How long are IBM shareholders waiting for a turnaround?

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<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "IBM (NYSE:IBM) Chief Executive Ginni Rometty's $ 34 billion commitment to open source software provider Red Hat wasn't the last "Game-Changer" It promised investors. The company's latest earnings report was particularly worrying as it included results from its recently closed Red Hat business. "Data reactid =" 11 ">IBM (NYSE:IBM) Chief Executive Ginni Rometty's $ 34 billion commitment to open source software provider Red Hat was not the last game changer she had promised investors. The company's latest earnings report was particularly worrying as it included results from its recently closed Red Hat business.

Why you shouldn't give up the IBM stock

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<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "InvestorPlace – Financial News, Equity Advice & amp; trading Tips"data-reactid =" 24 "> InvestorPlace – stock market news, share advice and trading tips

The Armonk, NY-based company's total revenue, led by Rometty, plummeted for the fifth time in a row and for the 27th time overall. Quarterly sales were down 3.9% to a disappointing $ 18 billion. Red Hat was a bright spot, generating $ 371 million, a "normalized profit" of 20% year over year.

A hybrid strategy for IBM Stock

<p class = "canvas-atom canvas-text MB (1.0em) MB (0) – SM MB (0.8em) – SM" type = "text" content = "Under Rometty's leadership, IBM is pursuing a" hybrid "" cloud- Red Hat strategy for enhanced security services in private and public clouds. Theoretically, IBM would work with leading providers such as Amazon (NASDAQ:AMZN) Web Services (AWS) that dominate the $ 70 billion global cloud infrastructure services market. It has no other choice considering how much IBM is lagging behind in the fast growing market. "Data-reactid =" 27 "> Under the leadership of Rometty, IBM is pursuing a" hybrid "cloud strategy in which Red Hat provides enhanced security services for private and private companies. Public clouds: In theory, IBM would like to work with leading providers like Amazon (NASDAQ:AMZN) Web Services (AWS) that dominate the $ 70 billion global cloud infrastructure services market. It has no other choice considering how much IBM is lagging behind in the fast growing market.

<p class = "Canvas-Atom-Canvas-Text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Synergy Research Services is located in Seattle connected to the internet Cloud Market Share in a 2019 report at around 35%, followed by Microsoft Azure at 15%. IBM finished fourth with less than 10%. "Data-reactid =" 30 "> Synergy Research Services put the Seattle-based company's cloud market share in a report for 2019 at around 35%, followed by Microsoft Azure at 15%, and IBM was fourth at less than 10%.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "" Companies are in the early stages of their journey to modernize their infrastructures to achieve savings, productivity and innovation, ”said James Kavanaugh, Chief Financial Officer of IBM, at the & nbsp;The company's latest earnings & nbsp;Telephone conference. “We are ideally positioned to bring our customers to the cloud and make their journey easier. We've moved our portfolio to take advantage of this opportunity by investing in our cloud capabilities while suppressing and ending certain lower value content. "" Data-reactid = "31"> "Companies are in the early stages of their journey to modernize their content infrastructure for savings, productivity, and innovation," said James Kavanaugh, chief financial officer of IBM, at the recent conference call The company's bottom line is our portfolio to take advantage of this opportunity by investing in our cloud capabilities while downgrading and removing certain less valuable content. ”

Big Blue has problems

Unfortunately, the rest of Big Blue is not that hot for owners of International Business Machines.

IBM's Global Technology Services (GTS) and Global Business Services (GBS), which were cash cows for the company in the past, had problems in the last quarter. GTS revenue, which includes IBM's cloud business, decreased 5.6% to $ 6.7 billion. GBS had sales of $ 4.1 billion, an increase of 1%. It includes the consulting activities of IBM.

Systems sales, including mainframes and other hardware, decreased 15% to $ 1.5 billion, while global financing dropped 12% to $ 343 million.

<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Big Blue's shares increased by 15% in 2019, underfilling the S & amp; P 500, which increased by 30%. IBM shares are currently trading at a discount of around 10% compared to Wall Street analysts' average price target of $ 148.50. Most analysts rate the IBM share as "hold", which seems right to me given the slowdown in growth. "Data-reactid =" 36 "> Big Blue's shares gained 15% in 2019, falling short of expectations S&P 500, which increased by 30%. IBM shares are currently trading at a discount of around 10% compared to Wall Street analysts' average price target of $ 148.50. Most analysts rate IBM stock as “hold”, which seems right to me given the slower growth.

I expect the stock to remain on the water for the foreseeable future given the challenges it faces in the cloud business and elsewhere. The only way to see the movement of the stock is for an active investor to take a position in the IBM stock. Although such a scenario is unlikely given IBM's size, strange things have happened.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Jonathan Berr currently does not own any of the above shares."data-reactid =" 38 ">Jonathan Berr currently does not own any of the above shares.

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