Ibm Corporation

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IBM Corporation In the seven years (since 1994), that Lou Gerstner reigned over IBM, the company’s earnings per share increased an average of 27% per year. This remarkable increase in earnings did not go unnoticed by the securities markets. Indeed, the company’s market value grew from less than $30 billion to over $200 billion during the period. Use the following financial statement data to: 1. Decompose IBM’s ROE (by quarter) and discuss the factors (and trends) that contribute to Big Blue’s profitability 2. Evaluate IBM’s Revenue growth, Receivables, and Gross margins and over the period. Be sure to control for seasonality (e.g., compute the same quarter to same quarter change in these items). 3. Evaluate IBM’s Earnings per…show more content…
-97 Earings per Share of Common Stock - Basic Average Number of Common Shares Outstanding - Basic Average Price per Share * All Data are Adjusted to Reflect stock splits Jun-97 Mar-97 $ 0.69 $ 0.73 $ 0.59 $ 0.99 $ 0.62 $ 1,956.0 52.13 $ 1,973.8 42.78 $ 2,006.8 36.45 $ 2,053.6 36.61 $ 2,087.4 31.65 2 for 1 stock split 5/9/97 Mar-99 Dec-98 Sep-98 Jun-98 Mar-98 Dec-97 $ 0.80 $ 1.27 $ 0.80 $ 0.77 $ 0.54 $ 1.08 $ 1,823.8 88.28 $ 1,839.5 82.91 $ 1,856.9 62.20 $ 1,879.2 57.97 $ 1,946.6 51.12 $ 1,929.6 52.05 EXHIBIT 3 IBM Consolidated Statements of Income For the Quarters Ended: Total Revenues Cost of Sales Gross Margin Selling, General and Administrative Expenses Research and Development Total Operating Expenses Operating Income Other Income (Expense), net Interest Expense Income Before Taxes Income Tax Expense Net Income $ $ Mar-00 19,348 $ 12,337 7,011 3,706 1,172 4,878 2,133 189 152 2,170 651 1,519 $ Dec-99 24,182 $ 15,299 8,883 4,445 1,416 5,861 3,022 134 171 2,985 896 2,089 $ Sep-99 21,144 $ 13,580 7,564 3,501 1,383 4,884 2,680 134 185 2,629 867 1,762 $ Jun-99 21,905 $ 13,681 8,224 2,846 1,293 4,139 4,085 155 197 4,043 1,652 2,391 $ Mar-99 20,317 $ 13,059 7,258 3,937 1,181 5,118 2,140 134 174 2,100
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