IBM Remains Weak and Small

International Business Machines Corp. (NYSE: IBM) revenue rose only 4% year over year in the fourth quarter to a modest $17.4 billion. Net income rose from $2.9 billion in the year-ago period to $3.3 billion. In contrast, Microsoft Corp.’s (NASDAQ: MSFT) projected revenue for the quarter about to be reported is $58 billion, up approximately 14%. Expected net income is over $20 billion, a gain of more than 10%. IBM’s market cap is $165 billion, while Microsoft’s is $3 trillion. (Apple could buy these 25 huge companies with cash right now.)

IBM asked investors to look at its hybrid cloud and artificial intelligence (AI) businesses. Several companies dwarf these, including Microsoft, based largely on its relationship with OpenAI. IBM’s cloud business is a fraction of the size of those divisions of Microsoft and Amazon.com Inc. (NASDAQ: AMZN).

IBM’s stock has risen 36% over the past five years. Microsoft’s share price is up 276% in that time.

In 1975, IBM was the largest tech company, ranking ninth in the Fortune 500. That was the year of Microsoft’s founding. Amazon was founded in 1994.

Among the major technologies released since the decade’s start, IBM has had little or no part of these or entered them well before the industry leaders. These included cloud computing, smartphones, e-commerce and search.

The headlines about IBM’s recently released quarterly results were based on the impression the company had a good quarter. Put into the context of the rest of the big tech industry, that is untrue.