IBM (NYSE:IBM) the tech stock everyone wants to like has some worrisome trends. But they just raised the dividend what could be the problem.
Top line growth over the past three years is relatively flat. For tech this is the sign of death. You are milking the legacy aspects. Eventually a disruptor comes and takes it all away. BTW there is next to no research and development. They just buy and hope o catch the wave.
Earnings are up modestly but because of decreases in shares outstanding the EPS looks great. This is financial engineering straight from a quantitative computer model. This is not a compelling product proposition. They have cut costs and squeezed operations. Eventually this gambit runs its course.
A company is only as good as its customers. IBM customers are all in the cost cutting austerity business. Not one name is turning the world on its head. No world-beating disruptor is using IBM. Think about it. No fuel for the fire.
George Gutowski writes from a caveat emptor perspective.