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Flat Revenue Growth and a stagnant Stock Price.
Since 2000, the company has sold off businesses that collectively generated $24 billion in sales, including Personal Computers and Servers to Lenovo. Good. These are no longer material to the IBM Core.
Interestingly IBM has invested $24 billion in the data analytics business, including $17 billion on 30 acquisitions. In 2013, the business generated nearly $16 billion in revenue. Good. These are Sources of Profitable New Growth.
The street sees this as a “timing & execution” discount as the new Big Data Category and IBM’s non leadership positioning, integration and execution efforts within the Category holding back the stock price.
A classic case of what happens when Internal Innovation slows and needs to be replaced with high cost – high effort M&A.
You have to hand it to Larry Ellison. By far the most savvy enterprise software entrepreneur in the valley. If he was not dishing out the seed money to cloud startups with ex execs such as Benioff’s Salesforce and Nelson’s NetSuite, he goes big on M&A with companies founded by ex-execs at Siebel and PeopleSoft. The golden lining for Larry is that in the end (game), they all come home to Papi.