A New Year for IBM
IBM (IBM) once again reported quarterly earnings, and once again the market responded by sending shares downward. But it wasn't because of another quarter of shrinking revenue. This time during Q4 2017, IBM posted revenue growth over Q4 2016 by nearly 4%! For a company that has been tagged with having revenue losses for over 5 years, this is a pleasant development. After IBM's Q3 2017 performance where quarterly revenue held steady from the previous year, it might be that IBM has finally stopped the revenue losses, and may return to steady growth. IBM has also continued improving its strategic imperatives revenue, up 17% for the quarter. At $36.5 billion, the strategic imperatives segment is now 46% of IBM's revenue, in line with the company's vision to transform its operations. Cloud revenue alone reached $17 billion, nearly half of the entire strategic imperatives segment. However things weren't all sunshine and roses. Shares fell during the following trading day, after all. Margins declined somewhat through certain segments, perhaps from pressure from competition or from concessions by IBM to increase sales from customers. Regardless, IBM still presents value in this market. The company might have nearly 30% upside, while paying a moderate and growing 4% dividend. With the recent market declines from rate hike fears, profit-taking, and whatever else spooks today's investors, IBM's price is now heading back toward the glorious buy-zone of sub-150/share. I would be interested in adding IBM at this level, should sufficient funds be available.
