IBM's entrenched services let it cling to clients while newer, agile companies took the lead on the software-as-service revolution. But IBM has its own cutting-edge tech in the works — and Wall Street will look for signs in the tech giant's earnings report Monday of start-up-like speed.
IBM's first-quarter earnings will mark the debut report under a new segment structure, which emphasizes cloud computing and "cognitive solutions" over sales, services and hardware. Cognitive solutions may not be at the core of IBM's business yet, but results will shed light on whether Big Blue can pull off its pivot toward software-as-service as enterprises shift their technology strategies to the cloud.
"IBM's large, profitable, and sticky core operations will protect it from any precipitous slide in competitive positioning, but ... we have concerns about the economics and competitive dynamics of its newer initiatives," wrote Morningstar equity analyst Andrew Lange, who has a $145 price target on shares. "IBM needs to continually evolve to the rapid evolution of the IT landscape and adopt a more agile startup type mentality, rather than be burdened by slow-moving bureaucracy."