Big Blue looks like it is in big trouble if the third quarter reports released on the 18th of October 2011 are anything to go by. Investors have been quite happy with the tech conglomerate and giant. IBM's performance and profit margins in the last five quarters have been impressive. This is the first time in a long while that IBM's quarterly reports have given buyers and stock holders a reason to furrow their brows.
Q3 Disappoints & Stock Plummets
IBM is facing gunfire from many different sources which includes the fact that rivals like Oracle and Accenture have released strong reports and profit margins for their investors. IBM's development and expansion in their core business areas has been relatively slow and the 3.7 percent plummet in stock prices in quarter 3 reflect the wide ranging disapproval of this stagnancy.
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Investors have other concerns with Big Blue when it comes to their corporate IT spending patterns which are decidedly uninspiring. With multiple levels of approval needed and a lackluster mindset when it comes to IT spending, it was inevitable for the spending to decelerate. Needless to add, the U.S. economic conditions are the reason behind this slow down and the budget cuts that new projects initiated by IBM have had to cope with.
Revenue Rise Gives Hope
While the stock prices fell with the quarter three reports, the revenue generated as well as the share price has performed better than what was predicted for the end of quarter three. IBM missed their revenue expectations which were $26.26 billion by just a small margin which came in at $26.16 billion while indicating an 8 percent rise. While 2011 has not proven to be a remarkable year when it comes to tech spending for IBM, there are still some bright news for IBM investors.
Entrance into Cloud Storage Market
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Elongated sales cycles and delays in important projects have caused a stock price dip but IBM is all set to return to its stellar performance levels with the acquisition of cluster and grid management related software companies such as Platform Computing and Nirvanix which occurred just a week ago. In an effort to change the pattern that caused the dip in its stock price in quarter three, they have made a grand entrance into the hotbed of the cloud storage market.
The start-up company Nirvanix has been making innovative contributions to the cloud storage industry and with the distribution network and sales engine primed by IBM Global Services, there will be no looking back. Smart investors have already seen the opportunities that this unification will bring in the future and stock prices rose smartly for the first time in 52 weeks after this announcement. Competitors such as Amazon, Oracle, and Google have had to sit up and take notice due to the inroads that IBM is forging in the cloud storage market.
Better 2012 Forecast
Though the global environment is far from conducive to growth and expansion, plenty of investors and portfolio managers believe that IBM will triumph in the far end of 2011 and into 2012, aided by their recurring revenue maintenance agreements and new cloud storage market ventures.