Tides of Technology: Understanding IBM's Seasonal and Cyclical Trends
Analyzing IBM through the Lens of Cycles and Seasonality
Introduction
Did you know that International Business Machines (IBM) is one of the oldest IT companies in the world? It was founded in 1911 and is headquartered in Armonk, New York. However, its origins date back even further. On January 8th, 1889, Herman Hollerith received a patent for his electronic tabulating machine. His Tabulating Machine Company eventually merged with three others to become Computing-Tabulating-Recording Co. and later International Business Machines, now commonly known as IBM.
IBM has always been at the forefront of IT, survived many economic downturns, and may be an interesting play for long-term investors as it provides a handsome dividend (Yield of 4.64% at current price level) and has paid an increasing dividend for over 28 years at a stretch.
Many Fortune 500 companies have long-term contracts with IBM, with services ranging from IT services, Global Business Services, Cloud Applications, Cloud Management, Cloud Platforms, Cloud Infrastructure, Data and AI, Security, and more.
IBM- Q2 2023 Results
The latest Q2 2023 Earnings report from IBM contained positive and negative news. While the company exceeded profit expectations, the revenue decline was not as low as expected and was mainly caused by the mainframe business's hardware business and product life cycles. However, the software and consulting segments experienced significant growth. It's worth noting that IBM's full-year guidance remains the same.
Looking at the cycles, it appears IBM hit a 30-year low at the beginning of 2023. This indicates that a longer-term cycle may have begun a decade after the all-time high in March 2013. In this update on IBM for the premium subscribers, I revisited my recent IBM analysis (click on the link). In this article I revisit the shorter- and longer-term cycles, such as the 1-year, 5-year, 10-year, and 30-year cycles unfolding in IBM stock charts.