*IBM downgrades forecast; spells out significant changes * * Excerpts from concall: Potential pricing concern in traditional IT business *
*Further to a disappointing 3QCY14 earnings report, IBM dropped its CY14 outlook and sold its chip manufacturing activities at a big loss. * *It cited that changes in technology are taking place at a faster pace than it anticipated, forcing its hand to announcing divestiture of non-core segments. * *The key highlights from Indian IT Services perspective were the drop in the company’s services business owing to pressure in pricing; and its comments on the pace of change in technological landscape. Also, IBM announced its intent of getting more aggressive with its shift to global delivery network model * *Implications for Indian IT: In our view, IBM’s moves imply heightened competitive intensity in the bread-n-butter traditional IT Services outsourcing business. While IBM’s announcement of a more aggressive foray will rub off somewhat negatively on the Indian IT. But this also reaffirms IBM’s lagging state of affairs in this segment, and Indian counterparts’ deal-win prowess. Whether IBM can knock them off their perch will one be discovered gradually, but the development has negative pricing connotations in the traditional IT business. * *ON IT SERVICES (DIRECTLY RELEVANT TO INDIAN PEERS) Commentary on Services business Revenue performance: Flat YoY * Services generated USD13.7b in revenue, flat YoY at constant currency adjusted for the customer care divestiture. Total backlog was USD128b. Global technology services (GRS) revenue was USD9.2b, down 3% YoY up 1% YoY in constant currency, after adjusting for the divestiture. GTS outsourcing grew 2% YoY at constant currency adjusted for the divestiture. Global business services (GBS) revenue was USD4.5b, down 1% YoY at constant currency. Consulting and systems integration declined 1% YoY and was flat at constant currency. We had Strong double-digit growth in our practices that are highly differentiated), offset by declines in the areas that are becoming less differentiated, such as the more traditional back office implementations. -- -- NIFTYVIEWS.COM NOW A FREE OPEN SOURCE WEBSITE. http://www.niftyviews.com/ Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture.The administrator of www.Niftyviews.com just provide a platform for the authors to express their opinion and take no guarantee for the genuineness of the same."ANY member of this forum doesnt prepare or publish any research report; or ii. provide research report; or iii. make 'buy/sell/hold' recommendation; or iv. give price target; --- You received this message because you are subscribed to the Google Groups "Niftyviews.com" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
