It seems that these "old dogs" can still learn new tricks. IBM was founded in 1911, Intel began 1968. Instead of becoming bores in their old age, these companies keep up-to-date with technical progress. It seems that they used the last recession as a call to restructure and to become more efficient and are now continuing to do so. Both are playing the technology revolution and globalization to unlock new markets and to expand them. We learned from Charles Darwin that continuous adjustments to the challenges of our environment are necessary to survive and to be successful. IBM & Intel are role models of how to adapt to a continuously changing environment.
To emphasize this idea I present here some quotes from their recent earnings calls where management discussed their numbers with analysts (you can find a lot of transcripts here seekingalpha.com/tag/transcripts ) .
IBM reported (seekingalpha) that in the fourth quarter "we grew revenue, expanded growth, pretax and net margins and delivered operating earnings per share of $4.71, up 11% year-to-year. For the full year we delivered an operating EPS of $13.44, up 15%".
They added, "we continued to build our momentum in software, our performance reflecting both strong demand for our offerings and leadership sales execution. Our software revenue was up 9%, driven by aggressive growth in our focus areas,"
Further they declared: "Our Services business delivered powerful margin and profit growth, with combined pretax income of 17%. Services revenue growth was again led by growth markets, which were up 13% at constant currency.
We're continuing to expand into new countries and territories to build out IT infrastructures in support of economic growth and to take a leadership position in key industries.
We're going to invest in market opportunities and we're going to drive productivity where it's more challenging".
IBM`s Chief Financial Officer Mark Loughridge said that his company has benefited recently from its investments in growing technology sectors, such as business analytics and cloud computing. "Revenue from business analytics--which mines data to gain insight--gained 16% in 2011, while revenue from cloud computing, which allows users to access their data over the Internet, more than tripled for the year."
Intel reported (seekingalpha): "We surpassed $50 billion in revenue for the first time, after crossing $40 billion for the first time just last year. This was our second consecutive year of more than 20% revenue growth".
They plan to invest massively in the future: "We are planning on another strong year, with revenue growth in the high single-digits and gross margin at the high end of our historical range, at 64%. Importantly, we will continue to invest in our business in 2012. We are forecasting an increase in capital spending to $12.5 billion as we build the world's first high-volume manufacturing factories for 14-nanometer process technology. We are also forecasting an increase in investment in research and development of $1.8 billion. We are making critical investments in R&D for Ultrabooks, data centers, phones and tablets. In addition, we are making R&D investments in core capabilities like security, SoCs and extending our process technology leadership."
Both companies are reacting swiftly to new trends and calibrate their businesses to the rhythm of the markets. These efforts pay. IBM is close to an all-time-high (finance.yahoo), though Intel is still way below its peak in 2000 but the stock shows an upward trend since spring 2009 and is outperforming the S&P 500 since then (finance.yahoo). I reckon that IBM & Intel are role models for investors who are seeking companies which have a high likelihood to benefit from technology revolution and globalization.
Disclosure: I don`t have any positions in IBM & Intel stocks.
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