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IBM takes controlling stake in Dexia IT unit, shrugs off downgrade

  • IBM (IBM +0.7%) has inked $1.3B worth of outsourcing deals (spread out over 7 years) with Dexia and several other European financial institutions to manage their IT infrastructures. (PR)
  • As a result, IBM will take a controlling stake in the Dexia IT services unit that had been managing said infrastructures, and will "implement a cloud infrastructure" to expand the Dexia unit's services offerings into new markets.
  • The tie-up is the kind of higher-margin/value-added services deal IBM has been focusing on, as it looks for way to maintain EPS growth in the face of top-line weakness. IBM's services revenue fell 4% Y/Y in Q3, but its backlog ($141B) was flat Q/Q and up 2% Y/Y.
  • Separately, Cowen has downgraded IBM to Market Perform. The firm cites negative survey data regarding Big Blue's services workload and execution/delivery, and (with $100B worth of contracts set to be renegotiated in 2014, and Indian competition an issue) thinks the company's U.S. revenue growth outlook and IT outsourcing base are at risk.
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Comments (10)
  • hhess13892
    , contributor
    Comments (443) | Send Message
     
    "The firm cites negative survey data regarding Big Blue's services workload and execution/delivery,"

     

    Has the firm been reading SA shorts articles?
    6 Dec 2013, 10:36 AM Reply Like
  • BAHAMAS1
    , contributor
    Comments (3312) | Send Message
     
    When was the last time cowen made a difference in anything ?
    6 Dec 2013, 12:05 PM Reply Like
  • brianhutch
    , contributor
    Comments (328) | Send Message
     
    Cowen 's rating is in line with IBM insider's rating .
    Their rating is evident from the fact that no insiders have risked their own money buying shares they just rely on you shareholders money to buy stock
    6 Dec 2013, 12:43 PM Reply Like
  • s.khan
    , contributor
    Comments (69) | Send Message
     
    There is a disconnect between the market and IBM.
    Market is focused on revenue growth and IBM on
    EPS. One way to get more revenue is to lower the price
    to compete with Amazon( low price strategy) and Indian
    IT companies. It will effect EPS but market doesn't seem
    to care. If IBM is looking for high value added business
    it is leaving out a lot to others.
    6 Dec 2013, 03:34 PM Reply Like
  • DanoX
    , contributor
    Comments (2940) | Send Message
     
    IBM is in a long slow decline, Amazon and Indian IT companies are at the bottom of the barrel, IBM needs wake up and stop spooning Watson.
    6 Dec 2013, 05:12 PM Reply Like
  • brianhutch
    , contributor
    Comments (328) | Send Message
     
    Compare HPQ to IBM valuations .
    HPQ price to sales ratio = 0.46 , IBM PS ratio = 1.89
    HPQ price to Book = 2.14 IBM = 9.62.
    Now with that in mind read the following report just released .
    IBM loses server sales to HPQ .

     

    Server sales drop again in Q3, H-P takes share from IBM • 6:41 PM

     

    IDC estimates server sales fell 3.7% Y/Y in Q3. That's a modest improvement from Q2's estimated 6.2% drop, but hardly a figure that will bring cheer to industry players. Gartner estimates revenue fell 2.1% in Q3 vs. 3.8% in Q2.
    The embrace by Web/cloud giants of home-grown servers produced by Asian contract manufacturers (ODMs) continues to upend the industry. IDC thinks sales of such servers rose 45% Y/Y, and now make up 6.5% of industry revenue. It estimates nearly 4/5 of these sales came from the U.S., largely from Google, Facebook, Amazon, and Rackspace.
    #1 H-P (HPQ), which recently reported encouraing enterprise hardware numbers, is assigned a 28.1% share (+150 bps Y/Y). #2 IBM, whose total Q3 hardware sales fell 17% Y/Y, is given a 23.4% share (-430 bps).
    6 Dec 2013, 07:23 PM Reply Like
  • johnimpe
    , contributor
    Comments (6) | Send Message
     
    In my opinion, IBM is worth $215 today and will be worth $250 after year end reports for 2014.
    8 Dec 2013, 09:51 PM Reply Like
  • Momintn
    , contributor
    Comments (5102) | Send Message
     
    The European union just decided to go with IBM servers instead of HPQ. Read the news. Analysts are always behind. They downgrade stocks after they fall in price and cite previous quarters in the past and old surveys.
    9 Dec 2013, 11:30 PM Reply Like
  • Momintn
    , contributor
    Comments (5102) | Send Message
     
    I always find it funny when I look up the financial firms who criticize IBM and see their own financial reports. Cowen has lost money the past 3 years. I don't see how they can stay in business. Perhaps they need to quit trying to short stocks during a bull market.
    http://yhoo.it/1btywbi
    9 Dec 2013, 11:36 PM Reply Like
  • Momintn
    , contributor
    Comments (5102) | Send Message
     
    Deutsche Bank says buy IBM for 2014.
    10 Dec 2013, 01:33 PM Reply Like
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