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 datas for you to better understand its activities and thereby complete a correct analysis of the IBM share price.
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.
When analysing IBM's share price, you must ensure that you take into account information relating to the industry in which this company operates. This means that you need to know the company inside out. Here is a complete and detailed presentation of the IBM Group, its activities and its sources of revenue:
The IBM Group, or International Business Machine Corporation, is an American company that operates in the computer sector. More specifically, the company is currently one of the world's leading IT services companies.
In order to better understand the activities carried out by this group, it is possible to divide them into several divisions according to the share of turnover they generate and in this way:
In terms of the geographical distribution of IBM's revenues, it should be noted that 36.8% of its turnover is generated in the United States, 10.2% in the Americas, 31.7% in Europe, the Middle East and Africa, 11.3% in Japan and 10% in Asia Pacific.
Photo credits: Open Grid Scheduler / Grid Engine
Let's take a look at the environment in which the IBM group is currently evolving and, more precisely, at the companies that are facing it and that are likely to take market share in the years to come. Here is a presentation of these different players:
One of IBM's major competitors is of course the American multinational Apple, which produces and markets various consumer electronics products, including personal computers and software. Of course, the group is best known for its computers, mobile phones and tablets, but also for its office suites and software for professionals. Apple currently employs more than 137,000 people and operates 506 company-owned shops in 25 countries.
This other American company is also specialised in the IT sector and in particular in network equipment and servers. It is currently a major competitor of IBM in this segment.
The Hewlett-Packard Company (HP) is another American multinational that used to specialise in electronics and instrumentation, and has expanded into computers, printers, servers, networks, software and multimedia. It also markets computers and peripherals and is headquartered in Palo Alto, California.
The American group Intel is another competitor of IBM but also the world leader in the semiconductor sector in terms of turnover. It specialises in the production of microprocessors, motherboards, flash memory and graphics processors. The company is listed on the Nasdaq.
Another American computer and microcomputer multinational to watch is, of course, Microsoft, which was founded by Bill Gates and Paul Allen and is one of the largest capitalisations on Nasdaq. This group currently operates in more than 120 countries and employs more than 148,000 people.
The last major competitor of IBM is the Oracle Group, which is known for its database management system and application server. The Oracle Group is currently the second largest company in the software segment in terms of turnover and market capitalisation and is therefore a player to watch closely in your analyses.
In 2018, IBM and VMWare announced a strategic partnership with new offerings that aim to accelerate enterprise adoption of hybrid cloud. The partnership includes an IBM services offering to help migrate and extend mission-critical VMware workloads to the IBM Cloud and new integrations to help enterprises modernise their applications with Kubernetes and containers.
After IBM announced partnerships with Columbia University and Seagate on blockchain, it announced a partnership with Chinese start-up iExex to strengthen the security of its decentralised infrastructure. Cloud computing makes it possible to move the computing power needed for computing tasks over the internet, allowing even the smallest electronic device to perform complex calculations.
Also in 2018, the French bank BNP Paribas renewed its partnership with IBM for a period of 8 years. Through this initial partnership, the bank created in 2003 the IT services company BNP Paribas Partners for Innovation or BP2I, a joint venture owned equally by the two groups. This agreement will allow BNP Paribas to continue to develop its Cloud approach through solutions offered by IBM Services.
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.
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.
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.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail CFD accounts lose money. You should consider whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
