Investing in IBM Company Paper Example

International Business Machines has returned to its revenue growth after coming to an end of a five-year streak declines. The turnaround has been due to the launch of new mainframe system implemented in the strategies of the company including the cloud computing and security. Its investment briefing provided long-term financial goals to the stakeholders. Therefore, IBM gave additional details on its expected targets for the long-term model. The transformation of the company involves the investments in cloud computing and artificial intelligence(Timothy Green, 2018). With the long-term model, there has been growth in revenue as well as growth in income. Besides the expansion in the growth of revenue and income, IBM expects the profitability of its improved business services.

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IBM is reinstating its growth without slowing down on the investments. It continues to build out its business services with steady investments that expect more acquisition. IBM has the goal of starting its investments with expected revenue growth returns and margin expansion. IBM is expected to adjust its EPS by appreciating the higher expected tax rates with a solid long-term investment (Timothy Green, 2018). The funneling profits of expanding the business serve the IBM expansion reasons with income-generating stocks. The free cash flow of IBM helps it acquire new physical assets and maintain the assets with the change in the working capital. The payout ratios in IBM guide it in assessing the position of the company hence sustaining the growth of the dividends. As a result, the company's dividend distribution will reflect the cash generation across the past fiscal year. Since the IBM payout history increases on an annual basis, the company opts to increase its payout through investment ideas that are reasonable to the expected dividend growth.

The binary computing world has led to the breathing of big blue with lovable green screen machines in businesses. IBM has stood by its corporate mouth agape despite the flooding of PC clones in the market. Although IBM abandoned the PC marketplace in 2005, it is currently investing in it with an estimate of about $178 billion annually (Lou Carlozo, 2018).Looking at the future has assisted IBM to boost its early innings hence achieving the artificial intelligence with the digital leader technology. Considering the company's innovation will enable the IBM front-running position to revive the business with the blockchain management.

IBM is expected to continue paying dividends for it increase its sustainable growth. The strong cash flow will be effective in IBM if it gains the ability to buy back the shares hence growing faster in the market in the next five years. Although IBM faces an uphill battle with its shareholders, the preferred holding period will increase the commitment of the stakeholders hence reducing the troubles caused. IBM in the past mismanaged the PC business it created. However, it has been forced to turn back to it due to the AI competitors (Lou Carlozo, 2018). With over 380,000 employees, IBM has to adjust its high innovation so as to work faster hence getting the marketplace without much friction. The counter-argument of IBM attracts professional services to the market. The new technology in IBM which entails machine learning that uses the experience of educated professions. As a result, the company makes better decisions that improve the efficiency in the running of the business.

References

ADDIN Mendeley Bibliography CSL_BIBLIOGRAPHY Lou Carlozo. (2018). IBM Stock Is at Computing's Crossroads | Dividends | US News. Retrieved November 12, 2018, from https://money.usnews.com/investing/dividends/articles/2018-05-08/ibm-stock-is-at-computings-crossroads

Timothy Green. (2018). Here's How IBM Expects to Grow. Retrieved November 12, 2018, from https://www.fool.com/investing/2018/03/12/heres-how-ibm-expects-to-grow.aspx