- 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.
IBM takes controlling stake in Dexia IT unit, shrugs off downgrade
Dec 6 2013, 10:29 ET