IBM - Embedded Expectations Analysis - 2020 12 14
International Business Machines Corporation (IBM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 16.1x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about declining free cash flow, GBS segment contracts, and segment revenue growthSpecifically, management may lack confidence in their ability to prevent free cash flow declines, sustain their segments' revenue growth, and generate growth from segment investments. Moreover, they may have concerns about spinning off the Managed Infrastructure Services segment, the costs of conducting M&A, and their recently issued debt. Furthermore, management may be exaggerating their AI capabilities, the potential of their technology pipeline, and their focus on growing their dividend. Finally, they may lack confidence in their ability to win new contracts for the Global Business Services (GBS) segment and capitalize on digital transformation trends
International Business Machines provides integrated solutions and products that utilize data, information technology, capability in industries and business processes. The company has five segments: Cloud and Cognitive Software, which provides a range of software offerings; Global Business Services, which provides consulting, systems integration, application management and business process outsourcing services; Global Technology Services, which provides project services, managed and outsourcing services, cloud-delivered services, and technical and IT support services; Systems, which provides technology and service; and Global Financing, which provides client financing, among others.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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