The Average Joe (2024)

It took IBM 100 years to break $100B in annual sales — and 10 years to lose 30% of it.

IBM is reinventing itself, and things are looking positive. A strong earnings report sent its stock up 7%.

What’s the big deal? IBM is In the middle of transitioning — from its old technology services business to the fast-growing cloud computing market.

• IBM was an early leader in artificial intelligence — but gave away its lead to other tech giants — with sales steadily declining 30% since 2012.
• In April 2020, Arvind Krishna, a long-time IBM employee, took over as IBM’s CEO — and he’s “laser-focused on the $1 trillion hybrid-cloud opportunity.”

Making progress: Last quarter, IBM reported its most significant sales increase in a decade.

• Sales grew 7.7% to $14.2B — exceeding analyst projections of $13.8B.
• IBM expects $10-10.5B in free cash flow for 2022 — letting it pay a generous 5% dividend.

$IBM is up 1.68% this year — outperforming the S&P 500 in a market where profitable businesses with cheaper valuations are shining (e.g., IBM).

For 2022, IBM expects sales growth to come in at high-single digits — higher than previous estimates.

Slimming down… As part of the transition to hybrid cloud, IBM also sold its Watson Health business and split off its legacy IT business into its own company, Kyndryl (NYSE:KD) — which is down over 68% since separating.

• Kyndryl helps corporate customers maintain their technology systems — a business with much lower profitability and growth.

Just to bulk up again… In 2021, IBM acquired 15 companies related to hybrid cloud and artificial intelligence with more likely to come.

IBM’s CEO said it has $20-22B to acquire more businesses without impacting its debt (Barron’s) — with a long list of companies that IBM finds attractive.