IBM Stock Analysis - 5.2% Dividend - Hybrid Cloud Growth, but...

IBM stock analysis - Is IBM stock a buy after a decade of terrible performance? Not an easy answer but here we go:

0:00 IBM stock price
0:32 Summary points
4:39 IBM business overview
7:10 dividend buybacks
10:16 IBM stock valuation

IBM (NYSE:IBM) stock analysis content:
- IBM stock key points summary
- IBM stock price overview (Lower than Buffett’s 2011 buying level and 2017 selling level)
- IBM business analysis (Hybrid cloud focus and NewCo spin-off)
- IBM fundamentals (IBM dividend & buybacks)
- IBM valuation and risk and reward investment conclusion (excel model included)
IBM stock key points and issues summary
The main issues the market sees for IBM are the following (I’ve read approximately 30 analysts reports and listened to the latest conference calls):
- Lagging industry peers in growth
- Leverage growth on declining revenue and income
- Continuous stagnation and weak performance
- Red Hat questionable merger rationale
- Beating analysts’ estimates in only 2 of the last 8 quarters
- Revenue estimates down from $80 billion to $76 billion for 2021
- 2022 EPS estimates cut from $15 to $13 due to COVID
- Reducing employee count – thus not trying to grow and leading to high skill loss (example: Lisa Su – left in 2007, currently CEO of AMD that has a market cap close to IBM’s now)
- Former CEO Rometty’s compensation went from $16 million in 2012 to $158 million in 2019 while the market capitalization went down significantly. To me personally, a picture like the following tells me the CEO is focused on herself and on the ivory tower she lived in, but that is just a subjective perspective and hopefully things change now with the new CEO
- Buffett bought $10.7 billion in 2011, took a look and sold
- IBM spent $200 billion on buybacks over since 1994 – almost twice the current market capitalization
- IBM will split in 2021, thus it will spend two years focusing on how to split instead of focusing on how to grow
- No buybacks till debt ratios improve – around 2022 at first
- M&A strategy is unclear, also unclear where will the discussed growth come from
- Quantum computing is too early to create profits in this decade
- Cloud will be a commodity in the future, with thin margins given the already strong competitive environment (think: Amazon, Microsoft and Google).

An interesting view from Jim Chanos, I'll make a video to dig into his numbers better because IBM is his highest conviction short pic.
https://youtu.be/aDrtvFfw-pw?t=1314

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Видео IBM Stock Analysis - 5.2% Dividend - Hybrid Cloud Growth, but... канала Value Investing with Sven Carlin, Ph.D.