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Revising IBM To $204

IBM (IBM) was one of the worst performing stocks in 2014. While the Nasdaq stock index was up by more than 10% in 2014, IBM's stock declined by 17% during the year. The primary reason for this was the decline in revenues across all of its reporting segments. The fall in revenues was further accentuated by the sale or pending sale of some of the underperforming assets such as x86 server division and microelectronics fabrication units, which cumulatively accounted for nearly $4 billion in revenues. In addition to these divestments, the company had sold its customer care business process outsourcing unit in 2013, which resulted in a decline in revenues and outsourcing backlog in 2014. Based on these events, we have recently revised IBM's stock price to $204. Despite this revision, out stock price is 30% higher than the current market price. In this note, we explore the reason for… Read More …