

IBM Outperforms Even Apple: Smarter Planet, Big Data and Cloud Power the Future - Sato
http://wikibon.org/blog/ibm-outperforms-even-apple-smarter-planet-big-data-and-cloud-power-the-future/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+WikibonBlog+%28Wikibon+Blog%29

======
nl
IBM is a great company and all, but the idea that IT services will outperform
all other IT related sectors is _interesting_..

Services are - by their nature - always related to head count. In the old days
- 10 years ago - Microsoft dominated financially because they could resell
shink-wrapped software better than anyone else.

Customising software can be lucratitive, but it is difficult to make it as
profitable as reselling copies of the same bits over and over again.

Indeed - one could argue that Apple has simply out-Microsofted Microsoft now.
They resell the same software _and hardware_ and make almost MS-like profit
margins (even taking the higher material costs of hardware ino account)

~~~
mattmanser
_Customising software can be lucratitive, but it is difficult to make it as
profitable as reselling copies of the same bits over and over again._

The amounts these companies charge is obscene, plenty of companies spend
several orders of magnitude more money on customisation and consultancy than
they do on generic software licences and hardware.

And then you get the nice juicy recurring support contract on top of that too.

Also Apple sells hardware, which is not the same bits over and over again.

------
tybris
Funny that he's praising IBM for something as meaningless as a YTD stock price
change, and then goes on to complain about Amazon and conveniently ignores
that its stock price outperforms IBM at every level.

<http://www.wolframalpha.com/input/?i=ibm+vs+aapl+vs+amzn>

~~~
bitdiddle
What's even more impressive is that IBM pays a dividend, which in volatile
equity markets and low interest environments is a very good thing.

Apple and Amazon do not.

~~~
notirk
And dividend payments are represented in the stock price graph as a reduction
of the price (on the ex-dividend date), making the return to investors
actually higher than what is shown in the graph.

~~~
onemoreact
Any graph that ignores dividends is useless for comparing companies over time.
Unfortuantatly, you normaly pay taxes on dividends so there is no simple way
to add them back into the stock price. Which, IMO is why it's best to compare
earnings not stock price.

~~~
meric
US should implement dividend imputation. With it, dividends are no longer
taxed at both the company level and the share holder level - they are taxed
only in the latter. How it works is when a company pays a dividend, it is
counted as taxable income as normal; _then_ , the shareholder will be able to
claim back the part of the dividend the company has already paid tax on.

When a share market lacks dividend imputation, few companies pay a dividend,
and rather resort to "share buy backs". Shareholders then are encouraged to
aim for profit from capital gains (share price rising), rather than passive
investment (collecting dividends). Implementing dividend imputation will
neutralize this effect.

See <http://en.wikipedia.org/wiki/Dividend_imputation> laws

~~~
bitdiddle
Interesting, I need to read up on this. I would have thought compensation
plans are what drive share buyback programs rather than the tax handling of
dividends. Thanks!

~~~
meric
>> compensation plans are what drive share buyback programs

Sometimes, but without dividend imputation you really can't tell, both
shareholders & employees who are affected by these compensation plans based on
stock price, are incentivised to pay out profits via share buybacks as opposed
to dividends.

In Australia, where there is dividend imputation, you still sometimes see
companies do share buy backs, (that could be driven by compensation), but
mostly you see many large established companies paying out 50% or more of
their profits as dividends.

Here is a very large (in Australian terms) company that pay out around $1.3 of
dividend a year and whose price is $13.90.
[http://au.finance.yahoo.com/q?s=qbe.ax&ql=1](http://au.finance.yahoo.com/q?s=qbe.ax&ql=1)
(I'm not advocating anyone to buy it. It is an insurance company very exposed
to the US economy & also recent natural disasters. )

------
tom_b
IBM is _very_ good at acquiring companies, rebranding acquired products as Big
Blue offerings, and then pumping these down the established sales pipe to
their enterprise customers. Notice that global services is the majority of
their revenues - 57% -
([http://www.wikinvest.com/stock/International_Business_Machin...](http://www.wikinvest.com/stock/International_Business_Machines_%28IBM%29))

Oh, if only I could hack into that beautiful stream of out-sourced services
money . . . (hint, hint)

------
alperakgun
I will be surprised if IBM soon becomes the most valuable company, a very
small probability for example...if iphone-n turns out to be a flop microsoft
struggles in post of era.

