Published by Harvest ETFs
The hallmark of a good company is its ability to adapt to new circumstances. International Business Machines is one such master of adaptation, having evolved from a merger of time-clock companies in 1911 to the global technology giant of today.
The company is transforming again, moving into cloud computing, artificial intelligence, and Blockchain applications. IBM’s plan is to integrate these processes into end-to-end services that help companies plan, build, and manage their information technology infrastructure.
IBM operates in 175 countries and gets 60% of its revenue outside of the U.S. It had an R&D expense of US $5.4 billion in 2018, which was approximately 7% of revenues. R&D is a hidden asset because it creates a pipeline for new products and services.
IBM was awarded more than 9,100 patents in 2018, more than any other company for the 26th consecutive year. It is also a dividend leader. It raised its dividend in 2018 for the 23rd consecutive year.
In October 2018, IBM offered US $34 billion to buy Red Hat, an open source software firm. It followed Microsoft’s smaller purchase in June 2018 of GitHub, a similar software repository. Open source software is released under a license which lets users make changes and distribute it.
Both Microsoft and IBM are adding to their cloud computing abilities with the acquisitions. Github and Red Hat are leading cloud-based developers. These systems let customers store and access files and programs on Internet servers.
IBM, Red Hat and Microsoft are components of the Harvest Portfolios Group Harvest Tech Achievers Growth & Income Fund (TSX:HTA, HTA.U). The ETF had 30% of its holdings in software and 24% in IT services as of Feb. 28, 2019. The ETF invests in 20 global technology leaders in the IT, health care equipment, healthcare technology, wireless telecommunication services and electrical components industries. – AM
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