International Business Machines Corp. (IBM) Investing In Areas That Make Sense

Discussing International Business Machines Corp. (NYSE:IBM) on Bloomberg, market experts Brian White, analyst with Cantor Fitzgerald and Stocktwits co-founder and chairman, Howard Undzon, focused on the company’s investments and what the management needs to do to boost performance an create bigger shareholder value.

The discussion on IBM followed the company’s recently announced partnership with Apple Inc. (NASDAQ:AAPL), which would see the two tech companies join forces to drive growth of mobile in enterprise.

According to Mr. White, the growth strategy of International Business Machines Corp. (NYSE:IBM)’s CEO, Ginni Rometty, is likely to work and he believes the company is already investing in segments that make so much sense that should impress shareholders. He also noted that the company is undergoing transition and mobile enterprise appears to be in focus.

“IBM is going through a transition, and it was a first time IBM’s CEO ever made it to the Mobile World Congress, and she gave a keynote. They opened up to developers to develop mobile apps, and that is part of what she was talking about. The big areas of focus — big data, cloud, software, social and also mobility,” he said on International Business Machines Corp. (NYSE:IBM)’s breakthrough at Mobile World Congress as well as new business focus.

Although it appears as though International Business Machines Corp. (NYSE:IBM) is building free cash flow as the CEO is under pressure to make shareholders happy, Mr. White doesn’t think the company is doing so at the expense of its investment. In other words, he doesn’t think IBM is under investing.

However, Mr. White acknowledged that there is a problem with the stock of International Business Machines Corp. (NYSE:IBM) in that its growth trails the S&P by a huge margin.

“The problem is the stock is only up 3 – 4 percent since the end of 2011 when she took over in January 2012. S&P is up 56%. This is an issue with investors,” he observed.

In his contribution to the discussion, Mr. Undzon observed that International Business Machines Corp. (NYSE:IBM) has so much ahead of it that it only needs to be clear on its vision.

 “I think IBM is going to have to step up to the plate and really show their vision with some acquisitions and spend some money,” he said.

Disclosure: none