Dividends and the fate of the supercomputer Watson 10 years after its Jeopardy! triumph

Most of believe that in the future technology is going to solve some of the problems on earth, we are not positive how, but we believe in the future of technology. It may and that is why technology stocks are a good thing to invest in, but which ones is always the question.

The biggest and best technology company for generations was IBM or International Business Machines. They were an early leader, had most of the large corporations and governments around the world as clients. The men and they were mostly men had a distinctive shirt and tie uniform and they were the problem solvers.

Part of the promise of technology is artificial intelligence or AI and the US looked to IBM to bring AI into the fold of computers. The majority of the public really does not know how the computers to work, only the promise of AI was going to make life in the future simpler and better.

In an article by Steve Lohr of The New York Times News Service, about 10 years ago, there was a contestant on the game show Jeopardy! who seemed to know all the questions. Could the supercomputer beat the contestant? IBM had a team and there was a show with their computer Watson and the computer won. For the public the results showed the promise and hope of AI, but what about at IBM?

The scientist behind Watson had a warning, beware what you promise. David Ferrucci, explained that Watson was engineered to identify word patterns and predict correct answers for the trivia game. It was not an all purpose box to take on the commercial world.

After Watson won the game, IBM poured millions of dollars in promoting Watson to their customer base and saw opportunity everywhere. However, it did not pan out in more contracts or advances into AI, the company is the fourth largest cloud computing company behind Amazon, Microsoft and Google. In the last 10 years, IBM’s stock price is down 10%.

Clearly the hype and challenges were more difficult than expected. Perhaps because IBM’s executives knew sales and service better than technology, perhaps they had too much money and could invest in just about everything, in any rate there has been many wrong turns and mishaps. Perhaps the idea was wonderful, the ability to execute was always need to be a catch up to match public and corporate expectations.

Linking to dividend paying stocks, in the business pages there are press releases from companies discussing opportunities they see in the marketplace. There are many opportunities to be seen, however what sets dividend paying companies and other companies is the ability to generate sales and profits. The issue is never the opportunity, the issue is can the product or service bring in sales and profits or is it better to wait and buy the companies in the space when they demonstrated sales and profits? No company gets it right all the time, but companies that can pay dividends tend to be selective enough to get it right to make profits and pay dividends. The total return on both the stock price and the dividends is the reason why you want to be a long term holder.

There are more questions than answers, till the next time – to raising questions.

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