The year is nearing its end, and now's a good opportunity to look at what happened throughout 2012 to the stocks you follow. If you know the important things a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.
Today, I'll look at IBM (IBM +0.12%). As the most influential member of the Dow Jones Industrials (^DJI 1.01%) because of its high per-share stock price, the pioneering technology leader has had more than 100 years of bringing innovative new products to business users and consumers. Along the way, though, it has had to reinvent itself numerous times to keep up with changing trends. Will IBM continue to stay nimble? Read on for more on what moved shares of IBM in 2012.
Stats on IBM
|
Year-to-date stock return |
6.1% |
|
Market cap |
$217 billion |
|
Total revenue, trailing 12 months |
$104.7 billion |
|
Net income, trailing 12 months |
$16.3 billion |
|
1-year revenue growth |
(1.7%) |
|
1-year earnings growth |
4.1% |
|
Dividend yield |
1.8% |
|
CAPS rating (out of 5) |
**** |
Source: S&P Capital IQ.
Why has IBM risen slightly this year?
Many longtime investors know IBM as a pioneer in creating hardware. From electric typewriters and mainframes to PCs, IBM has been at the forefront of innovation for decades.
Yet 2012 is a great example of how IBM never lingers long enough in one niche to become completely dependent on it. As we saw yesterday, headwinds in PC demand have wrought havoc on PC-microprocessor specialist Intel (INTC 6.53%), leaving the company scurrying to find ways to promote PC-offshoots like Ultrabooks as well as gaining entry into the mobile-device market.
Rather than getting stuck in PCs, though, IBM has pushed outward in multiple directions for years. Most recently, it has made a commitment to "big data," looking to press forward into innovative markets such as cloud-computing storage solutions and data processing. Although rival Oracle (ORCL 2.25%) as well as fellow Dow stocks Cisco Systems (CSCO +0.40%) and Microsoft have followed in IBM's footsteps, they're largely behind IBM in terms of level of advancement.
Still, one reason IBM's stock is lagging behind the Dow's superior return is that its revenue has started to decline recently. In the third quarter, sales fell 5%. Yet with IBM's competitors also having a lot of trouble, IBM is holding up reasonably well, all told.
In the long run, IBM appears to remain on track to meet its roadmap goals of $20 per share earnings by 2015. In fact, if big tech can catch an updraft, IBM could easily see its shares soar from current levels.
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