is one company that is progressing at a high speed in the data analytics segment, and expects to increase its customer base by 40% this year. The company estimates 2013 revenues to be around $260 million- $270 million. But it is a bit expensive at present, with a price to sales ratio of 20.14 and a forward P/E of 394.27.
is also going full steam in the cloud computing business. Last month it introduced
a new line of servers named HP Moonshot which are expected to consume 89% less power and cost 77% less than the traditional servers. The company believes that social-media, cloud-computing and e-commerce sites, which are equipping data centers with millions of servers, will be the targeted clients as the mushrooming online traffic creates demand for efficient data storage and handling equipments . The server business is a $51.3 billion market, and Hewlett-Packard Company (NYSE:HPQ) is second to IBM in this business. The company expects Moonshot to represent around 15% market share by 2015.
But Amazon.com, Inc. (NASDAQ:AMZN):
remains the leader at present. Amazon.com, Inc. (NASDAQ:AMZN)’s web services generated over $600 million last quarter, and analysts expect this segment to generate over $3.8 billion this year. A noted analyst projects profit margins to be more than 50% in this segment, which means Amazon.com, Inc. (NASDAQ:AMZN) is profiting very heavily from this business.
IBM has an impressive history of increasing shareholders wealth, having returned over $150 billion since 2000 through share buy-backs and dividends. It plans to repurchase $50 billion worth of shares and pay dividends worth a total of $20 billion by 2015. This is one of the key reasons why IBM is one of Warren Buffet’s biggest holdings.
IBM’s average earnings growth rate for the next five years is pegged at 10.5%. Analysts at Zacks have a long-term (2011-2015) EPS target of $20. It currently trades at 2.20 price to sales ratio and a forward P/E of 11.08. The company expects its geographical revenues to account for 30% of its geographic revenues b y 2015. And the $20 billion that it plans to spend on acquisitions by 2015 is expected to contribute $0.90 in EPS by 2015.
IBM seems to be stable at present with a steady growth ahead. Its foray into high margin businesses will fuel its growth going forward. By the time IBM gains a fat share in the new businesses, its steady dividend and buyback programs will ensure shareholders are getting a healthy return for their investment. That’s why long term investors looking for a steady return without much volatility should definitely consider IBM.
The article Where Does IBM Stand in the Long Term Scheme of Things? originally appeared on Fool.com is written by harsha lohia.
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