IBM showed losses after Thursday’s Investors’ Day announcements of $40 billion revenue target.
The tech giant’s shares currently stand at $160.87 on the New York stock exchange, down 1.6% on Thursday’s trading as Investors’ Day announcements included an optimistic revenue target of $40 billion.
Ginni Rometty, IBM Chairman, President and Chief Executive Officer, and senior management presented the new forecast to IBM's investors, saying that the $40 billion would be achieved through ‘strategic imperatives’, namely the company’s sortie into cloud, analytics, mobile, social and security software.
These products will also have $4 billion spent on them in 2015. In return IBM has high expectations of the businesses; to improve revenue of $25 reported last year, i.e. 27% of the sales total of $93 billion, and take the figure up to 44% of total revenue, which is expected to report in at $90 billion in 2018.
This would represent a U-turn for IBM revenue versus earnings per share that has fallen for 11 straight quarters. Over the past 3 years, IBM has put moves into place to achieve positive revenues, selling many unprofitable businesses such as servers, semiconductors and cash registers.
However, it was in 2014 that IBM reversed its long-term goal of $20 per share in 2015. This figure changed to a range of between $15.75 and $16.50, though analysts are still forecasting a mid-range figure of $16.02.
The question is: Will investors see the long-term worth in the strategic product switch or be warned by the analysts’ lower figure on operating earnings per share? Markets on Friday are due to react to the announcements of the Thursday Investors’ Day.
MT4 chart: IBM
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