IBM (IBM) Stock Price Drivers
IBM’s main revenue is generated from the services it provides to its clients. These services are often contractual and can continue for years, thus creating a recurring revenue stream and a backlog. The more contracts the company gets, the more they translate into a future revenue stream. The book-to-bill ratio shows the demand for a company’s products. IBM has a book-to-bill ratio of 0.96—which is below 1—reflecting that its services are not all that much in demand. IBM has also been targeting growth markets, which accounted for 24% its total revenues in 2012; however, this has been declining in every quarter of 2013.
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