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IBM CEO Rometty Reaches for the Cloud

NEW YORK ( TheStreet) --  IBM (IBM - Get Report) is trying to convince investors to forget its past failures by focusing on its future in cloud computing.

CEO Virginia M. Rometty said in an interview with The New York Times that appeared on Monday that although growth has been stagnant during the past few years, "she and the company now had a clear vision for how to pursue another generation of growth."

"We are transforming this company for the next decade," she told the paper, a theme she plans to use on Wednesday at the company's yearly meeting with investment analysts. "That is not a one-year job, not when you're a hundred billion-dollar company."

The challenge IBM CEOs have had to face over the years is how to navigate the 100-year-old company through the ever-changing technological world as older businesses erode.

In recent years, the company has divested its less profitable businesses, such as in January when it announced it was selling its server computers division to China's Lenovo Group (LNVGY) for $2.3 billion.

Meanwhile, IBM has been making major commitments to cloud technology, which allows processing and software delivery remotely over the Internet. Last June, it bought a fast-growing cloud-computing start-up, SoftLayer Technologies, for $2 billion.

IBM also invested $1.2 billion in cloud data centers in January, stating that it had a goal of having 40 cloud-dedicated centers in 15 countries by the end of 2014.

The cloud market has plenty of competition. Amazon (AMZN), Microsoft (MSFT), Google (GOOG) and Salesforce (CRM) are all investing in cloud technologies, hoping to gain large market share early and force out lagging companies.

Analysts say IBM's biggest competition is Amazon Web Services, which has been efficient in delivering a large number of services to customers remotely from Amazon's data centers

Rometty insists that the future for IBM relies on helping customers find insight in today's flood of digital data. If IBM's investments work out, cloud-style computing could drive the company's revenue and its share price for years to come.

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At the time of publication, the author had no position in any of the funds mentioned.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


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