As a company with more than 100 years of history, the International Business Machines Corporation is trying to reinvent its mission and adjust its role to the challenges of the Internet era. Aggressive competitors now dominate the strategic business sectors -hardware, software, analytics and services – that made IBM once the biggest IT company in the world.
After launching a new strategy the Big Blue was rewarded by investors who valued the potential for a well-established company pursuing a more innovation-oriented approach: since the beginning of this year, IBM has recorded a +15.43% of its year-to-date stock price reaching $158.
As the chart shows, the value of IBM’s shares has particularly shrunk in the last two years picking up again in the first two quarters of 2016 and stabilizing around the 2011 value.
Facing a loss in the share value accompanied by a year-to-year decline in revenues for 17 straight quarters, IBM set up new “strategic imperatives” and invested on research and development, in particular computer clouding, big data and in the so-called cognitive solutions, which include artificial intelligence and machine learning.
“To move our clients into the future, we’ve been making significant changes to our business,” said Martin J. Schroeter, senior vice president and chief financial officer during the first quarter call.
This is where the challenge lies: a well-established company with an important portfolio of clients is looking for the right formula to keep its heritage and be up to the task in a continuously evolving market.