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    International Business Machines Corp (IBM)

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    Business Description

    IBM is a global technology company that focuses on providing integrated solutions and products leveraging hybrid cloud and artificial intelligence (AI) technologies. The company operates through key segments, including Software, Consulting, and Infrastructure, to support clients' digital transformations. IBM's offerings include a range of software solutions, consulting services, and infrastructure products, all designed to enhance business operations and drive innovation .

    1. Software - Offers hybrid platform software solutions, transaction processing, and distributed infrastructure software, including proprietary and open-source software delivered through as-a-Service or cloud models, and on-premise licenses. Red Hat, part of this segment, has shown substantial growth .

    2. Consulting - Provides business transformation, technology consulting, and application operations services, delivered through various models, including cloud and as-a-Service, crucial for clients preparing for AI integration .

    3. Infrastructure - Delivers Hybrid Infrastructure solutions like zSystems and Distributed Infrastructure solutions such as Power and Storage, supporting mission-critical workloads and driving hardware and related software adoption .

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Arvind KrishnaChairman of the Board and Chief Executive OfficerApril 2020Arvind Krishna became the CEO of IBM and a member of the Board of Directors in April 2020. He was elected Chairman of the Board in December 2020. He joined IBM in 1990 and has held various leadership roles .
    Michelle H. BrowdySenior Vice President, Legal and Regulatory Affairs, and General Counsel2015Michelle H. Browdy is the Senior Vice President, Legal and Regulatory Affairs, and General Counsel at IBM. She has been serving in this role since 2015 .
    Gary D. CohnVice Chairman2021Gary D. Cohn serves as Vice Chairman at IBM. He joined IBM in 2021. Prior to his role at IBM, he served as Assistant to the President for Economic Policy and Director of the National Economic Council .
    Nicolas A. FehringVice President and Controller2023Nicolas A. Fehring is the Vice President and Controller at IBM. He began serving in this role in 2023 .
    James J. KavanaughSenior Vice President and Chief Financial Officer, Finance and Operations2008James J. Kavanaugh is the Senior Vice President and Chief Financial Officer, Finance and Operations at IBM. He has been serving in this role since 2008 .
    Nickle J. LaMoreauxSenior Vice President and Chief Human Resources Officer2020Nickle J. LaMoreaux serves as the Senior Vice President and Chief Human Resources Officer at IBM. She has been in this role since 2020 .
    Robert D. ThomasSenior Vice President, Software and Chief Commercial Officer2023Robert D. Thomas serves as the Senior Vice President, Software and Chief Commercial Officer at IBM. He began his role as an executive officer in 2023 .

    Questions to Ask Management

    1. Consulting revenue was flat this quarter with signings declining for the second consecutive quarter; given the ongoing macroeconomic challenges and client spending shifts, how confident are you in Consulting returning to growth in 2025, and what specific strategies are you implementing to drive this turnaround?

    2. With the HashiCorp acquisition potentially diluting free cash flow in the near term, especially if Consulting remains flat, how do you plan to achieve the high single-digit free cash flow growth you've previously targeted for 2025?

    3. IBM's revenue growth has averaged around 3% in several of the past four years, below your mid-single-digit model; considering that some growth drivers like the mainframe cycle and acquisitions could be one-time boosts, what initiatives are in place to ensure sustainable mid-single-digit revenue growth beyond 2025?

    4. While your generative AI book of business has grown significantly, you mentioned that these AI engagements have longer durations and lower immediate revenue yield; how will this affect your Consulting revenue growth and margins in the near term, and when do you expect these AI investments to contribute meaningfully to your financial performance?

    5. Software segment profit margin expanded to about 30% this quarter, above historical levels; given the competitive pressures in the software industry, how sustainable is this margin expansion, and what risks could potentially impact your software margins moving forward?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateOctober 30, 2018
    End Date/DurationNo expiration date
    Total additional amount$4.0 billion
    Remaining authorization amount$2,007,611,768
    DetailsProgram suspended at the time of the Red Hat acquisition in 2019; remains suspended

    Debt Maturity Schedule

    YearAmount Due (in millions)Debt TypeInterest Rate (%)% of Total Debt
    202493 Notes3.5 0.2% = (93 / 57,565) * 100
    20255,296 Notes5.1 9.2% = (5,296 / 57,565) * 100
    20266,321 Notes3.7 11.0% = (6,321 / 57,565) * 100
    20276,501 Notes3.3 11.3% = (6,501 / 57,565) * 100
    20284,043 Notes5.0 7.0% = (4,043 / 57,565) * 100
    20293,750 Notes3.6 6.5% = (3,750 / 57,565) * 100
    20301,350 Notes2.0 2.3% = (1,350 / 57,565) * 100
    2031500 Notes4.8 0.9% = (500 / 57,565) * 100
    20321,850 Notes4.4 3.2% = (1,850 / 57,565) * 100
    2033750 Notes4.8 1.3% = (750 / 57,565) * 100
    20341,000 Notes4.9 1.7% = (1,000 / 57,565) * 100
    203883 Notes8.0 0.1% = (83 / 57,565) * 100
    20392,745 Notes4.5 4.8% = (2,745 / 57,565) * 100
    2040650 Notes2.9 1.1% = (650 / 57,565) * 100
    20421,107 Notes4.0 1.9% = (1,107 / 57,565) * 100
    20441,000 Notes5.3 1.7% = (1,000 / 57,565) * 100
    204527 Notes7.0 0.0% = (27 / 57,565) * 100
    2046650 Notes4.7 1.1% = (650 / 57,565) * 100
    20493,000 Notes4.3 5.2% = (3,000 / 57,565) * 100
    2050750 Notes3.0 1.3% = (750 / 57,565) * 100
    20521,400 Notes4.2 2.4% = (1,400 / 57,565) * 100
    2053650 Notes5.1 1.1% = (650 / 57,565) * 100
    20541,400 Notes5.3 2.4% = (1,400 / 57,565) * 100
    2096316 Debentures7.1 0.5% = (316 / 57,565) * 100

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Alphabet (Google): Competitor in the Software segment .
    • Amazon: Competitor in the Software segment .
    • BMC: Competitor in the Software segment .
    • Broadcom: Competitor in the Software segment .
    • Informatica: Competitor in the Software segment .
    • Microsoft: Competitor in the Software segment .
    • Oracle: Competitor in the Software segment .
    • Palo Alto Networks: Competitor in the Software segment .
    • Salesforce: Competitor in the Software segment .
    • SAP: Competitor in the Software segment .
    • Splunk: Competitor in the Software segment .
    • Accenture: Competitor in the Consulting segment .
    • Capgemini: Competitor in the Consulting segment .
    • India-based service providers: Competitors in the Consulting segment .
    • Management consulting firms: Competitors in the Consulting segment .
    • Consulting practices of public accounting firms: Competitors in the Consulting segment .
    • Engineering service providers: Competitors in the Consulting segment .
    • Dell Technologies: Competitor in the Infrastructure segment .
    • Hewlett-Packard Enterprise (HPE): Competitor in the Infrastructure segment .
    • Intel: Competitor in the Infrastructure segment .
    • NetApp: Competitor in the Infrastructure segment .
    • Pure Storage: Competitor in the Infrastructure segment .
    • Original device manufacturers (ODMs): Competitors in the Infrastructure segment .
    • Non-captive financing entities: Competitors in the Financing segment .
    • Financial institutions: Competitors in the Financing segment .

    Auditor

    NameStart DateEnd DateReason for Change
    PricewaterhouseCoopers LLP1923 PresentCurrent auditor

    Latest news

    Recent developments and announcements about IBM.

    Financial Reporting

      Earnings Call

      ·
      6 days ago

      Summary of IBM's Fourth Quarter 2024 Earnings Call

      Key Financial Highlights:

      • Full-Year Revenue: $63 billion, with a 3% growth rate for 2024.
      • Free Cash Flow: $12.7 billion, marking a 14% increase year-over-year and the highest free cash flow margin in IBM's history.
      • Quarterly Revenue: $17.6 billion, up 2% at constant currency.
      • Software Growth: Accelerated to 11% in Q4, led by Red Hat (17% growth), Automation (16%), and Transaction Processing (11%).
      • Consulting Revenue: Down 1% for the quarter, reflecting client reprioritization of IT spending.
      • Infrastructure Revenue: Declined by 6%, attributed to product cycle dynamics.

      Management’s Forward Guidance:

      • 2025 Revenue Growth: Expected to exceed 5% at constant currency, driven by accelerating growth in Software and Consulting.
      • Free Cash Flow: Projected at $13.5 billion for 2025, supported by double-digit adjusted EBITDA growth.
      • Mainframe Launch: IBM plans to release the z17 mainframe in mid-2025, which is expected to contribute to Infrastructure growth.
      • Software Growth: Anticipated to approach double digits in 2025, with Red Hat expected to grow in the mid-teens.

      Strategic Initiatives and Market Conditions:

      • Generative AI: IBM’s GenAI book of business grew to over $5 billion, with significant contributions from both Software and Consulting.
      • AI Innovations: Key products like watsonx Code Assistant and Red Hat OpenShift AI are driving adoption. IBM also acquired Neural Magic to enhance AI model optimization.
      • Consulting: IBM is leveraging its Consulting Advantage platform to integrate technology and industry expertise, with a focus on generative AI and digital transformation.
      • Macroeconomic Environment: Management highlighted optimism for 2025 despite ongoing challenges like geopolitical tensions and supply chain vulnerabilities. Technology remains a critical enabler for business growth.

      Analyst Questions and Management Responses:

      • Infrastructure and Mainframe: Analysts inquired about the sustainability of growth in Transaction Processing and the upcoming mainframe cycle. Management expressed confidence in the enduring value of the mainframe platform and its role in hybrid cloud and AI workloads.
      • Consulting Growth: Analysts questioned the revenue recovery in Consulting. Management emphasized the strong backlog (up 8%) and record Q4 signings, which are expected to drive growth in the second half of 2025.
      • M&A Strategy: IBM plans to lean into acquisitions, supported by its strong free cash flow. The pending HashiCorp acquisition is expected to close soon, contributing to revenue growth and strategic synergies.

      Notable Client Partnerships:

      • Collaborations with NatWest, Lockheed Martin, L’Oreal, UFC, and Ferrari to leverage IBM’s AI and consulting expertise.
      • Partnership with the U.K. Home Office to support the emergency services network.

      Upcoming Events:

      • IBM’s Investor Day is scheduled for February 4, 2025, where more details on strategy and guidance will be shared.

      Earnings Report

      ·
      7 days ago

      IBM Releases Fourth-Quarter 2024 Earnings Results

      IBM has announced its fourth-quarter 2024 earnings results on January 29, 2025, highlighting several key financial and operational achievements:

      Key Highlights

      Revenue Performance

      • Total Revenue: $17.6 billion, up 1% year-over-year (2% at constant currency).
      • Software Revenue: $7.9 billion, up 10% (11% at constant currency), driven by:
        • Red Hat: Up 16% (17% at constant currency).
        • Automation: Up 15% (16% at constant currency).
        • Data & AI and Security: Both up 4% (5% at constant currency).
      • Consulting Revenue: $5.2 billion, down 2% (1% at constant currency).
      • Infrastructure Revenue: $4.3 billion, down 8% (6% at constant currency), with IBM Z declining 21% (20% at constant currency).

      Profitability

      • Gross Profit Margin: 59.5% (GAAP), up 40 basis points; 60.6% (Non-GAAP), up 50 basis points.
      • Operating (Non-GAAP) Earnings Per Share: $3.92, up from $3.87 in Q4 2023.

      Cash Flow

      • Free Cash Flow: $6.2 billion for Q4, up $0.1 billion year-over-year.
      • Full-Year Free Cash Flow: $12.7 billion, exceeding expectations.

      Generative AI Growth

      • IBM's generative AI book of business has grown to over $5 billion, increasing by nearly $2 billion quarter-over-quarter.

      Full-Year 2025 Outlook

      • Revenue Growth: Expected to grow at least 5% at constant currency.
      • Free Cash Flow: Projected at approximately $13.5 billion.

      Strategic Commentary

      Arvind Krishna, IBM's Chairman and CEO, emphasized the company's focus on AI and innovation, stating, "With our focused strategy, enhanced portfolio, and culture of innovation, we're well-positioned for 2025 and beyond".

      Trends and Challenges

      • While software continues to drive growth, consulting and infrastructure segments faced challenges, with declines in revenue attributed to shifts in client demand and product cycles.
      • IBM's strong cash flow performance supports its ability to invest in future growth and return value to shareholders through dividends.

      For more details, IBM's earnings webcast is available at IBM Investor Events.