Published Thu, 15 Oct 2020 08:15:23 -0400 on Seeking Alpha
Seeking AlphaDividend Ideas | Tech IBM: Like Microsoft In 2010, Plus A 5.2% YieldOct. 15, 2020 8:15 AM ET|| About: International Business Machines Corporation (IBM), Includes: MSFTby: Gen AlphaGen Alpha Long Only, Value, Growth, Growth At Reasonable PriceSummaryLike Microsoft from a decade ago, IBM is seen and valued as a legacy technology company.
I see IBM as being on the cusp of a technology transformation, and believe the hybrid cloud represents a substantial opportunity.
I believe the shares are attractively valued at present, and may see strong gains after the spin-off.
IBM (IBM) has seen its share of challenges, with declining annual revenues over the past decade. However, I see reasons to be optimistic, as IBM has positioned itself to capture a substantial share of the sizeable hybrid cloud market. At present, I see parallels between IBM of today and Microsoft (MSFT) from a decade ago.
While Microsoft is undoubtedly a Wall Street darling today, those with a longer memory may note that this was not always the case. Back in 2010, Microsoft was seen as a legacy technology company, with stagnating revenues and trouble finding areas for growth. Both Apple (AAPL) and Google (GOOG) (Nasdaq: GOOGL) had already dominated the mobile operating system market at the time, and Microsoft found itself late to the game.
Microsoft made a number of missteps, not least of which was its ill-fated $7.2 billion acquisition of Nokia in 2013, which it subsequently sold for a paltry $350 million three years later. It did, however, eventually find its footing. With a new CEO and a robust public cloud strategy, Microsoft transformed itself into the darling that it is today.
I believe IBM is at a similar cusp of a technology transformation. While I cannot (nor should) promise the same result for IBM as that of Microsoft, I believe the hybrid cloud presents a similar opportunity for IBM as what the public cloud presented for Microsoft. In the following section, I evaluate... Read more
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