International Business Machines Corp. (IBM) Empire Slowly Crumbling

Sales decline continue to be a point of concern for International Business Machines Corp. (NYSE:IBM) as the company has only been able to grow its top line by 1% over the past ten years. Bloomberg’s Anurag Rana notes that in contrast, EPS numbers have continued to grow attributed to stock buy-backs that the company has been pursuing. The decline in sales has mostly been attributed to a series of restructuring that the company has been pursuing.

International Business Machines Corp. (NYSE:IBM) total liabilities thought to be worth $15 billion and due in the next three years continues to be another point of concern especially for CEO, Virginia Rometty.

 The decline in sales has mostly been attributed to IBM lagging behind its peers in pursuing growth opportunities that would have had an impact on sales.

“They have been undertaking a lot of restructuring over the last ten years. They have been shrinking their workforce from high-cost countries moving into low-cost countries. They have been exiting businesses they have been taking charges on that so there has been a lot of noises in this results,” said Mr. Rana

Acquisitions have also played a big role in International Business Machines Corp. (NYSE:IBM) experiencing a shaky run in the industry over the  past 10 years as most of them have not lived up to expectations in terms of returns. The company has already spent $2 billion on the cloud business with the acquisition of Soft layer awaiting to see if it will translate to desired earnings in the coming years

IBM continues to be seen as a laggard when compared to other tech companies that have consistently invested a big chunk of their returns on research and development. Bloomberg’s, Alex Barinka, notes that having generated more than $100 billion in revenues IBM only spent $6 billion in R&D compared to Microsoft Corporation (NASDAQ:MSFT) and Google Inc. (NASDAQ:GOOGL), which spent almost double  the amount.

“When you look at their investments you kind of ask where do they put their money, is it buybacks and dividends or is it into investing for the future of the business,” said Mrs. Barinka.

The restructuring process is poised to gain momentum in 2015 where International Business Machines Corp. (NYSE:IBM) may look to slim its wage bill with focus being given on running everything on the cloud. CEO Rometty might also be in danger of an axe depending on what she says in January about the company’s long-term prospects.

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