With annual revenues exceeding US$90 billion, International Business Machines (IBM) is a world leader in all three core components of information technology: hardware, software and services.
More than 60% of Big Blue’s sales originate outside the United States. Japan at 11% is the only other single country providing more than 10% of IBM’s revenues.
IBM Revenues By Region
IBM organizes its revenues by geographic region:
- North & South America … US$39.5 billion (43.2% of total company revenues in 2006)
- Europe, Middle East & Africa … $30.5 billion (33.4%)
- Asia Pacific … $17.6 billion (19.2%)
- Other Emerging Nations … $3.9 billion (4.2%)
IBM’s overall revenue growth in 2006 from the prior year was flat. Slow growth was caused in part by the company’s massive size, and in part by a 5.7% decline in overall Asia-Pacific revenues.
Trends In Information Technology & World Trade
Despite the revenue slowdown, IBM senior management continues to grow company earnings per share (EPS) at a double-digit rate. IBM’s success in making profits is due in no small part to their superlative analyses of leading trends in both IT and international trade.
A leading trend that IBM management recognized early on was that enterprises and institutions want to:
- Tap the skills and expertise available around the world; and
- Integrate their operations globally.
Consequently, Big Blue has built up its global resources with operations in 170 nations. About 65% of IBM employees are located outside the U.S. including 30% in Asia.
BRIC Nations Lead Growing Demand For IT Solutions
Over the next four years, IBM expects IT markets in BRIC countries (Brazil, Russia, China, India) to increase their sales at more than double the overall average worldwide rate. By 2010, BRIC is expected to blossom into a marketing opportunity of over $150 billion.
Big Blue is already taking advantage of BRIC’s accelerated growth curve, as shown by the following list of annual percentage growth rates in IBM’s 2006 revenues:
In contrast, IBM revenues from the U.S. in 2006 were up only 2.8% from the prior year while those from Japan declined about 9%.
Top International Trade Stock
Given IBM’s vast size, its strong cashflows and continued profitability, plus a loyal and growing customer base in markets across the planet, IBM’s shares (IBM on NYSE) represent an attractive buying opportunity at around US$88. (The closing price on April 5, 2007 was $96.52.)
Sources For This Article
This article presents independent calculations and insights based on data drawn from the 2006 Annual Report on ibm.com.
