The Case For IBM

___IBM is one of the DOW 30 companies. It has a long history of excellence and innovation. I used the model 360 mainframe computer in 1968 while in graduate school at U. of Missouri. Two 360 mainframes controlled the thousands of transmitters and receivers of the phased-array radar where I was Senior Director in 1975. IBM became a leader in the PC world and made MS-DOS the standard OS when it licensed it from Microsoft's Bill Gates. It eventually sold its PC business to Chinese company Lenovo as the PC business has become a commodity business.

___IBM has had decreasing revenues as the high-technology world transitions to the global economy. Its most recent quarter, it reported revenue of $22.1B and net income of $4.5B. Profit for the year will be about $13.4B While most companies would be ecstatic with such results, IBM stock plumeted to $118. The stock had reached about $200/share in 2013.

___Like other multinational companies, IBM has left its foreign profits overseas instead of having them taxed a second time. IBM has been buying back its stock for years as its dividend yield has increased. It has been cheaper to borrow money than pay dividends – now about 4%. It has about $154B in Treasury stock. It also has about $141B in Retained Earnings and $9B in cash.

___IBM has an effort called “Strategic Initiatives” which is doing well and growing at an impressive rate. It has major competitors in Amazon, Google and Microsoft for cloud computing and other initiatives (like smart homes and smart cities). When the global downturn ends, there be much money to efficiently control the production and use of electricity and other power and energy sources. Waste and polution has been minimized in the United States using technology, and the same thing can be done in the BRIC (Brazil, Russia, India, China) and other nations.