International Business Machines Corporation (IBM) Bundle
A Brief History of IBM
Company Overview
International Business Machines Corporation (IBM) was founded in 1911. As of 2024, IBM is a leading global technology and consulting company, with a focus on cloud computing, data analytics, artificial intelligence, and enterprise solutions.
Financial Performance
For the first nine months of 2024, IBM reported revenue of $45.2 billion, compared to $44.5 billion in the same period of 2023, reflecting a year-over-year growth of 1.6% .
Net income from continuing operations was $3.1 billion, which includes a one-time, non-cash pre-tax pension settlement charge of $2.7 billion .
Operating (non-GAAP) earnings for the same period were reported at $6.0 billion, up from $5.3 billion in 2023 .
Earnings Per Share
The diluted earnings per share from continuing operations for the nine months ended September 30, 2024, was $3.30, reflecting a decrease of 28.1% compared to $4.59 in 2023 . The operating (non-GAAP) earnings per share was $6.41, an increase of 11.7% from $5.74 in the previous year .
Balance Sheet Overview
As of September 30, 2024, IBM reported total assets of $134.3 billion, a slight decrease of 0.7% from $135.2 billion at the end of 2023 . Total liabilities were $109.8 billion, down 2.5% from $112.6 billion . Equity increased by 8.5% to $24.5 billion .
Revenue Breakdown by Segment
| Segment | Revenue (2024) | Revenue (2023) | Year-over-Year Change |
|---|---|---|---|
| Cloud & Cognitive Software | $23.4 billion | $21.8 billion | 7.3% |
| Global Business Services | $15.5 billion | $15.2 billion | 2.0% |
| Global Technology Services | $18.1 billion | $17.5 billion | 3.4% |
| Systems | $5.9 billion | $6.0 billion | -1.7% |
Macroeconomic Environment
Throughout 2024, IBM has faced challenges due to macroeconomic uncertainties, which have impacted client spending, particularly on smaller discretionary projects. However, there has been solid demand for larger digital transformation projects .
Pension and Retirement Obligations
IBM's retirement-related costs for the nine months ended September 30, 2024, were $3.8 billion, significantly influenced by a one-time pension settlement charge of $2.7 billion . The operating retirement-related costs were $767 million, which marked a decrease compared to previous years .
Cash Flow and Dividends
In terms of cash flow, IBM generated $9.1 billion from operations and delivered $4.6 billion in dividends to shareholders .
Conclusion
As of 2024, IBM continues to adapt to changing market conditions while maintaining a focus on innovation and operational efficiency.
A Who Owns International Business Machines Corporation (IBM)
Major Shareholders
As of 2024, the ownership structure of IBM reflects a mix of institutional and retail investors. The largest shareholders include:
| Shareholder | Ownership Percentage | Type |
|---|---|---|
| The Vanguard Group, Inc. | 8.4% | Institutional |
| BlackRock, Inc. | 7.6% | Institutional |
| State Street Corporation | 4.5% | Institutional |
| Wellington Management Group LLP | 3.2% | Institutional |
| Geode Capital Management, LLC | 2.9% | Institutional |
| FMR LLC (Fidelity) | 2.6% | Institutional |
| Other Institutional Investors | 30.0% | Institutional |
| Retail Investors | 38.0% | Individual |
Institutional Ownership
The institutional ownership of IBM is significant, with major investment firms holding a large portion of the company's shares. The top institutional investors as of early 2024 include:
| Institution | Shares Owned | Value (in billions) |
|---|---|---|
| The Vanguard Group | 163 million | $24.5 |
| BlackRock | 150 million | $22.5 |
| State Street | 90 million | $13.5 |
| Wellington Management | 60 million | $9.0 |
| Geode Capital | 55 million | $8.3 |
Retail Investor Ownership
Retail investors continue to play a crucial role in the ownership of IBM. As of 2024, retail investors own approximately 38% of the company's shares, reflecting a steady interest from individual shareholders.
Recent Shareholder Changes
In the recent quarters, IBM has seen fluctuations in its shareholder composition driven by market conditions and company performance. The following table summarizes key changes in ownership over the past year:
| Period | Change in Institutional Ownership | Change in Retail Ownership |
|---|---|---|
| Q1 2023 | +2% | -1% |
| Q2 2023 | -1% | +1% |
| Q3 2023 | +3% | -2% |
| Q4 2023 | +2% | +1% |
| Q1 2024 | +1% | -1% |
Impact of Share Buybacks
IBM has actively engaged in share repurchase programs. As of September 30, 2024, the company had repurchased approximately 1 billion shares over the past year, leading to a reduction in total outstanding shares and potentially increasing shareholder value.
Conclusion of Ownership Dynamics
Overall, IBM's ownership is characterized by strong institutional backing, with significant retail investor participation. The company’s strategic decisions regarding share buybacks and capital allocation continue to influence its shareholder dynamics as it navigates the current technological landscape.
International Business Machines Corporation (IBM) Mission Statement
Mission Statement Overview
As of 2024, IBM's mission statement emphasizes its commitment to innovation and technology leadership. IBM aims to lead in the era of hybrid cloud and AI, facilitating digital transformation for its clients. The company focuses on delivering high-value solutions that enhance efficiency and drive growth across various industries.
Financial Performance Metrics
IBM’s financial performance is a testament to its mission-driven approach. The company reported revenue of $15.0 billion for the third quarter of 2024, demonstrating a 1.5% increase compared to the previous year. This growth reflects the company's strategic investments in hybrid cloud and AI technologies.
| Financial Metric | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Total Revenue | $15.0 billion | $14.7 billion | +1.5% |
| Net Income | $(0.3) billion | $1.9 billion | -115.8% |
| Operating Earnings (non-GAAP) | $2.2 billion | $2.0 billion | +10.0% |
| Diluted Earnings per Share | $2.30 | $2.20 | +4.5% |
| Free Cash Flow | $2.1 billion | $2.0 billion | +5.0% |
| Dividends Paid | $1.5 billion | $1.4 billion | +7.1% |
Strategic Focus Areas
IBM's strategy centers around key growth areas including:
- Hybrid Cloud: With an annual recurring revenue (ARR) of $14.9 billion, this segment is critical for IBM's growth.
- Artificial Intelligence: IBM continues to invest heavily in AI, particularly in solutions like Watson, which have shown substantial demand.
- Consulting Services: The consulting segment generated $5.2 billion in revenue for Q3 2024, indicating a strong market position despite a slight year-over-year decline.
Consulting Segment Performance
In the consulting segment, IBM reported a revenue of $5.2 billion for Q3 2024, down slightly from $5.2 billion in Q3 2023, reflecting a challenging macroeconomic environment. Key highlights include:
| Consulting Revenue Breakdown | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Business Transformation | $2.3 billion | $2.3 billion | +1.6% |
| Technology Consulting | $0.9 billion | $0.9 billion | -4.0% |
| Application Operations | $1.9 billion | $1.9 billion | -1.2% |
Software Segment Performance
IBM's software segment recorded significant growth with revenue reaching $6.5 billion in Q3 2024, up 9.7% from the prior year. The growth was driven by:
- Hybrid Platform & Solutions: $4.6 billion, up 9.8% year-over-year.
- Transaction Processing: $1.9 billion, an increase of 9.4% compared to Q3 2023.
Infrastructure Segment Insights
The infrastructure segment reported revenue of $3.0 billion in Q3 2024, reflecting a decrease of 7.0% year-over-year, driven by product cycle dynamics. Key figures include:
| Infrastructure Revenue Breakdown | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Hybrid Infrastructure | $1.8 billion | $1.9 billion | -9.1% |
| IBM Z | Decreased 18.7% | Decreased 18.6% | N/A |
| Infrastructure Support | $1.3 billion | $1.3 billion | -3.9% |
Conclusion on Financial Position
As of September 30, 2024, IBM's total assets were $134.3 billion, with total liabilities of $109.8 billion, resulting in stockholders' equity of $24.5 billion. The company maintains a robust liquidity position with cash and cash equivalents of $13.7 billion.
How International Business Machines Corporation (IBM) Works
Business Overview
International Business Machines Corporation (IBM) operates through four main segments: Software, Consulting, Infrastructure, and Financing. As of Q3 2024, IBM reported total revenue of $15.0 billion, reflecting a 1.5% increase year-over-year.
Financial Performance
In the third quarter of 2024, IBM recorded a net loss of $0.3 billion due to a one-time, non-cash pre-tax pension settlement charge of $2.7 billion. Operating earnings (non-GAAP) for this period were $2.2 billion, with diluted earnings per share (EPS) of $2.30 on an operating basis.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $15.0 billion | $14.8 billion | 1.5% |
| Net Loss | $0.3 billion | $1.0 billion profit | — |
| Operating Earnings | $2.2 billion | $2.0 billion | 10.0% |
| Diluted EPS (GAAP) | $(0.34) | $1.50 | — |
| Diluted EPS (non-GAAP) | $2.30 | $2.20 | 4.5% |
Segment Performance
IBM's performance varies across its segments:
- Software: Revenue was $6.5 billion, up 9.7% year-over-year.
- Consulting: Revenue decreased slightly to $5.2 billion, down 0.5% year-over-year.
- Infrastructure: Revenue fell to $3.0 billion, down 7.0% year-over-year.
- Financing: Revenue was $181 million, a decrease of 2.5% year-over-year.
| Segment | Q3 2024 Revenue | Q3 2023 Revenue | Change (%) |
|---|---|---|---|
| Software | $6.5 billion | $5.9 billion | 9.7% |
| Consulting | $5.2 billion | $5.2 billion | (0.5)% |
| Infrastructure | $3.0 billion | $3.3 billion | (7.0)% |
| Financing | $181 million | $186 million | (2.5)% |
Geographic Revenue Distribution
IBM's revenue distribution across regions is as follows:
- Americas: Revenue of $7.5 billion, down 3.0% year-over-year.
- EMEA: Revenue increased by 8.5% to $4.5 billion.
- Asia Pacific: Revenue increased by 3.1% to $3.0 billion.
| Region | Q3 2024 Revenue | Q3 2023 Revenue | Change (%) |
|---|---|---|---|
| Americas | $7.5 billion | $7.7 billion | (3.0)% |
| EMEA | $4.5 billion | $4.1 billion | 8.5% |
| Asia Pacific | $3.0 billion | $2.9 billion | 3.1% |
Cash Flow and Dividends
During Q3 2024, IBM generated $2.9 billion in cash from operations and $2.1 billion in free cash flow. The company returned $1.5 billion to shareholders in dividends.
| Cash Flow Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Cash from Operations | $2.9 billion | $2.8 billion |
| Free Cash Flow | $2.1 billion | $2.0 billion |
| Dividends Paid | $1.5 billion | $1.5 billion |
Debt and Equity Position
As of September 30, 2024, IBM's total debt stood at $56.6 billion, with total stockholders' equity at $61.0 billion.
| Balance Sheet Metrics | Value |
|---|---|
| Total Debt | $56.6 billion |
| Total Stockholders' Equity | $61.0 billion |
How International Business Machines Corporation (IBM) Makes Money
Revenue Segmentation
IBM generates revenue through several key segments: Software, Consulting, Infrastructure, and Financing. For the first nine months of 2024, the total revenue was $45.2 billion, with the following breakdown:
| Segment | Revenue (in millions) | Year-over-Year Change (%) | Gross Margin (%) |
|---|---|---|---|
| Software | $19,162 | 7.5 | 83.1 |
| Consulting | $15,517 | (0.5) | 26.7 |
| Infrastructure | $9,764 | (2.3) | 55.3 |
| Financing | $543 | (4.1) | 48.2 |
| Total | $45,199 | 1.6 | 55.6 |
Software Segment
In the Software segment, IBM reported revenue of $19.16 billion for the first nine months of 2024, representing a 7.5% increase compared to the previous year. Key drivers of growth included:
- Hybrid Platform & Solutions: $13.27 billion, up 7.1%.
- Transaction Processing: $5.89 billion, up 8.2%.
- Red Hat: Revenue growth of 13.7% in Q3 2024.
- Automation: Revenue growth of 13.2% in Q3 2024.
Consulting Segment
Consulting revenue for the first nine months of 2024 was $15.52 billion, a slight decrease of 0.5%. The breakdown includes:
- Business Transformation: $7.00 billion, up 2.0%.
- Technology Consulting: $2.75 billion, down 2.0%.
- Application Operations: $5.76 billion, down 2.8%.
Infrastructure Segment
The Infrastructure segment saw revenue of $9.76 billion, representing a 2.3% decline. Key highlights include:
- Hybrid Infrastructure: $5.93 billion, flat growth.
- IBM Z: Revenue decreased significantly, reflecting product cycle dynamics.
- Infrastructure Support: $1.28 billion, down 3.9%.
Financing Segment
The Financing segment generated $543 million in revenue, down 4.1%. This decline was primarily due to a reduction in used equipment sales.
Geographical Revenue Distribution
IBM's revenue is also segmented geographically. For Q3 2024, the revenue performance was as follows:
| Region | Revenue (in millions) | Year-over-Year Change (%) |
|---|---|---|
| Americas | $7,453 | (3.0) |
| EMEA | $4,377 | 8.5 |
| Asia Pacific | $3,138 | 3.1 |
Financial Performance
For the first nine months of 2024, IBM reported net income from continuing operations of $3.1 billion, a decrease of 27.0% year-over-year. The diluted earnings per share from continuing operations was $3.30, which included a significant impact from a one-time pension settlement charge of $2.18 per share.
Cash Flow and Shareholder Returns
IBM generated $9.1 billion in cash from operations and $6.6 billion in free cash flow during the first nine months of 2024. The company returned $4.6 billion to shareholders in dividends during this period.
Pension Settlement Charge Impact
IBM incurred a one-time, non-cash pension settlement charge of $2.7 billion in Q3 2024, which significantly impacted the company’s reported net income. This charge was taken as part of efforts to reduce the risk profile associated with its retirement-related plans.
Future Outlook
IBM continues to focus on its hybrid cloud and AI strategy, which is expected to drive growth in its software and consulting segments going forward. The company remains committed to returning value to shareholders while investing in innovation across its business segments.
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Article updated on 8 Nov 2024
Resources:
- International Business Machines Corporation (IBM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of International Business Machines Corporation (IBM)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View International Business Machines Corporation (IBM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.