IBM and Hewlett Packard are back big time in 2016, beating Apple by a big margin. IBM’s stock is up 22.29 percent so far this year; Hewlett Packard Enterprise Company is up 57.23 percent and HP Inc. 33.61 percent.
Apple is up by 9.43%.
That’s certainly a reversal, at least for IBM, which has been a loser on Wall Street for several years.
*It doesn’t include dividends
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+Two years
Source: Finance.yahoo.com 12/8/2016
While it is still too early to determine whether this reversal in fortunes is sustainable, it isn’t too early to identify some of the factors behind the big comeback of the two “old” companies.
First came a leadership shake-up to help correct the strategic mistakes of the past. Then came a wave of corporate restructuring to help the two companies get their business model right, and to prepare for the next technology wave.
For decades, Hewlett Packard Enterprise Company and HP Inc. were part of the same company, the iconic Hewlett-Packard.
A split into two independent companies followed, in an attempt to improve flexibility and re-ignite innovation. HP Inc. retained the printing and PC business segments, while HPE retained the technology solutions segments.
Then came a hiring spree, at least in the case of IBM, replenishing the skills of its labor force to prepare for a cognitive era, which is already here in response to a turnaround caused by IBM’s business initiatives. In fact, IBM has hired more than 100,000 new IBMers since January 2015, cloud advisors, digital representatives, data scientists, etc. This includes about 700 executives.
IBM’s hiring spree followed a massive shift of resources from traditional computing business to the emerging cognitive business, driven by continues innovation, as evidenced by the company’s leadership in patents.
In the meantime, Apple’s innovation machine seems to be slowing down. Last year, Apple failed to make it to the MIT Technology Review’s 50 Smartest Companies.And it is way down on the patent list, which is topped by IBM and Samsung.
Worse, Apple’s sales growth are down from 27.10 percent six quarters ago to -9 percent recently; operating margins are down from 30.15 percent to 27.83 percent, and profit growth is down from 32.70 percent to -19.00 percent.
Wall Street has taken notice, as reflected in the performance of Apple’s stock, which lagged behind the performance of the three “old” technology companies.
Perhaps, it is time for a leadership shake-up in Apple.
Date: December 25, 2016