Cloud Computing Probably Will Challenge Profits in Short Term
As the cloud computing world evolves, pricing will remain competitive. In fact, many new SAAS companies simply don't make any money at all in a bid to maintain growth & market share. This obviously puts pricing pressure on companies like IBM and Oracle in this space, never mind pressure on traditional hosted software sales.
So sure, there is a good chance the short term outlook will prove challenging. If for nothing else, traditional vendors like IBM, Oracle, SAP, & MSFT are only now beginning to seriously get into the cloud computing game. But, all that said, I would bet on all these companies long term.
These companies all make serious money. They have deep war chests, brand, great cash flow & balance sheets. The certainly have the infrastructure & platform components that underpin the cloud. They also have applications that are and continue to be ported as SAAS.
IBM in particular comes out with seminal computer science. The R&D budget is $6 billion annually. Is this kind of company really going to lose to WorkDay, SalesForce, and Amazon over the long haul? I don't think so. I think IBM will be prospering in another 100 years...much like the past 100 years.
I think it is a good buy at a current PE of 13. Not a bargain, but a very good buy. My advice is to buy in with 50% of your money, holding the rest for dips. Reinvest dividends. You won't go wrong with this long term, particularly for retirement accounts.