This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

IBM's Server Sale Would Be a Smart Move

Stocks in this article: IBM

Speaking at a glitzy New York City event to unveil the business unit, IBM CEO Ginni Rometty explained that Watson heralded a third "cognitive era" of computing when it was first launched in 2011. "It's a new species -- it is taught, not programmed," she said. "It learns from experience and interaction."

At its investor briefing last year, IBM increased its 2015 revenue target for analytics and big data to $20 billion from $16 billion, highlighting the potential for technologies such as Watson. Back in 2010, IBM had set an initial goal of $10 billion by 2015.

Underlining IBM's desire to tap new software and service dollars, just a week after its latest Watson news, Big Blue announced a $1.2 billion global cloud investment.

IBM's System x sales should also be viewed within the context of its broader business. The company's total revenue in fiscal 2012 was $104.5 billion, with Global Technology Services and Global Business Services bringing in, respectively, $40.2 billion and $18.6 billion. Software revenue was $25.4 billion, while the Systems & Technology group brought in sales of $17.7 billion. A source familiar with the situation told TheStreet that, within the Systems & Technology group, IBM's x86 server business had revenue of less than $5 billion in 2012.

IBM reports its fiscal fourth-quarter results after market close on Tuesday. Analysts surveyed by Thomson Reuters expect the hardware and software giant to post earnings of $5.99 and sales of $28.25 billion.

During the third quarter IBM beat Wall Street's earnings expectations but missed on the top line, weighed down by currency issues and weakness in key growth markets.

"We expect all segments to rise -- led by strength in software," wrote Cantor Fitzgerald's White, in a note released on Tuesday. "Recall, IBM experienced weakness in China and other developing markets in 3Q:13, a trend we expect to continue through the first half of 2014."

Despite this trend, White expects the company's software sales to rise 34% sequentially, above seasonal levels. Services should improve over 3% quarter-on-quarter, he added, in line with seasonality. The analyst expects IBM's System and Technology Group sales to increase 25% over the same period, well below historical averages, albeit with upside potential.

IBM shares dipped 0.96% to $188.27 in early afternoon trading on Tuesday.

--Written by James Rogers in New York

>Contact by Email.

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs