It wasn't that I was happy about this "new discovery." But I recall being proclaimed as "public enemy No.1" upon my asking three months ago, "At what point does IBM become overrated?"
It wasn't meant as a slight against the tech giant. After all, there's no debate that IBM has earned every bit of respect that it gets. But I was nevertheless annoyed by the apparent double-standard under which the company operates.
I won't argue that IBM continues to be a very profitable company. But I'm constantly in awe of the fact that despite IBM's lack of revenue growth over the past couple of years, the company's never really lost its bellwether status on Wall Street. It's as if the company is immune to criticism.This is despite having spent more than $16 billion over the past five years in acquisitions, trying to grow the top line. It hasn't worked. Nor has it seemed that Wall Street has cared. (CRM), which has done an excellent job building itself into a leading software-as-a-service (SaaS) business, was winning market share from IBM. By contrast, Apple (APPL), which, had posted exceptional growth during that same span, has had its valuation cut by almost in half from a high of $705 to a low of $385. Everyone was somehow ready to bury Apple but not IBM. I'm not blaming IBM for this, though. But still, I felt it was time to draw attention to these fundamental inequalities. And after IBM's second-quarter earnings report, I believe investors have finally gotten the memo; Big Blue needs to perform better for these shares to make sense.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV