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Is IBM a Good Long Term Investment?

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http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment

Is IBM a Good Long Term Investment?

IBM just used part of its cash hoard plus a lot of debt to buy Red Hat which is a Linux software and cloud computing company. The purchase comes on the heels of a weak quarterly report due to soft software and server sales. And, news of the purchase drove the stock a bit lower. We have ask, is IBM a good long term investment?

International Business Machines

IBM has been around since 1911 and took the name International Business Machines in 1924. The company has been a dominant presence in the world of computing and basic research for decades. Over that time its employees have earns five national medals of science, 10 National Medal of Technology, 6 Turing awards, and 5 Nobel prizes. Inventions from IBM include the SQL programming the language, automatic teller machines, bar codes, DRAM (dynamic random access memory), and many others. The company holds the most US patents for any business.

Through the middle of the 20th century IBM dominated the marker for the large main frame computers that were necessary for large businesses and governmental organization. But, the company was caught napping by the advent of the personal computer and faster and more efficient computer chips and programming. In its attempt to catch up with Apple computer it gave Bill Gates and Microsoft a start by using its operating system for their computers. Gates was quoted as saying that many billionaires were created by the need to fix various inadequacies in the IBM personal computer design.

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Is IBM a Good Long Term Investment?

  1. 1. Is IBM a Good Long Term Investment? By www.ProfitableInvestingTips.com
  2. 2. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment IBM just used part of its cash hoard plus a lot of debt to buy Red Hat which is a Linux software and cloud computing company.
  3. 3. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment The purchase comes on the heels of a weak quarterly report due to soft software and server sales.
  4. 4. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment And, news of the purchase drove the stock a bit lower.
  5. 5. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment We have ask, is IBM a good long term investment?
  6. 6. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment International Business Machines
  7. 7. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment IBM has been around since 1911 and took the name International Business Machines in 1924.
  8. 8. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment The company has been a dominant presence in the world of computing and basic research for decades.
  9. 9. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Over that time its employees have earns five national medals of science, 10 National Medal of Technology, 6 Turing awards, and 5 Nobel prizes.
  10. 10. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Inventions from IBM include the SQL programming the language, automatic teller machines, bar codes, DRAM (dynamic random access memory), and many others.
  11. 11. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment The company holds the most US patents for any business.
  12. 12. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Through the middle of the 20th century IBM dominated the marker for the large main frame computers that were necessary for large businesses and governmental organization.
  13. 13. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment But, the company was caught napping by the advent of the personal computer and faster and more efficient computer chips and programming.
  14. 14. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment In its attempt to catch up with Apple computer it gave Bill Gates and Microsoft a start by using its operating system for their computers.
  15. 15. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Gates was quoted as saying that many billionaires were created by the need to fix various inadequacies in the IBM personal computer design.
  16. 16. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment IBM lost its dominant position in the computing world is the need for its huge mainframe computers diminished.
  17. 17. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Smaller and networked computers took over the work of large mainframes and then cloud computing took away the need for mainframes in the office.
  18. 18. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Part of IBM’s purchase of Red Hat is to strengthen its position in the world of cloud computing.
  19. 19. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Although IBM with its huge research base and cadre of brilliant scientists was well- positioned to develop things like smart phones and search engine software, they never did and the lead in these areas went to companies like Google, Apple, and not- so-little-any-more Microsoft.
  20. 20. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment IBM is still an impressive company but does it have a strong future or is the tech world passing it by?
  21. 21. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Is IBM a good long term investment with is more than 5% dividend?
  22. 22. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment IBM Shares
  23. 23. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Five years ago in 2013, IBM peaked above $200 a share.
  24. 24. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Today, after a weak quarter and the Red Hat purchase, it is down to $125 a share.
  25. 25. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment The company has had its ups and down over the years but does it have the intrinsic value to justify long term, buy and hold investment?
  26. 26. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Over the last thirty years, IBM has steadily rotated out of non-profitable products and services and into products and services where it retains dominance and profitability.
  27. 27. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment But, there is a sense that it is chasing an ever-shrinking set of market niches instead of using its robust research base to create new niches in which it could reassert its old dominance.
  28. 28. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment What Does Warren Buffett See in This Company?
  29. 29. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment A major shareholder in IBM is the all-time king of long term investing, Warren Buffett.
  30. 30. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment Forbes looks at Buffett, IBM and long term investing.
  31. 31. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment There are those that think Buffett’s stake in IBM is curious, not only because of his openly cautious approach to tech over the years but also because of the world’s continuing shift toward cloud computing– and the threat it represents to the makers of computing devices.
  32. 32. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment But Buffett doesn’t make investments without having a concrete reasons for doing so.
  33. 33. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment In his 2011 letter to Berkshire Hathaway shareholders, Buffett explained his foray into IBM as founded on the belief that the company would deliver benefits in the form of billions of dollars in dividends and repurchases over time.
  34. 34. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment It is useful to recall that when Buffett started out his investment strategy was picking companies that were doing poorly, fixing them up, and then selling after the stock price went up and before the company headed downward again.
  35. 35. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment The strategy was known as the “last puff from the cigar.”
  36. 36. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment If this is what Buffett is doing here, we should watch for when he decides to get out and then all head for the exit.
  37. 37. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment The long term problem with IBM is that it has not used its brain power to develop new and profitable product lines.
  38. 38. http://profitableinvestingtips.com/stock-investing-tips/is-ibm-a-good-long-term-investment For IBM to be a good long term investment, this needs to change.

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