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TheStreet Open House

IBM Fights for Respect and Relevance on Rough Seas of Investor Confidence

NEW YORK (TheStreet) -- International Business Machines (IBM - Get Report) has lost its sheen since missing revenue estimates in the first quarter and reporting its lowest quarterly revenue since the first quarter of 2009.

Revenue has declined for eight consecutive quarters, and the struggling stalwart of big technology is beginning to look like the Titanic. If the company doesn't make some major changes in the second half of the year, investors will continue to "abandon ship" and the shorting sharks will begin circling.

CEO Ginni Rometty has her hands full. It's no easy task to reinvent a 103-year-old company while trying to stay afloat in shifting seas. Big Blue finished 2013 as a profitable company with about $18 billion in Ebitda earnings on revenue of $100 billion.

With a market cap of over $184 billion and a trailing return-on-equity of 88%, IBM has a lot to live up to. It faces enormous challenges, including competition in a crowded cloud computing space and an investment community that's losing patience with its stock.

Shares of IBM, at the $183.60 close Wednesday, are down 2% for the year to date and almost 16% from the March 2013 high of $216. As the chart below illustrates, IBM's stock appears to be experiencing what Apple (AAPL) did when it fell from grace in late 2012. That comparison may be good news for those waiting to board the S.S. IBM.

IBM Chart
IBM
data by YCharts

IBM isn't the same breed of company as Apple. Yet the hardships each company's stock have experienced are similar.

Few predicted after shares of Apple fell over 40% by mid-2013 that activist investors would pressure management and the stock would recover almost all the loses by June 2014.

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SYM TRADE IT LAST %CHG
IBM $160.40 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%

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