IBM (IBM) Stock Sinks As Market Gains: What You Should Know

https://finance.yahoo.com/news/ibm-ibm-stock-sinks-market-224510461.html

IBM (IBM) closed the most recent trading day at $134.13, moving -0.06% from the previous trading session. This change lagged the S&P 500's 0.72% gain on the day. Elsewhere, the Dow gained 0.36%, while the tech-heavy Nasdaq added 0.91%.

Coming into today, shares of the technology and consulting company had gained 0.16% in the past month. In that same time, the Computer and Technology sector gained 2.68%, while the S&P 500 gained 2.64%.

IBM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $4.68, down 3.9% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $21.65 billion, down 0.49% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $12.80 per share and revenue of $77.02 billion. These totals would mark changes of -7.31% and -3.23%, respectively, from last year.

Any recent changes to analyst estimates for IBM should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. IBM currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, IBM is holding a Forward P/E ratio of 10.49. This valuation marks a discount compared to its industry's average Forward P/E of 11.33.

It is also worth noting that IBM currently has a PEG ratio of 2.1. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Integrated Systems industry currently had an average PEG ratio of 1.7 as of yesterday's close.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 235, which puts it in the bottom 8% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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GTS/GBS cloud is 3.4 billion. GTS/GBS revenue is 10.8 billion. So yes a smaller sales team is needed to service the 31% of the IBM strategic cloud services company. IBM will most likely round that 31% off to 40% to account for intangibles, but the remaining 60% is unwanted and not viewed as strategic. Bain recommended dumping GTS and restructuring GBS into a cloud company. IBM liked Bain’s recommendation, but didn’t want to give up the revenue generated by GTS. The board decided to grow cloud via Redhat, and re-orging services. That plan is moving along, but the industry is changing faster than IBM can adapt. The CFO has said as much (exiting low margin businesses, exiting OEM businesses, exiting businesses we choose not to serve). IBM has made mandatory Redhat training as part of the legacy work force training over the last 6 months. IBM management now knows who will be able to transition to Redhat, and who is disposable. The Bain recommendation wasn’t ignored, but rather just delayed until a proper trained sales force emerged. Now that the training is winding down, IBM is executing the Bain recommendation. Look for the great restructuring to happen come 1st q. As the previous poster has stated. “you don’t need a large sales force if you are going to segment the market into “enterprise” customers (IBM mapped at 1100 entities worldwide) and everyone else”. IBM is in full cloud transition mode. Redhat was just the catalyst to make the transition. Revenues are going to shrink as the plan executes (Ginni Calls them empty calories), BUT margins are going to improve, due to a greatly reduced head count. Let’s hope the new management team needed to make the “cloud” strategy work can execute in a timely manner. If they don’t, IBM much like HPE / Xerox will be forced into an arranged marriage

I heard on good authority that the Bain contract ended shortly after they finished their infamous report 2 years ago. In the eyes of the board, Bain recommendations become meaningless when Red Hat was purchased. It was noted during the due diligence that Red Hat had a small sales staff. So the board felt that turning all of GBS and GTS into a Red Hat sales force was the better option. Thing is, you still don’t need such a huge sales force for their products. Yet another miss by the board. They really don’t understand IBM business model.

Just curious if anyone knows whether Bain is still advising IBM?

Yeah, that would be another $19+B out the window... that’s what IBM does best... selling stuff, incapable of competing on anything, always claiming that a business is low margin. Well IBM keep on doing that, your competitors love it!

If IBM exits the body shop business, of course there is plenty of IBM left. HW, SW, consulting, outsourcing for complex envio’s, LINUX, and cloud. That should add up to approx 55-60 billion

So if IBM gets rid of the body shop business like someone said, what is left of IBM? Is there even a reason for IBM to exist?

Bain recommended getting out of the body shop business 2 years ago. IBM management disagreed, and decided to exit the OEM business instead. You can see the results, and do the math. The business environment has done nothing to bolster IBM managements decision, except to reduce GTS’s business value by 1/3. The facts remain. The body shop business is a low margin business that IBM desperately needs to exit as their margins don’t support it

This article is automatically generated at Yahoo - these kinds of articles appear for other stocks, every time the condition is true. There are similar auto-generated articles for the opposite - e.g. stock XYZ rises as the market falls.

Having said that, IBM stock has pretty much stayed the same for a long time while the market has risen substantially. I sold my IBM at $178 around 6 years ago when I still worked there and saw the company morale in the toilet.

Bain was hired to clean up GTS. The 3-5% shrinkage rate per quarter says they will not be getting their bonus. Looks like jelly of the month club for another year

Bain has been cleaning... just not fast enough!

Wait for 2020, more layoffs to come so that IBM can make earnings every quarter.

When a company still pays dozens of managers for defunct IBM tools what do you expect?
Bain needs to cleanup the bloat like the promised 2 yrs ago.

IBM stock has been dead money for a decade. Sad.

Thread regarding IBM layoffs

IBM (IBM) Stock Sinks As Market Gains: What You Should Know

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