The technology company IBM has held on to the market quite steadily, even though the S&P 500 in 2020 declined significantly. The company will report its first-quarter results early next week. Coronavirus proliferation and quarantine measures to contain it do not seem to threaten IBM's results shortly. The company has not reduced its financials, but the IBM press office reports how the company is helping the world confront the virus. The company's newly appointed CEO, Arvind Krishna, said the pandemic will accelerate the adoption of cloud systems and artificial intelligence at the global level, although he left out the question of whether the virus will help or harm IBM's results in 2020.
IBM is transforming its business model from 2012 by changing the company's policy on AI and cloud services. Under former CEO Ginni Rometti, IBM sold most of its computer hardware to large investments in software and services. The largest of these changes in strategy came in 2019 when IBM closed a $34 billion buyout of Red Hat open-source software.
Former CEO of Red Hat, Jim Whitehurst, is now president of IBM, focusing on the corporate strategy of Big Blue. Chief Executive Officer Arvind Krishna is an expert in quantum computing, block-chain platforms, and artificial intelligence. The weight of both these companies in the same management team gives IBM a unique competitive advantage and a clear strategy for the future. IBM specializes in artificial intelligence and cloud computing at a time when both of these markets seem perfectly mature for explosive growth.
A steady increase in dividend payments over the years plus the relatively cheap share price over the last decade adds 5.3% to the generous dividend yield. These figures will change when IBM reports on next week's earnings, but analysts do not expect that the coronavirus pandemic will cause much damage.
On this basis, the purchase of IBM shares looks like a great investment idea. The company should go on progressive growth in a post-coronavirus recession.