![]() UBS was one of the few to tweak their models, dropping the IBM price target from $125 to $122, with a similar argument to Ellis about the inability to make moves hampering its growth. ![]() See also: How tech hopes to help vaccine distribution, ‘the biggest data puzzle of our lifetime’Įllis maintained a sell rating and $115 target price, a common theme from analysts Friday morning as almost all chose to maintain their ratings and targets on the stock after the results. By comparison, the analogous figure was $13 B in 2010 – so there’s been a ~60% drop in IBM’s cash flow capacity for major investments over the past decade, at a time when IBM desperately needs to invest to improve its positioning in must-win areas like cloud,” the analyst wrote, with emphasis. ![]() “We estimate that IBM will only have about $2.5 B and $5.5 B of excess available for major investments (e.g., additional M&A) in 20, respectively. That dynamic leaves IBM limited in its ability to change its course, Ellis wrote. For a company that pays a hefty ~$6 B dividend and has major investments required to bolster the company’s positioning in cloud, it’s even more concerning.” ![]() “That level of free cash flow deterioration is concerning for any company. “So, even after undertaking major portfolio moves including the acquisition of Red Hat and the planned spinout of the managed infrastructure services business, IBM is expecting 2022 FCF to be, at best, ~flat with 2019, and down about 25% from where it was 10 years ago,” Ellis summarized. “It’s rarely a good sign when a company starts reporting an “adjusted” free cash flow metric (isn’t “adjusted free cash flow” an oxymoron?),” MoffetNathanson analyst Lisa Ellis wrote in a note Friday morning.Įllis did the math on the adjustments and showed that counting the billions in restructuring charges that IBM is trying to strip away shows the same lack of earnings growth that IBM’s other numbers show. on Jand is headquartered in Armonk, NY.IBM attempted to divert investors’ and analysts attention away from its current numbers with two-year forecasts and a focus on adjusted free cash flow, but it did not seem to work. The company was founded by Charles Ranlett Flint and Thomas J. The Financing segment refers to the client and commercial financing, facilitating IBM clients’ acquisition of IT systems, software, and services. Infrastructure is optimized for infusing AI into mission-critical transactions and tightly integrated with IBM Software including Red Hat for accelerated hybrid cloud benefits. The Infrastructure segment offers solutions for hybrid cloud, and is the foundation of the hybrid cloud stack. The Consulting segment focuses on integrating skills on strategy, experience, technology and operations by domain and industry. The Software segment combines hybrid cloud platform and software solutions to help clients become more data-driven, and to automate, secure, and modernize their environments. It operates through the following segments: Software, Consulting, Infrastructure, Financing, and Other. is an information technology company, which engages in the provision of integrated solutions that leverage information technology and knowledge of business processes.
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