IBM has shown great earnings growth over the last five years, with
earnings increasing every year by double digits, also with projected earnings
increasing by double digits for the next two years.
IBM is the world’s largest technology company.
It offers a diversified line of computer hardware equipment, application
and system software, and related services.
IBM competes with many of the big name technology companies like
Microsoft, Cisco, Oracle, Hewlett-Packard, and Texas-Instruments. IBM finds its greatest growth in e-commerce applications.
This fast growing sector, coupled with IBM’s leadership within it, will
further accelerate earnings. IBM
leads the world in U.S. patents, with 2,658 in 1998.
These just goes to show how dedicated IBM is to research and development
of new products.
The Global Financing unit continues to grow, which greatly aids IBM’s
earnings. This unit is used to
leverage the company’s financial structuring, portfolio management, and grow
the company’s addressable customer base.
IBM will do what it takes to get its products out to the customers that
need them. Financing is
increasingly becoming an important customer offering for computer hardware
vendors.
I would recommend buying this stock, due to IBM’s leadership among
their competitors and the recent valuation.
The stock recently dropped around 30% following reduced fourth quarter
earnings and warnings about Y2K. The
company projects slower growth in its mainframe sales, which also aided in the
recent declines. The company’s
strengths include its strong earnings growth, leading research and development,
customer relations, and expansion into rapidly growing markets.
The weaknesses include the slower near term earnings and Y2K fears.