This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

IBM CEO Rometty Plans Enterprise Deep Dive

NEW YORK (TheStreet) -- In her annual letter to shareholders, IBM (IBM - Get Report) CEO Ginni Rometty vowed to strengthen the tech giant's links to its vast enterprise customer base, which experts said will be critical as the company shifts focus onto more profitable areas.

With the company's long-term growth strategy coming under intense scrutiny, Rometty clearly wants to focus investor attention onto the more lucrative parts of IBM's arsenal, such as data analytics and cloud.

The three key areas outlined by the IBM chief are: making markets by transforming industries and professions with data, remaking enterprise IT infrastructure for the cloud era, and enabling "systems of engagement" for enterprises.

"I believe IBM's strategic priorities are spot on in that they highlight the business/technological issues with which their enterprise customers are most concerned," wrote Charles King, principal analyst at tech research firm Pund-IT, in an email to TheStreet. "Not surprisingly, the three points-analytics-enabled business, cloud transformation and helping clients transition to next-generation technologies-are also issues IBM is extremely well-positioned to address."

In her letter to shareholders, Rometty said that 57% of companies expect to devote more than a quarter of their IT spending to new systems of engagement, such as social media and mobile devices, by 2016, almost double the level 12 months ago.

To support this trend, the CEO cited IBM's launch of its MobileFirst strategy last year, which aims to streamline businesses' management of employees' mobile devices. Rometty also pointed to IBM's $1.3 billion purchase of recruitment and talent management software specialist Kenexa in 2012 and its dozen acquisitions in the security space.

"Overall, I feel Rometty's priorities for IBM qualify as a balanced mix of visionary goals and practical needs," wrote King, in his email to TheStreet.

"IBM is so large it needs to align to global waves of change," added Stuart Williams, vice president of research at Technology Business Research (TBR), in an email. "To the extent that IBM's very broad strategy can be said to 'cover the waterfront' I'd agree that almost every priority aligns to customer needs. IBM is both making markets and reacting to change, not a bad place to be."

IBM's challenges, however, are in execution, not vision, according to Williams.

In her letter to shareholders, Rometty acknowledged that the company's 2013 performance didn't meet the company's expectations. The CEO pointed, in particular, to IBM's operating pretax income, which declined 8% year over year, and its overall revenue, which slipped 5% to $99.8 billion.

Rometty vowed to address the parts of IBM's business that are holding the company back, explaining that Big Blue is shifting its hardware operations to new opportunities. This involves pushing its Systems products, particularly its Power and storage offerings, towards "growth opportunities" and Linux. The IBM chief also highlighted the company's recent $2.3 billion deal to sell its low-end server business to Lenovo.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
SYM TRADE IT LAST %CHG
IBM $161.03 0.34%
AAPL $129.36 0.21%
FB $79.60 -0.19%
GOOG $573.64 0.40%
TSLA $199.56 1.13%

Markets

DOW 18,203.37 -85.26 -0.47%
S&P 500 2,107.78 -9.61 -0.45%
NASDAQ 4,979.9010 -28.1950 -0.56%

Partners Compare Online Brokers

Free Reports

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