Is a badly run company with a safe, high-yield dividend a good investment for those who want a predictable payout yearly? An answer to that question might be IBM (NYSE: IBM). These are some reasons to avoid IBM shares. 

IBM’s yield is 3.53%. Based on the company’s balance sheet and earnings, that will not likely erode. However, the stock has disappointed because of IBM’s financial results. Its shares are up 43% in the last five years. The Nasdaq is up 114% over the same period. The stock of much larger rival Microsoft (NASDAQ: MSFT) is higher by 270%. IBM has a market cap of $172 billion. Microsoft’s is $3.1 trillion.

IBM has tried to bill itself as a force in cloud computing. While it is in the business, its market share is small. If there is a hallmark of successful tech companies now, they either have a large footprint in cloud revenue or are part of the early leadership in artificial intelligence.

According to CRN, IBM’s global cloud market share is 3%, which has fallen recently. Google’s share is 11%, Microsoft’s is 21% and Amazon’s (NASDAQ: AMZN) is 32%. CRN points out that “Amazon Web Services continues to be the dominant worldwide market share leader in cloud services, winning 32 percent share of the global market. AWS pioneered cloud computing and has led the market for over a decade.”

In the most recently reported quarter, IBM’s revenue was 4% to $17.4 billion. Net income was $3.3 billion, up from $2.7 billion in the same period the year before. Cash and cash equivalent were $13.1 billion.

In the most recent quarter, Microsoft had revenue of $62 billion, up from $52.7 billion in the same period the year before. Net income was $21.9 billion, up from $16.4 billion. Unlike IBM, Microsoft can argue that it is among the leaders in AI technology worldwide.

Will IBM ever be a significant force in global tech again? No. Will it continue to have a high yield and safe dividend? Yes

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