Analysis of IBM share price for trading

New technology is undoubtedly one of the economic sectors that have experienced the strongest expansion over the last few decades. It is therefore normal that the major companies in this sector attract investors from around the world. Among the companies whose shares are quoted on the stock markets, and also the most popular company shares at present we see the American giant IBM. Here is some important practical information and advice for you to better understand its activities and thereby complete a correct analysis of the IBM share price.  

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Our advice for trading IBM share

Tip number 1

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.

Tip number 2

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.

Tip number 3

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.

Tip number 4

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.

Tip number 5

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.

Tip number 6

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.

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About the IBM Company:

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.

 

The major competitors of IBM:

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.

 

The major partners of IBM:

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 Petrobas.

These partnerships have often been subject to controversy in the economic sector.

Of course, IBM is also the partner of numerous other smaller businesses.

 

Analysis of the IBM share price:

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.

 

Financial and economical history of the IBM Company:

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.

  • In 2004 the annual report of IBM announced a turnover of over 96 billion dollars. With no less than 330,000 employees throughout the world in more than 75 countries IBM in fact achieves the majority of its turnover in Russia, India, China and Brazil.
  • In 2006 the turnover of IBM amounted to over 91.4 billion dollars with a profit of 9.4 billion dollars. It was the systems, services and software that generated the most turnover in this year. The presence of IBM was strengthened on an international level with an increase in profits in China, Brazil and Russia. 
  • Between 2002 and 2007, IBM carried out investments that led to savings of 4.1 billion dollars with the transformation of its IT centres.
  • In 2009 IBM achieved a turnover of U.S. $95.76 billion with U.S. $13.43 billion profits. The company also announced that it wished to double its strength in a year without increasing its energy use. It is integrated in the Dow Jones and the Nasdaq.
  • In 2011, IBM recorded a higher stock market capital than that of Microsoft with 161 billion Euros due to a strategy that was launched in 2005.
  • In 2014, IBM recorded another negative quarter with worrying results. It therefore planned redundancies of over 112,000 employees in the United States. According to sources the exact number of redundancies envisaged by the group varies and the figures quoted are often contradicted by the management.

This financial data is of course susceptible to modifications over time and should therefore be monitored regularly.

 

Major stock market information concerning the IBM share price:

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:

  • The total stock market capital of the IBM Company in 2017 amounted to U.S. $161,402.61 million.
  • The IBM share price is currently quoted on the Main Market of the NYSE in the United States.
  • The IBM company share price is also included in the Dow Jones Industrial Average stock market Index as well as the Nasdaq 100.  
  • Major shareholdings in this company are as follows: 8.46% by Berkshire Hathaway, 5.65% by the Vanguard Group, 5.30% by State Street Corporation, 2.94% by the California Public Employees Retirement, 2.73% by BlackRock, 1.73% by State Farm Mutual Automobile Investment Company, and 1.15% by Northern Trust Investments.

 

The advantages and strong points of IBM shares as a stock market asset:

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.

 

The disadvantages and weak points of the IBM shares as a stock market asset:

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.

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Trade IBM shares!
75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
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