How Is IBM Doing It?

IBM had a great 2007. And while the stock market was tanking yesterday, they were having a conference call announcing they  expected their earnings per share for 2008 to be even larger than they had previously anticipated, and their shares rose 5 percent on the news. How is IBM doing it, when so many other information and technology companies are getting killed?

...two thirds of I.B.M.’s revenue now comes from outside the United States. And I.B.M., he said, is a leader in supplying the digital foundations for the buoyant economies not only of the so-called BRIC nations — Brazil, Russia, India and China — but also dozens of other fast-growing countries, from the Czech Republic to Peru, he said. These markets now account for 22 percent of I.B.M.’s sales, and its business in these nations is growing more than 20 percent a year.

The other thing that seems apparent is how much I.B.M.’s long-term strategy of moving up to higher-profit businesses and increasingly relying on services and software is working. Its huge services business grew 17 percent to $14.9 billion in the quarter. After the currency benefit, the gain was 10 percent, but still impressive. Software sales rose 12 percent to $6.3 billion.

"Moving up to higher-profit businesses" is an interesting way to put it. IBM decided not to just keep on getting bigger, but concentrated on making money at things they were good at. And while they decreased the scope of their interests, they increased the pool of their customers by embracing the whole world.  The lesson: Don't eat roughage at the buffet, kids! Go straight for the shrimp.
Tags:  IBM