Wednesday, December 3, 2014

* IBM - Is This What it Looks Like When a Firm Gives Up?

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Over the last four-years IBM stock has been essentially unchanged... and so has cash from operations, investment in research & development and net income.  In fact, the only earnings effort that seems to be is simply tax management.  Is this what it looks like when a mega cap It firm gives up?

Revenue (TTM) vs. Net Income (TTM)
Over the long run, there has been a very nice increase in net income for IBM (the red line), but in the last four-years, there's been zero growth from endpoint-to-endpoint.

Provided by Capital Market Laboratories

Net Income (TTM) vs. Effective Tax Rate
The only real strategy that IBM seems to be implementing successfully is lowering its tax bill from 35% to 15%.  Now that the tax management strategy may have peaked, it appears so have earnings.

Provided by Capital Market Laboratories

Cash from Operations (TTM)
Over the last four years, cash from operations are actually down.

Provided by Capital Market Laboratories

Cash from Operations vs Stock Price
This is the same data, but the orange line is the stock price.  We see total stagnation.

Provided by Capital Market Laboratories

Research & Development vs Stock Price
Perhaps the most disheartening of all the images... IBM hasn't spent a single dollar more on R&D as its stock price has not participated in the bull rally... at all.

Provided by Capital Market Laboratories

This is trade analysis, not a recommendation.

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