Is International Business Machines Corp. (IBM) Still a Solid Tech Play, Despite Slowing Growth?

Rometty touched upon some very important topics, particularly as they relates to “higher value business.” Essentially, this was the key to this quarter. Granted, IBM improved sequentially in several areas. However, as I’ve pointed out, losing market share to rivals was offset by improved margins, which is precisely what Rometty is referring to — it’s brilliant. But can it continue?

Moving forward
Clearly IBM has sound leadership. And without question the company is still a force in technology. Unfortunately, the growth that the Street expects has not been there. However, the company understands this. To that end, IBM has been on an acquisitions spree – spending well above $16 billion over the past five years. While some have worked, several have not.

However, there are still opportunities. And the decline in its storage business is a perfect example. NetApp would make a great acquisition for IBM. As the future of the cloud takes full shape and with IBM’s expertise in data analytics, it makes perfect sense to shore up the data storage segment. Besides, IBM has always prided itself on being a one-stop shop.

Plus, this would be one more advantage that it can launch against Oracle and Salesforce. In the meantime, there is plenty to be excited about as the company appears more optimistic about what lies ahead for fiscal 2013. IBM is projecting non-GAAP EPS of at least $16.70, which is above Street estimates of $16.63.

Big Blue’s bottom line
IBM is still doing what it has to do to please investors. Even though the growth rate is far from exceptional, the company consistently delivers where it matters the most — on the bottom line. Since the report, shares have soared as much as 6%. For IBM and its investors, the good news there is still more room for the stock to run, as $225-$230 per share is certainly attainable. IBM would only need to grow cash flow at a 5% rate over the long term. This would represent a gain of almost 20%. At currently levels, patient investors should do well believing in Big Blue.

The article Is IBM Still a Solid Tech Play, Despite Slowing Growth? originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus has no position in any stocks mentioned. The Motley Fool recommends Salesforce. The Motley Fool owns shares of EMC, International Business (NYSE:IBM) Machines, and Oracle.

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