Ibm Case Study

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Competitive Position of IT Company:
International Business Machines (IBM) Case Study
I. Introduction: The Company that has been chosen for this case study is International Business Machines abbreviated IBM. This company was founded by Herman Hollerith in 1896 as the Tabulating Machine Company. It was later incorporated as the Computing Tabulating and Recording Corporation on June 16 1911. The Company was listed in the New York Stock Exchange in 1916 and one year later the Canadian and South American subsidiaries became what we know today as International Business Machines. (Wikipedia, the free encyclopedia, 2010) 1IBM's first U.S. trademark was for the name "THINK" filed as a U.S. trademark on June 6, 1935. "THINK" was the IBM philosophy Watson summarized with a motto consisting of one word. The name was attributed to a monthly magazine called Think that was distributed to the employees of IBM in the 1930s. A U.S. trademark for "IBM" was not filed until approximately 14 years later, on May 24, 1949. What began as a small computer company has now grown into a worldwide corporation that employs more than 400,000. 2IBM is second largest (by market capitalization) and the second most profitable information technology and services employer in the world according to the Forbes 2000 list with sales of greater than 100 billion US dollars. IBM holds more patents than any other U.S. based technology company and has eight research laboratories worldwide.

Market Share: In terms of market share, IBM (NYSE: IBM) announced that Gartner, Inc. has once again named IBM (NYSE: IBM) the worldwide market share leader in the application infrastructure and middleware software segment based on total worldwide revenue for 2009. (Comtex, 2010). According to the report (1), IBM was the leading software vendor with a 31.5 percent market share; nearly double that of its closest competitor. According to Gartner, IBM grew 8.1 percent in 2009, almost three times faster than the overall market. (Comtex, 2010).

To provide some statistics this fact see table below:
VALUATION MEASURES
 

Market Cap (intraday)5:
166.64B

Enterprise Value (May 19, 2010)3:
179.61B

Trailing P/E (ttm, intraday):
12.63

Forward P/E (fye Dec 31, 2011)1:
10.60

PEG Ratio (5 yr expected):
1.07

Price/Sales (ttm):
1.73

Price/Book (mrq):
7.59

Enterprise Value/Revenue (ttm)3:
1.85

Enterprise Value/EBITDA (ttm)3:
7.47

Taken from (Thomson, 2010)
Major Competition: The major competitors of IBM are Accenture (ACN), Hewlett-Packard Co. (HPQ), and Microsoft Corporation (MSFT). Even with competitors as strong as these are, IBM has still managed to remain on top. The tables further illustrate this:

DIRECT COMPETITOR COMPARISON
 

IBM
ACN
HPQ
MSFT
Industry

Market Cap:
166.64B
25.01B
109.73B
250.62B
5.31B

Employ­ees:
410,830
181,000
304,000
93,000
5.10K

Qtrly Rev Growth (yoy):
5.30%
-2.10%
8.20%
6.30%
8.10%

Revenue (ttm):
96.91B
22.33B
116.92B
59.54B
1.77B

Gross Margin (ttm):
45.75%
30.48%
23.44%
80.16%
45.75%

EBITDA (ttm):
24.03B
3.29B
16.22B
25.25B
390.00M

Oper Margins (ttm):
19.67%
12.61%
9.84%
38.43%
10.17%

Net Income (ttm):
13.73B
1.54B
8.05B
17.29B
N/A

EPS (ttm):
10.29
2.337
3.317
1.93
0.55

P/E (ttm):
12.63
16.80
14.11
14.82
19.93

PEG (5 yr expected):
1.07
1.17
0.85
1.65
1.19

P/S (ttm):
1.73
1.14
0.95
4.24
1.73

ACN = Accenture plc
HPQ = Hewlett-Packard Company
MSFT = Microsoft Corporation
Industry = Diversified Computer Systems

Taken from (Thomson, 2010)
Financial Stability: IBM is definitely a company that is financially stable. Being one of the top in the industry would attribute to this fact. In reviewing the financial reports for IBM in 2008 shows major stability. On Oct. 8, IBM /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 128.92, +0.06, +0.05%) came out after the market closed and said that it...
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