Can IBM Make A Comeback In 2018 After An Unimpressive 2017?
Zacks Investment Research | Dec 21, 2017 04:49AM ET
The technology sector has been one of the best performing sectors this year so far. However, not all the companies have fared that well. International Business Machines Corp. (NYSE:IBM) is one of them.
IBM has been witnessing a year-over-year decline in its top-line over the last several quarters. The inconsistent revenue growth trajectory, slow transition to cloud, increasing competition and sluggish IT spending have been the major reasons behind the company’s dismal performance.
So far this year, IBM has lost 8.5% against Technology Select Sector SPDR ETF (NYSE:XLK) XLK gain of 32.3%.
What’s Hurting the Company?
IBM is under tremendous pressure due to its time consuming business model transition, which is negatively impacting results. Despite significant investments, the company is yet to gain a dominant position in the Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Hosted private cloud market. Intensifying competition in most of the markets is a major concern for the company.
Contrary to expectations IBM’s focus on becoming a major force in the Artificial Intelligence (AI) market with Watson has failed – at least in the near term.
Moreover, IBM’s continuing investments and pricing pressure related to its legacy hardware business is a concern. We believe the underperforming legacy business segments will remain an overhang on the company’s bottom line till the business model transition, which is heavily time-consuming, is completed.
IBM Corporation Revenue (TTM)
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