IBM Set to Spend $1.6B on Emerging Markets

(IBM), a bit behind the curve, announced that it is ramping up focus on emerging markets that investors are already investing actively in through exchange-traded funds. This is a significant change in thinking for a firm that has always focused on traditional markets.

IBM is set to spend $1.6bn over the next three years as its hunt for growth takes it to smaller markets in the emerging world that have not previously been a focus of its efforts, according to an internal memo from its chief executive and described by Richard Waters of the FT.

The attempt to tap a wider range of developing countries comes as IBM’s earlier investment in three big markets which already have ETFs - Brazil (EWZ), India (IIF) and China (GXC) – has started to pay off.

Though still only a small part of its total revenues, business in these countries accounted for a quarter of IBM’s growth last year and plays an important part in the longer-term financial goals that Sam Palmisano has set.

In an e-mail to senior management, the IBM executive wrote of “a significant shift in our approach to the global marketplace” as the company sought to organise itself to deal with opportunities outside its normal scope. “Too often in the past, because we’ve built our plans by starting with our traditional markets, we haven’t focused sharply enough on the opportunities being generated elsewhere,” Mr Palmisano wrote.

Comments

[Tom B]

One problem-- does IBM still actually HAVE any products? They sold PC's to Lenovo; their servers suck; and their "services" suck worse.

[EricPeterson,PhD.]

IIF is actually a closed-end-fund, not an ETF. IFN is another Indian closed-end-fund and INP is an exchange-traded-note. I don't know of an ETF for India, but maybe there is one.

I'm not sure what the relationship is between IBM doing business in a country, and that country "already having an ETF".

[Sac Tinko]

I don't agree with the comments of the first post, but besides the fact, IBM's software organization is #2 behind Microsoft. So, also software products.

Also regarding the announcement. IBM has been in these markets for years, in Hungary for example, 80+ years. This new money means, more emphasis. But its not like they are starting from scratch.