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IBM Analysis Paper

IBM Analysis Paper - International Business Machines(IBM...

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International Business Machines (IBM) Analysis Paper - 2011 Martin Meister Boston University 1 COMPANY ANALYSIS PAPER INTERNATIONAL BUSINESS MACHINES (IBM) Martin Meister Boston University December, 2011
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International Business Machines (IBM) Analysis Paper - 2011 Martin Meister Boston University 2 Table of Contents Introduction .............................................................................................................................................. 3 Industry Sector Analysis ........................................................................................................................... 3 Industry Overview and Principal Competitors ..................................................................................... 3 Factors Affecting the Industry .............................................................................................................. 4 Industry Forces ..................................................................................................................................... 5 Company Analysis ..................................................................................................................................... 6 History .................................................................................................................................................. 6 Institution Overview ............................................................................................................................. 6 Products and Services .......................................................................................................................... 7 Competitive Strategy of the Company ................................................................................................. 9 Financial Analysis of the Company ........................................................................................................... 9 Financial Overview ............................................................................................................................... 9 Principal financial indicators .............................................................................................................. 10 Liquidity .......................................................................................................................................... 10 Assets Management ....................................................................................................................... 10 Debt Management ......................................................................................................................... 11 Margins and Profitability ................................................................................................................ 11 Market Value .................................................................................................................................. 13 Conclusions ............................................................................................................................................. 14 Appendix A ............................................................................................................................................. 15 Appendix B ............................................................................................................................................. 17 Resources ............................................................................................................................................... 18
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International Business Machines (IBM) Analysis Paper - 2011 Martin Meister Boston University 3 Introduction The main purpose of this paper is to analyze the company International Business Machines (IBM) from the standpoint of their fixed income securities and equity, and the Industry where is immersed. The analysis is going to be made from different points of view, passing through the financial states, products and services, strategic position among others, and how it relates with their environment. Industry Sector Analysis Industry Overview and Principal Competitors Because IBM has a large diversified range of product and services, and is present in more than 170 countries (IBM Form 10-K Annual 2010 Report, 2011) it´s not easy to analyze the markets where it acts. Although, we can see some main competitors: Hewlett-Packard (HP) and Dell, each of these companies with a different focus area. Dell makes most of its money on PC and server hardware, while HP is more diversified as the leader in PCs and Imaging & Printing as well as offering IT services. Since IBM relies heavily on its Software and Services segment, it mainly competes with HP in the servers and IT services markets and with Dell in the servers and software markets. IBM is the leader in servers, IT services, and software. Also IBM leads HP and Dell in all measures of profitability, largely because IBM is focused on high-margin sectors such as services and software and has gotten out of the thin-margin PC business, in which HP and Dell are still heavily involved. In addition to HP and Dell, IBM also competes with smaller IT consulting firms such as Accenture. However, IBM leads these companies by a large margin in terms of revenue, profitability, and scale as we see on the next table. Finally, we put the data of Microsoft because it can permit us compare IBM with a large TI Company, but that doesn´t compete in a lot of products.
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International Business Machines (IBM) Analysis Paper - 2011 Martin Meister Boston University 4 Table 1 Direct IBM Competitors Comparison - 2011 IBM ACN HPQ MSFT DELL Industry Market Cap 229.31B 37.63B 55.49B 216.19B 28.37B 9.00B Employees 436.085 236.000 N/A 90.000 100.300 1.55K Qtrly Rev Growth (yoy) 7.80% 23.00% -3.50% 7.30% -0.20% 8.10% Revenue (ttm) 106.45B 27.35B 127.24B 71.12B 61.73B 2.24B Gross Margin (ttm) 46.64% 30.66% 23.35% 77.20% 22.29% 38.61%
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