Ibm and Microsoft Financial Statement Analysis
PACE UNIVERSITY- ACC-615 DR. FINN
Financial Statement Analysis
IBM and Microsoft
Bill Jacoby 4/20/2010
Financial Statement analysis for two comparable companies; IBM and Microsoft
ACC-615 Dr. Finn; William Jacoby
Microsoft Corporation is the world’s largest software company. Microsoft has five operating segments; client, server and tools, online business services, Microsoft business division and entertainment and devices division. They develop personal computing software including the Windows operating system which runs 90% of all PC’s currently in use and the Office application suite and the XBOX video game system. International Business Machines Corporation was founded in 1911 and has grown and adopted over nearly a century. IBM is nick-named “big blue” by Wall Street in reference to it being a quintessential blue chip stock. IBM currently is an information technology company that has four business segments; hardware, financing (to facilitate clients acquisition of IBM systems, software and services), services, software. I thought these two dominant, global, large-cap technology companies would be interesting to compare. First let us review IBM. IBM has continued to deliver steady revenue over a long period of time. They offer a wide array of technology products. Since 2000 IBM has added $12 billion to pre-tax profit base, increased pre-tax margin 2.5 times and quadrupled earnings per share and more than doubled free cash flow. They have achieved this by transforming over the last decade to emphasize software and services and reducing the hardware segment. IBM pursued this strategy a decade ago because they felt the global IT industry and broader world economies were changing to demand integration, computing architecture, data intelligence and innovation. IBM has successfully capitalized on recognizing the demand for products and services they had an advantage in. They exited some of their hardware business, selling the PC hardware business to Lenovo
Financial Statement Analysis
IBM and Microsoft
Bill Jacoby 4/20/2010
Financial Statement analysis for two comparable companies; IBM and Microsoft
ACC-615 Dr. Finn; William Jacoby
Microsoft Corporation is the world’s largest software company. Microsoft has five operating segments; client, server and tools, online business services, Microsoft business division and entertainment and devices division. They develop personal computing software including the Windows operating system which runs 90% of all PC’s currently in use and the Office application suite and the XBOX video game system. International Business Machines Corporation was founded in 1911 and has grown and adopted over nearly a century. IBM is nick-named “big blue” by Wall Street in reference to it being a quintessential blue chip stock. IBM currently is an information technology company that has four business segments; hardware, financing (to facilitate clients acquisition of IBM systems, software and services), services, software. I thought these two dominant, global, large-cap technology companies would be interesting to compare. First let us review IBM. IBM has continued to deliver steady revenue over a long period of time. They offer a wide array of technology products. Since 2000 IBM has added $12 billion to pre-tax profit base, increased pre-tax margin 2.5 times and quadrupled earnings per share and more than doubled free cash flow. They have achieved this by transforming over the last decade to emphasize software and services and reducing the hardware segment. IBM pursued this strategy a decade ago because they felt the global IT industry and broader world economies were changing to demand integration, computing architecture, data intelligence and innovation. IBM has successfully capitalized on recognizing the demand for products and services they had an advantage in. They exited some of their hardware business, selling the PC hardware business to Lenovo
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