But the blame lies with past leadership as much as with Rometty. A company as large as IBM takes years, not quarters, to reconfigure its revenue mix. Even so, some observers think the company has seemed too slow to respond. The good news is that some green shoots from Rometty's current plan may finally be emerging.
Today, though sales and profit declines from its legacy businesses continue to place downward pressure on overall results, IBM has seen impressive growth in business segments it has dubbed as "strategic imperatives" -- cloud computing, artificial intelligence, data analytics, mobile, social, and security. Last year, strategic imperatives accounted for about 38% of IBM's total revenue, and the combined businesses continued to grow in Big Blue's most recent quarter, rising 12% year over year.
IBM's stock is tantalizingly cheap at 12 times earnings, particularly for a company that has grown its dividends annually for 16 consecutive years. The company faces competition in many of the markets that make up its strategic imperatives -- Amazon.com dominates cloud computing, for example. However, given the company's immense financial resources and research prowess, it seems unlikely IBM will fade into irrelevance any time soon, making it an interesting option today for investors willing to hold IBM stock over the long term.
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Andrew Tonner owns shares of Apple. The Motley Fool owns shares of and recommends Amazon.com and Apple. The Motley Fool owns shares of Microsoft and has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
