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Below is the Stock Analyst Report for IBM.

International Business Machines CorpIBM

Morningstar Rating

Stock Research and Analysis

by Rick Hanna

We believe IBM is positioned to excel in the enterprise market with its globally integrated services, software, and hardware offerings.

IBM is unrivaled in the breadth and depth of products and services that it can offer its clients. The company contains within itself many of the same capabilities that make Accenture ACN (services), Oracle ORCL (software), Hewlett-Packard HPQ (hardware systems), and Intel INTC (hardware architecture) great companies in their respective areas. Read more

Bulls Say

IBM's strong brand, customer relationships, and comprehensive product offering combine to build an economic moat difficult for competitors to breach.

The company's services relationships provide great insight into customer requirements, which benefits new product development and research initiatives.

IBM has done a good job of boosting the profitability of the services business through using its global delivery operations, process improvement, and automation.

IBM has been awarded the most patents in the United States for 16 straight years, and it generates about $1 billion per year in intellectual property and custom development income. Read more

Bears Say

IBM's size and product breadth make it difficult to compete and grow in each business segment.

The company generates more than half of its revenue outside the United States; thus, it is exposed to political, economic, and currency risks from its operations.

IBM is a complex company with a long history. There's always the small risk an issue could emerge regarding revenue recognition, pension accounting, or environmental liabilities.

The company could face significantly higher pension expenses in the event of a prolonged stock market decline. Read more

Strategy

IBM offers integrated hardware, software, and services that deliver business value for its clients. IBM's goal is to give companies the technology and services they need to improve their business performance. Read more

Management

Samuel Palmisano has been chairman and CEO of IBM since 2003. Like most senior executives at IBM, he is a lifelong IBM employee and rose through the ranks after stints in the enterprise and personal systems groups, as well as global services. His services experience continues to benefit IBM as the firm works hard to fine-tune the profitability and resource-allocation issues that come with expanding such a complex business. Read more

Profile

IBM is one of the largest IT solutions providers in the world. It designs computer systems and software and provides related services. The company's hardware products (19% of sales) include servers, storage systems, and electronic subsystems. Read more

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