IBM - Embedded Expectations Analysis - 2021 02 24
International Business Machines Corporation (IBM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.0x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about their cloud and AI portfolio, margin expansion, and the potential of their proposed spin-offSpecifically, management may have concerns about the sustainability of software demand, the impact of their Managed Infrastructure Services business spin-off on client relationships, and the viability of their spin-off as a standalone business. Furthermore, they may be exaggerating the strength of their financial profile and platform strategy post-spin-off and the potential of their hybrid cloud and AI portfolio acquisitions. They may also have concerns about their large software project deployment and the impact of market volatility and client preferences on IBM Z15. Moreover, management may lack confidence in their ability to maintain backlog improvements, execute client engagement opportunities, and sustain gross margin expansion
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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