Another analyst downgrade, this time by Morgan Stanley. 4Q19 Results are going to be so c-appy, brace yourselves for the fallout
https://www.thestreet.com/investing/ibm-stumbles-again-following-second-downgrade-in-a-week
5 replies (most recent on top)
Stock price trades in a limited range because biggest shareholders are value mutual funds who need a steady dividend - their vote trumps all others. Board promises them a steady dividend.
Lehman's board paid CEO $500M severance in 2008 - he hand-picked the board.
Board should be denied a 3rd term for under-performance. This is their own rule for employees.
I believe you are incorrect. The board can be sued via the shareholders for not doing their fiduciary duty. We are very much in the Aikers model where he was replaced after a pile of excuses. The IBM board has a habit of waiting far too long for the CEO to hatch a new go to market strategy. Akers wanted to break IBM up, and was 80% of the way there before the board acted. Expect the board to do the exact same thing with Ginni. They may make her clean the barn (restructure IBM) before they dismiss her, but the dice have already been cast. Not only will services be addressed, but the remaining “old” pension plan employees will be forced That’s how you change the culture of a company Dump the heads that got you here
IBM doesn’t care about Wall Street or else they would have changed CEOs 5 years ago. The board and the entire executive management team is a bunch of lazy boomers with comfortable retirement packages. What do they care if the company goes under?
Katy’s actual words. NOTE 1% growth revised to 1.6% decline. HUM where have we seen that kind of revenue decline before. OH yea the previous 5 years. “Long term revenue growth is less likely without significant portfolio restructuring”. Sure sounds like Bain told you the truth 18 months ago, but you failed to listen. Ginni it’s time to resign. Everyone has lost faith in your leadership
International Business Machines Corporation (NYSE: IBM) is now less likely to generate long-term revenue growth without a meaningful shift in its portfolio, according to Morgan Stanley.
The IBM Analyst
Katy Huberty downgraded IBM from Overweight to Equal-Weight and reduced the price target from $170 to $155.
The IBM Thesis
Morgan Stanley’s proprietary surveys indicate a continued deceleration in IT budget growth in 2020, and enterprise hardware companies seem to be the hardest hit, Huberty said in the Friday downgrade note. (See her track record here.)
The analyst reduced her 2020 revenue estimate from positive 1% growth to negative 1.6%, adding that the AlphaWise CIO survey provided “new evidence” of core revenue declines at the company and a loss of market share in software and services.
IBM’s increased investment and more open approach to cloud following its acquisition of Red Hat had seemed to be a positive, Huberty said. Yet IBM’s positioning in cloud has not improved and “in some cases deteriorated over the past year,” she said.
IBM is likely to continue to lose market share as workloads increasingly move to public cloud, the analyst said.
Even after incorporating estimated synergies from the Red Hat acquisition, long-term revenue growth at IBM is now “less likely” without significant portfolio restructuring, she said.
Morgan Stanley cut its earnings estimate for IBM in 2020 from $13 per share to $12.80 per share to reflect “accelerated share losses and earnings risk.”
IBM Price Action
The stock was down 0.13% at $137.80 at the time of publication Friday.
Ahhh the 1000 cuts marches on. IBM Board. The street gave up on you months and months ago. Redhat short term has not changed the story. NEW EXEC management is your only savior now UNLESS you blow out the 4th q I’m not and certainly Wall Street isn’t holding their breath. Earnings estimates keep coming down, and you keep coming up with excuses. What’s the definition of insanity. Doing the same thing over and over hoping for different results? We swept past that marker 3 years ago with Camss. Time for a change