about a possible decrease of its share price on the stock market.
To date, the IBM group has not yet published its annual results for 2019. In 2018, its sales amounted to $79,591 million with a net income of $8,728 million. It should also be noted that the group's market capitalization was $118,977 million at the end of 2019. These results are of course accessible and updated on the company's website.
The main shareholders of the IBM group are Capital Research & Management at 8.55%, The Vanguard Group at 8.01%, SSgA Funds Management at 6.08%, BlackRock Fund Advisors at 2.49%, Putnam at 2.35%, State Farm Investment Management at 1.88%, Geode Capital Management at 1.41%, Northern Trust Investment or Investment Management at 1.33%, Brandes Investment Partners at 1.17% and Marsico Capital Management at 1.06%.
The IBM Group was formed on June 16, 1911 after the merger of the Computing Scale Company and the Tabulating Machine Company and was then named the Computing Tabulating Recording Company or CTR. It became International Business Machines Corporation or IBM in 1924. The company will long be called "Big Blue" because of the color of its logo and was the world's largest market capitalization for many years.
