IBM Stock Price Forecast: International Business Machines Is Exposed To Further Downside
The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.
Summary:
- The debt load of International Business Machines is worrisome. IBM’s annual sales has been declining since 2011. It will be hard to pare down a total debt of $69.45 billion.
- IBM had to issue $20 billion in new debt (bond) last year to fund its $34 billion acquisition of Red Hat. This is why IBM’s long-term debt is now more than $52.4 billion.
- The debt-laden status of IBM plus its lingering inability to reverse the decline in its annual revenue is why its stock is undervalued and under-appreciated.
- Using debt to grow its cloud business is justified. However, Red Hat is not yet helping cloud revenue grow fast enough to mitigate the decline in IBM’s legacy enterprise business.
- We can only pray that this pandemic will encourage more companies to subscribe to IBM’s cloud computing solutions.