Read. The. WHOLE. Article.
https://www.forbes.com/sites/adamhartung/2017/04/21/why-you-do-not-want-to-own-ibm-growth-stalls-are-deadly/#11af963671bf
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The stock is still up from January, 2016 lows of $125, and you might think this pullback is a buying opportunity. But you would be wrong. For long-term investors the stock has fallen from about $194 when CEO Ginni Rometty took control to the recent $160 - a 17.5% decline over 5 years. And that is after spending $9B on payouts (mostly share buybacks) to prop up the stock!
But because of its long-term "growth stall" the odds are almost a certainty things will continue to worsen for IBM.
Growth Stalls are Deadly Accurate Predictors of Future Value Declines
(c) Adam Hartung and Spark Partners
Growth Stalls are Deadly Accurate Predictors of Future Value Declines
When a company has 2 consecutive declining quarters of revenue or earnings, or 2 consecutive quarters of revenue or earnings lower than the previous year, that company is in a "growth stall." After stalling, 93% of companies will struggle to consistently grow a mere 2%. 70% will lose more than half their market cap.
I made this same call, to not own IBM, in May, 2014. Then IBM had registered a stall on both the quarter-to-quarter metric, and on the year-over-year quarterly metric. IBM was clearly in a "growth stall" and showed no signs of turning around its fortunes. Now IBM has failed to grow quarterly revenue for 5 YEARS!
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There's a lot more downside potential for IBM's valuation
In IBM's case, the shares are at about $195 when the first data indicating a growth stall were evident (Q3, 2012.) They then peaked at $213 in March, 2013. And it has been an ugly ride since. The "bounce" in 2016 from $125 to $180 was actually the best selling opportunity since September, 2014 (just after I made the call to get out.) At $160, IBM is down ~18% since the growth stall started (largely due to share buybacks) and revenues have kept dropping. According to "growth stall" analysis there is a 69% probability IBM's shares will fall to $85/share - or less - before the company fails, or starts a true, long-term recovery under new leadership.