IBM’s Strategic Initiatives, Part 2: How Much Value Can Be Added To IBM’s Stock Due To strategic Initiatives?
International Business Machine (NYSE:IBM) reported that its annualised revenue run rate from its strategic initiatives, which includes analytics, cloud, mobile, security and social, was $31 billion in Q2. In Part 1 of this article, we estimated that IBM’s strategic initiatives will add $18 billion to topline and $3.49 to EBITDA. Based on the total addressable market (TAM) and incremental free-cash-flow (FCF) from new revenue, we expect that IBM stock value can be $33.58 higher. For our calculation uses IBM’s weighted average cost of capital (9.75%) as the discount rate. Our calculation is as follows:
Have more questions about IBM? See the links below.
- What’s IBM’s Revenue And Earnings Breakdown?
- By What Percentage Did IBM’s Revenues And EBITDA Decline In The Last Five Years?
- How Has IBM’s Revenue Composition Changed Over The Last 5 Years?
- How Will Shift To Cloud Impact IBM’s Revenue & EBITDA Growth In The Next 3 Years?
- What’s IBM’s Fundamental Value Based On Expected 2015 Results?
- How Has Transition From Hardware To Cloud Impacted Capex In The Last Five Years?
- How Much Can Watson Add To IBM’s GBS Revenue And EBITDA In 2022?
- Why Did IBM’s Software Revenue Decline In 2015?
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for IBM