Founded in 1911 as a Computing-Tabulating-Recording Company, International Business Machines (IBM) needs to keep its finger on the pulse of the development of information technology not to be ousted by younger tech giants like Google, Microsoft, Apple, and Amazon.
With the advent of the internet, IBM needed to widen the spectrum of its products and services to retain its strong position in the tech field. Although the company lost its dominance, having only a 5% market share in 2021, as opposed to 68% shared by Microsoft, Amazon, and Google, it has many spectacular achievements to its credit.
IBM holds more patents than any other technology company and takes pride in employees who have earned five Nobel Prizes, four Turing Awards, five National Medals of Technology, and five National Medals of Science. And it had been the top tech company for longer than any of the titans dominating the market now.
Also called “Big Blue,” IBM indeed has an impressive pedigree. After starting to produce hardware at the beginning of the last century, it thrived in this business for decades and became the leading supplier of mainframe computers worldwide.
IBM’s gross income had inexorably grown in the last part of the twentieth century, expanding from $14.450 billion earned in 1975 to $71.940 billion made in 1995. The company’s revenue skyrocketed to the record level of $106.9 billion in 2011, after which it has steadily been declining amidst its transition into new technologies and lines of business.
To move with the times and survive the competition from other tech titans, IBM gradually shifted its focus from hardware to software and services. It began to devote more energy and money to cloud-based services and cognitive computing. IBM focuses now on offering primarily network services, application services, cloud services, digital workplace services, business processes and operations, technology consulting services, and AI services.
IBM Watson, a cognitive system capable of answering questions posed in natural language, has become the company’s high-visibility offering in the technology field. IBM has a strong faith in Watson, promoting the system as a benevolent digital assistant that would help hospitals, offices, factories, and farms. The company’s white paper referred to Watson as “the future of knowing.”
To see how well IBM has prepared for, what it calls, the new age of understanding, study the statistical data presented below.
IBM’s Outstanding Achievements
- In 1891, IBM, then called CTR, invented the computing scale that could show both the weight and the proportionate price of the product simultaneously.
- In 1888, the company invented the Time Clock, a device that records start and end times for hourly employees. Then, it designed the punch card base data processing machines. IBM is also responsible for inventing the magnetic stripe technology and the Universal Product Code.
- IBM designed and developed the first smartphone in the world, launching it in November 1992. Designed by IBM and manufactured by Mitsubishi Electric, the device had a touchscreen, a calculator app, email capability, 2 MB RAM, and 2 MB internal storage. There were about 50,000 of these smartphones sold for $899 a unit.
- IBM also revolutionized the computer industry, inventing DRAM, floppy disk, SQL programming language, ATMs, and hard disk drives.
- IBM also invented the first personal computer, known as the IBM PC. It was launched in August 1981 and acquired by many companies before PCs were commercialized.
- Since 1920, IBM has received 151,302 US patents. In 2019, the company received a staggering amount of 9,262 US patents. A year later, IBM beat the record of most US patents received by a business for 27 consecutive years. In 2021, IBM had 1,811 patents granted, while this year it has so far received 492 patents.
- IBM has long worked with NASA. Although IBM contributed to many missions, the most memorable is landing on the Moon in 1969. IBM’s responsibility was to develop the software and various programs, build computers, and streamline the mission for NASA.
- One of the fascinating inventions of IBM is the Scanning Tunnelling Microscope developed in 1981 for imaging at the atomic level. Gerd Binnig and Heinrich Rohrer received the Noble Prize in Physics in 1986 for the invention.
- IBM developed several chess computers, the most popular of which is Deep Blue. In 1996, Deep Blue beat the chess world champion, Garry Kasparov, who accused IBM of cheating. IBM declined Kasparov’s offer of a rematch.
- IBM invented the ASME (The Anatomic and Symbolic Mapper Engine) that offers a 3D interactive avatar of the human body to doctors in real-time, helping them visualize patients’ medical records.
- Big Blue made LASIK eye surgery mainstream.
- The company invented the IBM 2990 Blood Cell Separator, designed to harvest white blood cells from blood donors to support patients with leukemia. Later, IBM engineers improved the device, introducing its more sophisticated version, IBM 2997.
- IBM offers the IBM LinuxONE for cloud computing solutions. This powerful computer system can manage the work of 1000×86 servers simultaneously on a single platform.
IBM Statistics in 2022
- Over 90% of credit card transactions are processed by IBM mainframes.
- About 80% of global retailers use IBM retail solutions in their stores and for online sales.
- Over 80% of travel reservations are processed through an IBM product.
- Nearly 97% of banks worldwide use IBM products.
- There are 245,000 IBM employees worldwide in 2022.
- IBM employees live in 170 countries.
- There are 130,000 IBM employees in India.
- 3,000 researchers are working in IBM’s fifteen laboratories around the world.
- During the pandemic, between 2020 and 2021, IBM reduced the number of its employees by around 0.24%.
- Over 29% of IBM managers are women.
- There are an average of 108 applications per available job position at the company.
- Every day, IBM handles 70 billion security events.
- Every second, it manages 8.18 million security events.
- Over 27.3 million people use the IBM website every month.
- The IBM website has a bounce rate of 52.66%.
- In 2020, IBM’s earnings hit about $73 billion.
- In 2021, its global revenue diminished by 22%.
- Almost half of IBM’s revenue is generated in the North American market.
- IBM bought Red Hat for $33.4 billion.
- Cognos was purchased by IBM for $4.9 billion in 2008.
- Big Blue acquired SoftLayer Technologies in 2013 reportedly for $2 billion.
- To date, IBM has acquired more than 183 companies.
Facts about IBM’s Incumbent CEO, Arvind Krishna
- Arvind Krishna became IBM’s CEO in 2020, arriving with the mission to reverse the company’s decline. He is expected to create a new line of business that would rediscover IBM’s former glory.
- Before becoming the company’s CEO, Krishna worked as the Senior Vice President for IBM’s cloud and cognitive software. He developed IBM’s security software business.
- Krishna was the general manager of IBM Systems and Technology Group’s development and manufacturing organization. He also managed IBM’s acquisition of Red Hat and supervised its synergy with IBM.
- Krishna is the co-author of 15 patents and has been the editor of IEEE and ACM journals. He has received distinguished alumni awards from IITK and the University of Illinois, where he completed his PhD. His scholarly articles appear in numerous journals.
- Krishna leads the IBM business unit that provides the cloud and data platform. His responsibilities include IBM Research, IBM Cloud, and IBM’s security and Cognitive Application business.
- Krishna guides IBM’s overall strategy in core and emerging technologies including AI, quantum computing, blockchain, cloud platform services, data-driven solutions, and nanotechnology.
- IBM Chairman and CEO Arvind Krishna was paid $17.5 million for 2021, up from $17 million paid in the year before, according to IBM’s 2022 Notice of Annual General Meeting and Proxy Statement.
- In 2021, IBM’s board approved an annual incentive payment of $2.9 million to Krishna for the 2021 performance, which was 98% of the target.
- The estimated net worth of Arvind Krishna was about $27.4 million in June 2022. He also owns over 21,803 units of International Business Machines stock worth over $23,629,581.
IBM’s Annual Revenue from 2000 to 2022
Once an unparalleled tech giant, IBM has been struggling for the last decade. It had to adjust to the changing world by selling its low-margin businesses and investing in high-margin ones. To implement its strategies, Big Blue sold IBM WebSphere Commerce to HCL Technologies in 2018 and a part of the Watson Health business at the beginning of this year. Although IBM’s earnings are still high, they do not reach the levels hit between 2006 and 2012. The company’s annual revenue skyrocketed to $106.9 billion in 2011, whereas it was only $57 billion last year. In the third quarter of 2022, IBM reported earnings of $14.11 billion, which exceeded analysts’ prognosis of $13.51 billion. In the second quarter of 2022, IBM’s earnings dropped below expectations. IBM’s falling fortune is reflected in the table below:
IBM’s Annual Revenue since 2000 (in $US Billion)
|Year||Annual Revenue (in $US Billion)|
IBM’s Annual Revenue in 2022
Fortune smiled upon IBM in 2022. While this year proved to be the worst for the Nasdaq since 2008, IBM outshined other tech giants. Having soared 11%, IBM became one of only two US companies valued at $50 billion or more to make gains in 2022. It exceeded analysts’ estimates in every sector, boosted by higher-than-expected growth in its software and infrastructure divisions. Contrary to analysts’ prediction of a decline in IBM’s revenue, the company posted surprisingly high numbers in the fourth quarter and proved them wrong. The fourth quarter brought the company $16.7 billion in revenue versus $16.4 billion expected by analysts.
Nearly all segments gained in Q4. IBM’s software division boasted $7.29 billion, which amounts to 3% growth, and thus beat analysts’ estimates of $7.12 billion. Consulting brought IBM $4.77 billion in revenue, up 0.5% and slightly lower than the expected $4.8 billion. IBM picked up $4.48 billion in revenue in the fourth quarter in its infrastructure segment. This figure is higher than the $4.18 billion anticipated by analysts, registering a 2% growth. Revenue from IBM’s Z Systems line of mainframe computers surged a whopping 16% after the Z16 model became available in May 2022.
IBM’s net income rose 16% to $2.71 billion, allowing it to sound a note of optimism about its future in 2023. Unlike other companies complaining about a slowdown in business, IBM CEO Arvind Krishna said IBM did not follow the general downward trend noticeable in the tech sector. Krishna told the press that IBM’s clients want to do new development in 2023. To accommodate its clients, IBM plans to lengthen the useful life of servers and networking equipment in 2023. This move is believed to be also financially beneficial to the company. It might push IBM’s pre-tax income up by over $200 million.
IBM also intends to invest $20 billion in New York’s Hudson Valley area to make it the center of the future of quantum computing. It will spend money on research, development, and manufacturing of semiconductors, mainframe technology, artificial intelligence, and quantum computing. IBM’s next-generation quantum computer – Osprey – will feature 433 qubits. It will have the largest qubit count of any of IBM’s quantum computers and triple the qubits of the IBM Eagle processor unveiled in 2021.
Despite these grandiose plans for 2023 and success in 2022, IBM is cautious about its guidance concerning 2023 revenue growth. It expects it to be on the low end of its model for mid-single-digit revenue growth and around $10.5 billion in free cash flow. In 2022, its free cash flow amounted to $9.29 billion.
IBM’s Annual Revenue by Segment for 2020-2021
Big Blue has repeatedly changed the segment reporting to reflect its move away from being hardware, software, and service company towards becoming a cognitive solutions and cloud platform company. It changed its segment reporting in 2016, 2019, and 2021. The last change was dictated by IBM’s need to align its segment reporting with its platform-centric approach to hybrid cloud and AI. There are presently six segments in IBM’s business: Technology Services and Cloud Platforms, Infrastructure, Software, Consulting, Financing, and Other. In 2021, IBM’s software segment generated $24.14 billion of its global revenue of $57.35 billion. In 2022 so far, the Software division earned $5.77 billion and $6.2 billion, in the first and second quarters, respectively. The Consulting sector brought the company $4.83 billion in Q1 and $4.8 billion in Q2 of the current year. The revenue earned by the Infrastructure segment amounted to $3.22 billion in the first quarter and $4.0 billion in the second quarter. Revenues generated by IBM’s segments in the last two years are shown in the table below:
IBM’s Annual Revenue by Segment for 2020-2021 (in $US billion)
|Technology Services and Cloud||$25.00||$28.00|
IBM Q3 Earnings 2022
IBM reported third-quarter earnings after the bell on Wednesday, October 19, 2022 (See: IBM Earnings Report), beating analysts’ forecasts and reporting revenue that topped expectations. IBM announced earnings per share of $1.81 on revenue of $14.11. Analysts polled by Investing.com anticipated EPS of $1.79 on revenue of $13.54B.
“IBM stock is proving to be a good place to hide in the current market turmoil, mainly due to its revenue diversification. here are solid indications in this report that companies are increasingly investing in areas like cybersecurity and analytics, which make up about half of IBM’s revenue.”Haris Anwar, senior analyst at Investing.com.
IBM Q4 Earnings 2022
IBM reported its fourth-quarter earnings on Wednesday, January 25, 2023, with EPS of $3.60, $0.02 better than the analyst estimate of $3.58. Revenue for the quarter came in at $16.7B versus the consensus estimate of $16.13B.
“IBM is one of the few major tech stocks to deliver positive returns over the past year as it continues to make progress on its massive multi-year restructuring. The fact that the IT giant came in with good numbers despite the current macroeconomic and geopolitical climate sets an encouraging tone for enterprise software and tech companies reporting next week. IBM is poised to continue to benefit from its turnaround efforts, while taking advantage of strong demand for its hybrid cloud offerings, which will help power future earnings growth and allow it to focus on increasing shareholder returns.”Jesse Cohen, senior analyst at Investing.com.
Worldwide Market Share of Cloud Infrastructure Providers in Q2 2022
In the second quarter of 2022, IBM’s Cloud Infrastructure had only a 4% share of the worldwide market, lagging behind Amazon, Azure, and Google Cloud. The spending on global cloud infrastructure services soared to $55 billion and thus brought the industry’s total for the twelve months to more than $203.5 billion. Outshining IBM, Amazon and Microsoft together accounted for more than half of cloud infrastructure revenues in the three months that ended on June 30.
These figures show how much Big Blue fell from grace because, in the past, it used to enjoy the leading position. In 2017, IBM reported cloud revenue growth of 33% year-over-year in its first quarter earnings. In that quarter, its cloud revenue jumped to $3.5 billion. IBM’s total cloud revenue over the past 12 months that year hit $41.6 billion and catapulted IBM to the top of the list in the field of enterprise cloud. In the first quarter of 2017, today’s winners were obliged only to trail behind with lower earnings: Microsoft with $14 billion, Amazon with $12.20 billion, and Google with $10 billion. The latest market share of the main providers of cloud infrastructure can be seen in the table below:
Worldwide Market Share of Cloud Infrastructure Providers in Q2 2022
IBM’s Annual Net Income since 2009
Net income is defined as a company’s net profit or loss after it has accounted for all its revenues, income items, and expenses. IBM’s net income for the quarter ending on June 30, 2022, was $1.292 billion, which constituted a 5.06% jump year-over-year. The company’s net profit for the 12 months ending on June 30, 2022, was $5.588 billion, demonstrating an increase of 4.76% year-over-year. Last year, IBM’s annual net income reached $5.743 billion, a 2.74% surge from 2020. The first year of the pandemic brought IBM a net income of $5.59 billion, which was a whopping 40.73% drop from 2019. In 2019, IBM’s annual net profit was $9.431 billion, an 8.05% advance from 2018. The uneven trajectory of IBM’s annual net income is drawn in the table below:
IBM’s Annual Net Income since 2009 (in $US Billion)
|Year||Net Income in $US Billion|
IBM’s Number of Employees Worldwide from 2000 to 2022
IBM is the fifth largest employer in the United States. In 2021, the company employed 282,000 people worldwide. This year, the number of people working for Big Blue dipped to 245,000. As the company has lately been struggling, experiencing drops in its revenues, it is trying to restructure its business and be on par with such tech giants as Amazon, Microsoft, Google, and Apple. Hence the decline in the number of its employees in 2022.
In January 2023, IBM announced that it expected to cut about 3,900 jobs, representing 1.5% of IBM’s workforce. These cuts are related solely to reorganizing the company’s business units. They are related to neither IBM’s performance in 2022 nor its plans for 2023. The units affected are Kyndryl, an IT infrastructure services business, and IBM’s healthcare analytics business, an investment firm in the acquisition process.
The table below shows how the number of IBM’s employees has changed over the years:
IBM’s Number of Employees Worldwide from 2000 to 2022 (in 1,000s)
|Year||Number of Employees (in 1,000s)|
As the world is facing a probable recession, analysts believe that the enterprise tech sector will still continue going strong. People who are tech-savvy will turn to IBM in these unpleasant times to help them survive in a tighter economic environment and use the company’s software, consulting, and infrastructure to work productively during an economic decline. Big Blue can definitely provide the products and services people will need in the near future. IBM’s Q2 2022 results signify that technology spending in such spheres as AI, cloud, automation and networking is steady. The company beat anticipated results in the second quarter and boasted its first double-digit quarterly revenue growth in more than a decade. Automatic calculations conducted at Coinpriceforecast.com inspire faith in the company’s future and the cost of its stock. At the beginning of the year, IBM’s stock price was $116.92. At the time of writing, IBM is trading at $118.81, thus demonstrating a 2% jump from January 2022. Coinpriceforecast.com foresees that by Christmas, IBM will surge to $138. In the first half of 2023, the price of the stock might advance to $145 and end the next year at $155, adding 30% to today’s price. Whether or not these predictions prove to be correct, IBM will surely continue pushing technology and innovation forward, as it has spectacularly done since the beginning of the twentieth century.