How Will IBM (IBM) Stock React To Possible Server Ban In China?

NEW YORK (TheStreet) --China's government is looking into whether or not high end servers from International Business Machines Corp. (IBM) used by domestic banks compromise the nation's financial security, Bloomberg reports.

The People's Bank of China, the Ministry of Finance, and other government agencies are asking banks to remove IBM's servers and replace them with local brands while the government conducts its review.

China's investigation into its national security comes one week after the U.S. indicted five military officers from China based on allegations they hacked into several U.S. companies in order to steal secrets.

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IBM spokesperson Jeff Cross told Bloomberg his company is "not aware" of a Chinese policy urging against the use of IBM's servers.

Shares of IBM are down -0.95% to $184.18 on Tuesday.

TheStreet Ratings team rates INTL BUSINESS MACHINES CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTL BUSINESS MACHINES CORP (IBM) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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