IBM accelerating on all cylinders

After years lingering on its transformation, IBM continues to show progress. Earlier this month the company reported revenue of US $19.2B, with cloud revenue growing 44 per cent and mobile up 19 per cent. IBM forecasts earnings of $13.50 per share for this fiscal year. The CFO said the company “continued to invest where we see the greatest opportunities to create new markets and strengthen our enterprise IT leadership position.”

It is helping its customers building their digital businesses. For example, the company offers a developerWorks Premium resource on its marketplace. That may involve mobile, cloud, or analytics. IBM’s traditional businesses are doing well, too. In effect, IBM offers cloud platforms, solution and cognitive software solutions to clients, while embracing a cloud-oriented future.

IBM’s Z-Systems offset the weakness in UNIX with the growth in Linux. In the consumer space, Mint and Ubuntu build awareness for the ultra-stable operating system. Security, mobile, and analytics continue to do well for IBM. Enterprise customers are well-aware of Watson and its cognitive offerings. Thanks to continued demands for IT in the healthcare space, IBM benefited from customer demands for Watson Health. One example is the Teva Pharmaceuticals partnership with IBM. The duo collects and analyzes healthcare data as it pertains to patient care and chronic disease management.


Linux’s popularity in the open source operating system space helped IBM grow its sales for OpenPOWER, a high-performance computing platform powered by NVidia’s graphics chips. IBM more recently introduced a mid-ranged POWER system, specifically designed for hybrid cloud computing.

Watson Health is targeting four areas of health care: life sciences, oncology, imaging and value-based care. Watson will help scientists in drug discovery, by giving computing power through a cloud-based scalable platform. That enables researchers to discover disease pathways, find drug targets, and understand drug interactions.

In the financial services sector, Watson Financial Services will build on offering regulatory compliance and risk management. This is helped through IBM acquiring Promontory Financial Group in the last quarter.

Watson asks, “How may I help you?”

Watson Trend

IBM also introduced Watson virtual assistant. Back in February, the company blogged about use cases that integrate cognitive into their solutions. IBM began introducing the agent for companies wanting virtual agents for customer services. Watson virtual agent is capable of conversations, which companies may use in its customer services.  RBS, NatWest and Sweden’s largest Bank, SEB, are some of the banks employing virtual chatbots to support customers.

IBM in IoT

IBM doubled its number of new clients on the Watson IoT platform. The solution now allows customers to share IoT through connected devices on a block chain. The automotive sector, especially manufacturing, should benefit as devices proliferate and demand from developers grow.

IBM’s Cloud

Demand for IBM’s hybrid cloud rose, thanks to the company providing what the company describes is secure, agile and data leverage for their core systems. Security is a feature that stands out for the service. Regulated industries need high levels of security. IBM also benefited from its partnership with VMware. Last quarter, close to 1000 clients moved VMware to the IBM cloud environment.


Debt levels elevated

IBM is doing well financially. It has $10 billion in cash, but its debt levels are elevated. Of the US$42.5 billion in debt outstanding, US$26 billion supports the company’s financing business.

Bottom line

IBM made many acquisitions in the last few years, but the investments will pay off slowly over time. The profits generated from old businesses, along with the profitability of the new ones, should make IBM more financially sound. The company’s growth will accelerate as it wins more business for its cloud and high computing solutions.

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Jim Love, Chief Content Officer, IT World Canada
Chris Lau
Chris Lau
In search for alpha. Telecom, media, technology. Social media. Financial Markets. Real-Estate Agent. Seeking Alpha Contributor. Toronto, Ontario ·

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