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Richard Devlin / NYSE/NASDAQ/AMEX   International Business Machines Corporation   www.gigawealth.net   
 
Stock Summary Analysis


Security Importance Current Assessment Future Assessment Risk Trade Portfolio
IBM Stock   Very important   Good   Good   High   Buy   Overweight
 
Company Analysis  
 
1. Importance Very important  

IBM has been a bellweather of the tech industry. They are becoming less so as time marches on. They have missed major technology innovation opportunities. They have been living off their reputation is a company that anyone and everyone could count on to ensure their careers.

2. Wisdom Important  

The common wisdom was "No one got fired for buying IBM". That has changed in a world-wide economy where technical innovation is outpacing IBM's ability to maintain leadership products. The wisdom that IBM is a high dividend paying company may stay true, and over time, their stock has proven though that it can outlast and outpace others.

3. Knowledge Important  

IBM is run by a good mix of business technocrats and financial stalwarts who know enough about sales and marketing to keep IBM in growth areas that will generate adequate revenues, cash flow and profits to maintain an attractive dividend and growth. They are shrewd about maintaining shareholder value through combinations of debt, stock and buybacks.

4. Current Assessment Fair  

IBM is constantly re-inventing itself, adapting to markets, trying to tap into growth opportunities, and shedding businesses that they don't have strategic value. The legacy computer business continues to challenge them. IBM cannot be all things to all people. It has to be best in class in something. It has to dominate a technology or practice (service). IBM's revenue growth is flatline, and profit margins under pressure. And yet, their balance sheet is stellar and they are a financial juggernaut. Until they break out of their revenue slump, their stock is likely to stay in a defined trading range, which could be a protracted period of time.

5. Future Assessment Fair  

IBM is challenged to be a high growth company. They have no strong revenue generators that will propel them from their low, but solid, steady growth. They continue to manage the business well despite margin pressures, and will continue to deliver strong dividends and stock appreciation over time. They are very conscious of shareholder value and use buyback opportunities aggressively.

6. Risk High  

IBM is subject to all the innovation turmoil on a worldwide basis. They are susceptible to changes in macro-economic conditions. Their business will present constant risks to revenues and earnings. However, they have the acumen to handle those risks is a proficient way.

 
 
Future Assessment Probabilities, Reasons and Explanations
 
   Possible Outcome Probability Value Reasons and Explanations
1. Awesome   25%+ revenue 10%

IBM develops breakthrough device or novel Internet service.

2. Good   10%+ revenue 20%

IBM chooses to dominate a technology space, and acquires key players in bid to dominate.

3. Fair   5%+ revenue 60%

IBM continues on its current path of responding to economic and technology challenges in a steady, prudent way, missing large growth opportunities, but minimizing mistakes.

4. Bad   < 5% revenue 10%

IBM falls subject to macro-economic conditions beyond its control.

5. Terrible   < 0% revenue 0%

The worldwide economy has a meltdown.

 
 
Associated Information
 
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