A glimpse into IBM

IBM is undoubtedly one of the most popular technology companies in the world, operating in 175 countries and employing over 300,000 employees globally. It was founded as the Computing-Tabulating-Recording Company (CTR) in 1911 but was renamed International Business Machines in 1924.

This multinational corporation is responsible for creating and building hundreds of software and hardware information technologies and other inventions. The most renowned include the personal computer, the magnetic stripe card, the floppy disk, and the ATM. IBM technologies have also played a pivotal role in several NASA missions such as the 1969 moon landing, and others. It is also one of the United States’ most prolific companies for the number of patents received annually. Markedly, 5 Noble prizes and 5 Turing Awards have been awarded to International Business Machines Corporation employees.

Famous IBM creations

IBM is an industry leader in many emerging technologies. Let’s look at some of the most notable over the last almost 100 years.

• 1928: IBM punch cards became the industry standard for the next 5 decades, recording almost all the world’s known information.

• 1952: The company revolutionizes data storage through magnetic tape technology. This ushered in the shift from punched-card calculators to electronic computers.

• 1956: IBM demonstrates the first form of artificial intelligence by programming an IBM 704 to play checkers and learn from its experience.

• 1969: IBM computers and software play a pivotal role in the first moon landing and getting the astronauts back to earth.

• 1997: The world’s reigning chess player at the time is beaten by the IBM Deep Blue supercomputer.

• 2021: International Business Machines Corporation develops a 2-nanometer chip with 50 billion transistors, leading the way for more eco-friendly data centers and safer autonomous vehicles.

Notable IBM acquisitions

IBM has entered into several M&As over the years, with some worth billions of US dollars. Some of the most noteworthy are those listed hereunder:

• In June 2023, IBM announced that it had entered into a definitive agreement with Vista Equity Partners to acquire Apptio Ltd for US$4.6 billion. The purpose of the acquisition is to accelerate the advancement of IBM’s IT automation capabilities and deliver enhanced business value across technology investments.  
• Also in June 2023, IBM reportedly signed an agreement to acquire Agyla SAS, a leading French cloud professional services firm. This was IBM’s 6^th acquisition in 2023 and through it, IBM seeks to expand its hybrid multi-cloud services portfolio.
• In May 2023, IBM’s acquisition of Polar Security, an Israeli startup that secures cloud and software-as-a-service (SaaS) application data, was announced. While the company did not disclose the amount paid for Polar Security, it has been estimated that the deal was worth somewhere in the region of US$60 million.
• In September 2022, IBM announced plans to purchase Dialexa, a US digital engineering services firm. The terms of the acquisition were not disclosed this will be IBM Consulting’s first in the digital product engineering services market, said to reach US$700 billion by 2026.
• IBM’s landmark acquisition of Red Hat was finalized in July 2019. The transaction saw IBM acquire all the issued and outstanding common shares of Red Hat for US$190 per share, representing a total equity value of some US$34 billion.

IBM’s separation from Kyndryl

In November 2021 IBM announced the separation of its managed infrastructure business to Kyndryl, and that Kyndryl would begin “regular” trading on the New York Stock Exchange under the symbol “KD”.  Each holder of IBM common stock received one share of Kyndryl common stock for every 5 shares of IBM common stock held on 25 October 2021, the record date for the distribution. Furthermore, IBM was said to retain 19.9% of the shares of Kyndryl common stock, with the intention of exchanging those shares for IBM debt during the 12 months following the distribution, subject to market consideration.

Performance highlights for 2022

In 2022, IBM stock achieved significant financial results with revenue reaching US$60.5 billion and free cash flow totalling US$9.3 billion. Revenue growth was put at 12% at constant currency rates, including 4 points attributed to incremented external sales to Kyndryl. Notably, more than 70% of IBM’s annual revenue is in software and consulting.

IBM’s software segment experienced a 12% revenue increase at constant currency rates, including roughly 6 points stemming from incremental sales to Kyndryl. Red Hat continued to experience healthy growth. Additionally, IBM’s automation, data, AI, and security software have been optimized for the platform and also delivered robust growth.

International Business Machines Corporation consulting revenues surged by 15% at constant currency rates, evidencing a significant demand from clients seeking technical and business know-how to hasten their digital transformation initiatives.

IBM’s infrastructure segment recorded a 14% revenue increase at constant currency rates, with 6 points from incremental sales to Kyndryl.

In 2022, IBM allocated over US$2 billion for the acquisition of 8 companies and returned almost US$6 billion to stockholders through dividends.

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