Introduction
International Business Machines (NYSE:IBM) is about as blue-chip as it gets. But being a longtime stalwart of the tech services industry doesn't exactly mean it's got an unassailable position, so investors have been finding out over recent years. Competition from cloud computing, the proliferation of business services at other firms, the move away from the PC in general, and the strengthening positions of Apple and Microsoft have all combined to produce a very challenging environment for IBM. How has management navigated these challenging waters, and which way is the wind blowing with regards to profitability and its competitive position? Finally, what has management done to turn the tide and help keep shareholders happy? In short, the disruption of the cloud revolution has muddied the waters and management has flailed around looking for answers. So far, the answers they've come up with have been a mixed bag.
Fundamental Aspect
I typically start with looking at top-line growth (or negative growth, as the case may be), and kind of drill down from there. So, looking at the income statement, one can see that revenue has suffered in recent years, especially as its server business (and related services), an important cornerstone to the firm's profitability, has been hit especially hard as the cloud has made many of the expensive servers IBM provides somewhat redundant and less worth the cost to companies looking to house data for less. Let's take a look at the trend over the last decade:
