Consider: As IBM has posted sales declines during the past three quarters, both Oracle and Salesforce.com have grown revenue during that span. For instance, compared to IBM's 3% software revenue growth, Oracle just ended its recent quarter with software licenses surging 17%. Likewise, Salesforce.com reported 34% increase in the same category. Essentially, IBM has been ceding market share to both companies. But that's not all. While Salesforce.com posted a 35% year-over-year increase in service revenue, IBM posted a 2% decline in the same category. However, IBM still managed to report $5.8 billion in net income, or a 6% increase year over year. When excluding one-time items, earnings were $5.39, easily exceeding Street estimates of $5.25 per share.
Our performance in the fourth quarter and for the full year was driven by our strategic growth initiatives -- growth markets, analytics, cloud computing, Smarter Planet solutions -- which support our continued shift to higher-value businesses.Rometty's reference to higher-value business has been a clear focus, which showed in IBM's strong margin performance. Although the growth story is no longer a story, I worry the company can become vulnerable to the stronger growth players once tech spending recovers. Although the high margin business strategy is working well today, it's only a matter of time before SAP ( SAP) or Hewlett-Packard ( HPQ), which is desperate for growth, figures out a way to apply margin pressure. This would then put IBM in a tough situation, especially since the company just posted a 2% decline in service revenue. If there is a bright side, it's that overall revenue advanced 18% sequentially. While this may have been due to postponed orders placed in the fourth quarter, it's certainly an encouraging sign. Meanwhile, it's too hard to fall in love with the stock at the moment. The recent 7% surge was a surprise, and I expect a slight pullback to under $200 -- albeit temporarily. But over the long term, IBM's story has not changed. This is still a solid play on tech and the stock should reach $220 by the end of the year. The only thing that has changed, however, is growth has become overrated. But value in the bottom line still matters. At the time of publication the author had no position in any of the stocks mentioned. Follow @rsaintvilus This article was written by an independent contributor, separate from TheStreet's regular news coverage.