IBM can’t get any respect. Despite strong and improving profitability, IBM stock has been a dog for almost twenty years now. Remember, it traded as high as $125/share in the early 2000s. More than 15 years later, it has only advanced to $150/share now.  

Following the financial crisis, IBM appeared to prosper, with the stock reaching as high as $200 in 2012. Since then, it’s been a lost six years for the company, even as the stock market in general and tech shares in particular have soared.

What’s gone wrong for IBM, and is there a viable path to the stock recovering going forward?

Following the financial crisis, IBM appeared to prosper, with the stock reaching as high as $200 in 2012. Since then, it’s been a lost six years for the company, even as the stock market in general and tech shares in particular have soared.

What’s gone wrong for IBM, and is there a viable path to the stock recovering going forward?

Struggling Business Outlook

IBM faces a simple yet persistent problem: its core business is slowly disappearing. IBM built a sterling reputation over the years in its primary enterprise IT market. The company was the one-stop shop for mainframes and big mission-critical computing tasks.  

However, in 2018, that legacy market is less and less important. Nowadays, much of that activity is going to the cloud, where there are more nimble and respected competitors than IBM.  

That said, IBM’s position isn’t actually as bad in the cloud as you might have heard. And the slump in revenues has finally ended, as IBM has showed revenue growth over the past few quarters for the first time since 2012. But IBM stock remains at a discount valuation nonetheless.  

IBM faces a simple yet persistent problem: its core business is slowly disappearing. IBM built a sterling reputation over the years in its primary enterprise IT market. The company was the one-stop shop for mainframes and big mission-critical computing tasks.  

However, in 2018, that legacy market is less and less important. Nowadays, much of that activity is going to the cloud, where there are more nimble and respected competitors than IBM.  

That said, IBM’s position isn’t actually as bad in the cloud as you might have heard. And the slump in revenues has finally ended, as IBM has showed revenue growth over the past few quarters for the first time since 2012. But IBM stock remains at a discount valuation nonetheless.