NEW YORK (TheStreet) -- Shares of International Business Machines (IBM) - Get International Business Machines Corporation Report were gaining 0.3% to $159.71 in early trading Thursday after the technology company announced a new mobile app partnership with China Telecom (CHA) - Get China Telecom Corp. Ltd. Report.
As part of the agreement China Telecom will host IBM's MobileFirst platform on its service to help companies manage apps on iPhones and iPads. The MobileFirst platform is part of IBM's partnership with Apple (AAPL) - Get Apple Inc. Report which offers specialized enterprise apps to companies.
The partnership "builds upon China Telecom and IBM's work to help businesses implement secure, cost-effective and scalable cloud-based applications," according to IBM.
The two companies will target customers ranging from state-owned firms in the banking and insurance industries to private startups in China, according to Reuters.
"China Telecom and IBM will provide cutting edge mobile solutions for enterprises and start-ups across China," IBM Senior Vice President Bridget van Kralingen said in a statement. "IBM's capabilities in IT consulting, deep industry expertise and enterprise apps provide an opportunity to fully unlock the value of the mobile enterprise that will transform industries and professions."
TheStreet Ratings team rates INTL BUSINESS MACHINES CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTL BUSINESS MACHINES CORP (IBM) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the IT Services industry and the overall market, INTL BUSINESS MACHINES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for INTL BUSINESS MACHINES CORP is rather high; currently it is at 58.23%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.73% is above that of the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 20.0%. Since the same quarter one year prior, revenues fell by 11.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has declined marginally to $6,059.00 million or 7.18% when compared to the same quarter last year. Despite a decrease in cash flow INTL BUSINESS MACHINES CORP is still fairing well by exceeding its industry average cash flow growth rate of -17.69%.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, IBM has underperformed the S&P 500 Index, declining 16.63% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: IBM Ratings Report