IBM Shares Down 14% in 2017, While Amazon’s Rise 31%

By Douglas A. McIntyre Published Aug 15, 6:55AM EDT

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Amazon.com Inc.’s (NASDAQ: AMZN) AWS cloud business is widely considered the leader in the market. Several companies have decided to chase it in this sharply growing market. Among those that have been least successful, based on Wall St.’s evaluation, is International Business Machines Corp. (NYSE: IBM), which has had 21 quarters of negative revenue growth. In a critical measure of IBM’s health in the cloud segment, which it says it absolutely critical to its future, its shares are off by 14% this year to $142. Amazon’s shares are higher by 31% to $983.

Granted, both IBM and Amazon are in other businesses. IBM sells hardware, software and consulting and financial services. At the same time, IBM promotes cloud computing as the core of its future success. In her lead quote for IBM’s most recent quarterly report, IBM’s board chair, president and chief executive officer, Ginni Rometty, said:

In the second quarter, we strengthened our position as the enterprise cloud leader and added more of the world’s leading companies to the IBM Cloud. We continue to innovate, adding regtech capabilities to our portfolio of Watson offerings; developing solutions based on emerging technologies such as Blockchain; and reinventing the IBM mainframe by enabling clients to encrypt all data, all the time.

She barely mentioned IBM’s other businesses, as revenue fell 5% to $19.3 billion and net income by 5% to $2.3 billion.

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Amazon, on the other hand, barely mentioned AWS when it announced earnings, concentrating rather on its e-commerce strength. Amazon’s revenue rose 25% in the second quarter to $38 billion. Profits were weak, with net at $197 million, down from $857 million in the same quarter a year earlier. News about AWS was buried well down in the press release. However, investors took note that AWS posted revenue of $4.1 billion, up from $2.9 billion in the same quarter a year ago — a 41% growth rate. Operating income for the unit was $916 million, up from $716 million in the second quarter of 2016.

IBM has tried to take bragging rights about its cloud business. Amazon has not. The reality is that IBM does not deserve them.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.