How is this sort of calculation made?
"...In the mean time the 85% of contract revenue will put a floor on IBM in the 115 range and a cap on IBM in the 150 range..."
8 replies (most recent on top)
IBM is trying to grow by subtraction Dumping GTS (negative 5-7%) makes the resulting company look better. That assumes your legacy generates approx the same amount of revenue. That’s not a bad assumption if you can get the legacy to move to a new shinny object (SW modernization) It doesn’t grow revenue, BUT moves it from one bucket to another That’s the plan for now Stop the bleeding There were some quasi green leaves in the 3rd q earnings GBS grew 11% (thats real growth) Redhat grew 17% (that says the legacy move to a new shinny object is working). Then there is the yoke of poor Executive decisions and shrink Power down 25%, Watson health / Cognative / AI flat to down 5%, TPP down 10%, TSS down 7% That yolk is getting fairly heavy and will have to be dealt with. NOTE 85% of IBM’s revenue is baked in on day one of the quarter due to longer term contracts so all of the gloom and doom is most likely overstated. The real observation is IBM dumped 25% of itself that was shrinking at 5-7% which is goodness. IBM has to address the remaining Yoke which is another 25-30% of the remaining company which is either shrinking or non-strategic. That’s a smaller pill vs GTS, but a pill none the less. The sooner management addresses it the better In the mean time the 85% of contract revenue will put a floor on IBM in the 115 range and a cap on IBM in the 150 range.
I remember when IBM went to $42/share in 1993 ... and it will happen again. If you're long on IBM, sell now while you still have something worth selling. 💸
There will be no growth, they will fudge the books, AK will get a bonus, they they will jettison legacy products.
RA’s will carry on aka a different name or move people to an area they have no skills in and the pip them.
Meanwhile Rob Thomas will throw out typical one liners that mean F all, and will get more bonus,
Limited investment into software they build themselves (very limited)..
All in all the same cr-p thats happened for the last 7 plus years. But they will expect the market to love them.
141
Sub 125 and sub 100 on 4/27
104-105
110-117