My coaching clients understand that I thing in relative terms. I also see opportunities in groups of five. For example, five companies and their fortunes can be tied to one other particular company. I’ll pick Apple, naturally, to demonstrate a point around companies you all need to watch.
As Apple continues to move forward, its competitors have certainly not sat by on the sidelines. Hewlett-Packard, for instance, has continued to trudge along. But HP’s operating margins, although not poor, have for the most part stagnated for the past five years or so, while its stock is currently trading a just under $25 per share – barely above its 52-week low.
Another company that is relevant to Apple’s future is Dell (NASDAQ: DELL). This company’s revenue has declined recently, however it did achieve a growth in EBIT of 26% primarily from its services businesses as well as its enterprise solutions.
Nokia (NYSE: NOK) has also had operating margins of late that have literally fallen downward due in part to the erosion of the company’s traditional “Symbian” operating system. Yet this is offset somewhat by a positive outlook for Nokia’s Windows-based “Lumia” handsets.
Another company that is relevant to Apple is IBM (NYSE: IBM). This company has transitioned over the past decade, attaining approximately 85% of its 2011 revenue from software and services. So what could make IBM more of a competitor to Apple? First, the outlook for 2012 and beyond is extremely positive. There are few companies that have the global scale and tremendous customer base of IBM. In addition, the company has been smart with its product development and recent acquisitions – in particular the buyouts of Unica and Netezza that will move the firm more into the web marketing applications and web analytics areas.
In addition, IBM’s board of directors recently declared a regular quarterly dividend of $0.85 per common share that is payable June 9, 2012 to those stockholders of record as of May 10, 2012. This dividend represents an increase of $0.10, or 13% higher than the previous quarterly dividend of $0.75 per common share
IBM’s board also announced that the company has authorized $7 billion in additional funds for use in the firm’s stock repurchase program. IBM plans to repurchase shares in the open market as well as via private transactions, depending upon market conditions. IBM also anticipates spending $20 billion between 2012 and 2015 on acquisitions to support the company’s growth.