IBM shares have appreciated about 18% in 2019, well below the nearly 48% return for the average
tech stock in the S&P 500, and the roughly 30% gain for the Dow Jones Industrial Average. Up
about $21 this year, IBM accounts for about 3% of this year’s more than 5,200 point gain on the
Dow.
The first sentence of this paragraph is such a damning indictment of Ginni's tenure.
https://www.barrons.com/articles/ibm-bet-everything-on-red-hat-in-2019-51577479288
For IBM, 2019 was the year Big Blue doubled-down on the cloud.
In July, the enterprise technology giant completed its $34 billion acquisition of Red Hat, the dominant provider of open-source operating system software and support. The deal is a bet that IBM (ticker: IBM) can sell more of its own software and services to Red Hat’s customers—and that IBM customers are the perfect target to become Red Hat customers.
The Red Hat deal is just one in a decades-long series of IBM moves to keep up with shifting technology trends. Keep in mind that IBM over the years built and later unloaded large businesses in desktop computers, laptops, printers, microprocessors, chip manufacturing, and typewriters. (Didn’t you once own an IBM Selectric?) The latest move will help IBM stay relevant in a world in which cloud-based services have come to dominate the information technology landscape.
While IBM over the last decade has made a lot of noise about Watson, the company’s cloud-based artificial intelligence software platform, the company has been slow to establish a leadership position in the public cloud, falling behind the market leaders: Amazon.com’s (AMZN) Amazon Web Services, Microsoft’s (MSFT) Azure, and Alphabet’s (GOOGL) Google Cloud Platform.
Like many legacy tech players, IBM has been trying to shift the attention of investors to the faster growing elements of its business, even as older business lines like mainframe hardware and global technology services continues to shrink. With the Red Hat acquisition, IBM has found a way to reverse its top-line decline—the company expects Red Hat to add four to five percentage points to its revenue growth in 2020, and two to three points in 2021. The Street estimates revenues were down 3.1% this year, while projecting 3.2% growth next year, including the impact of Red Hat.
IBM shares have appreciated about 18% in 2019, well below the nearly 48% return for the average tech stock in the S&P 500, and the roughly 30% gain for the Dow Jones Industrial Average. Up about $21 this year, IBM accounts for about 3% of this year’s more than 5,200 point gain on the Dow.