Skip to Content
Stocks

Sales Disappoint, but IBM Still Moving in Right Direction

Sales Disappoint, but IBM Still Moving in Right Direction

Andrew Lange: IBM's first-quarter results came mostly in line with expectations, although sales slightly disappointed after the company's storage hardware business had some sales execution issues. We think the sales executions are down to the comparative nature of the industry.

In addition, the company also announced restructuring to its sales and cost structures. We think that this restructuring really follows the company's transition toward higher value, enterprise IT services--what the company deems as strategic imperatives.

While the strategic imperatives business continues to grow and will become the majority of IBM's revenue over the midterm, we are seeing a moderation in the growth rate of their business. Still, we think it is the right direction for the company to be heading, even if it is to achieve modest midterm revenue growth.

With management reiterating its full-year outlook and us retaining our outlook for IBM, we reiterate our $168 fair value estimate and narrow economic moat rating.

More on this Topic

Sponsor Center