IBM: Short-Term Investments Starting To Show Signs Of Life

2/21/17

IBM (NYSE:IBM) has certainly taken its fair share of investor complaints over the years. There are any number of reasons for this displeasure, but a few show up rather frequently.

For starters you have revenue growth or lack thereof. Revenue topped out around $107 billion all the way back in 2011 and since then has been steadily declining. Today the number is closer to $80 billion. Additionally, while the net profit margin has increased some, it hasn't been by enough to offset declining company-wide earnings growth.

Which brings us to another popular complaint: the buyback program. IBM has reduced its share count by about 40% during the last decade, allowing earnings per share to increase at a much faster clip than company-wide earnings. A lot of people consider this "financial engineering," I simply see it as another avenue of capital return. All sorts of companies utilize such programs (indeed some to an even greater degree) but IBM takes much more flak than praise for this endeavor.

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