IBM is a bargain

Article Excerpt

IBM $174.40 (New York symbol IBM; Shares outstanding: 988.4 million; Market cap: $171.3 billion; TSINetwork Rating: Above Average; Dividend yield: 3.0%; www.ibm.com) continues to transition from selling mainframes and consulting services into high-growth areas such as cloud computing and analytics software that can process huge amounts of data. IBM has successfully shifted from unprofitable businesses to fast-growing ones in the past, but investors remain scared of the latest shift in a time of rapidly evolving technology and customer demands. That’s why the shares trade at just 10.8 times its forecast 2015 earnings. The company’s revenue fell 11.9% in the three months ended March 31, 2015, to $19.6 billion from $22.2 billion. However, if you adjust for foreign exchange rates and the sale of the company’s server business, revenue was flat. Cost cuts let IBM earn $2.91 a share in the latest quarter, up 8.8% from $2.68. We think IBM’s latest business transformation will be a success. Meanwhile, the company is…