IBM Remains Weak and Small

By Douglas A. McIntyre Published Jan 25, 6:45AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

International Business Machines Corp. (NYSE: IBM | IBM Price Prediction) revenue rose only 4% year over year in the fourth quarter to a modest $17.4 billion. Net income rose from $2.9 billion in the year-ago period to $3.3 billion. In contrast, Microsoft Corp.’s (NASDAQ: MSFT) projected revenue for the quarter about to be reported is $58 billion, up approximately 14%. Expected net income is over $20 billion, a gain of more than 10%. IBM’s market cap is $165 billion, while Microsoft’s is $3 trillion. (Apple could buy these 25 huge companies with cash right now.)

IBM asked investors to look at its hybrid cloud and artificial intelligence (AI) businesses. Several companies dwarf these, including Microsoft, based largely on its relationship with OpenAI. IBM’s cloud business is a fraction of the size of those divisions of Microsoft and Amazon.com Inc. (NASDAQ: AMZN).

IBM’s stock has risen 36% over the past five years. Microsoft’s share price is up 276% in that time.

In 1975, IBM was the largest tech company, ranking ninth in the Fortune 500. That was the year of Microsoft’s founding. Amazon was founded in 1994.

Among the major technologies released since the decade’s start, IBM has had little or no part of these or entered them well before the industry leaders. These included cloud computing, smartphones, e-commerce and search.

The headlines about IBM’s recently released quarterly results were based on the impression the company had a good quarter. Put into the context of the rest of the big tech industry, that is untrue.

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.