IBM: Slow and Steady Wins the Race

IBM (IBM) has been a very disappointing investment for the past year. The shares are lower in the face of a strong market rally. The company continues to miss revenue growth targets as its hardware unit falters. In particular, its commodity x86 server business struggles as customers demand aggressive price cuts amid rising competition. IBM's mainframe hardware sales have also been weak during this period, although that is more of a function of an off-cycle year.

Despite these difficult revenue trends, IBM has been able to grow its earnings. The biggest contribution to earnings growth has come from an aggressive share repurchase strategy, with shares declining 2-4% per year. The company has also benefited from a positive mix-shift strategy to higher-margin software and service offerings and aggressive cost reduction programs....391 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.