Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Citi Tech Initiative Could Be Good News For IBM

It has been reported that Citi Group (NYSE:C) intends to consolidate many billions of dollars worth of IT systems and operations.  Who is the world's largest system integrator?  None other than IBM (NYSE:IBM).

Francesco Guerrera  writes in ft.com :

"Citigroup is ramping up efforts to slash its huge technology costs, with the bank’s management believing it can save significantly more than $1bn in 2009 by integrating hundreds of systems that have been separate for years."

Guerra also states:

"Citi had originally estimated it could save $3bn over three years by rationalising its operations and technology functions, which employ 140,000 people, including 25,000 software developers – more than many information technology companies."

and

"Citi does not disclose its exact operations and technology costs but regulatory filings show that IT and communication expenses were $4.9bn in 2008. Operations costs are believed to amount to several billions more."

If IBM does get to do this job, it could be a revenue booster of 1% or more annually over the next couple of years.

Disclosure:  The author has a significant long position in IBM stock.