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Can Strategic Imperatives Boost IBM’s Revenue Growth in 2017?

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IBM’s Strategic Imperatives contribution

Earlier in this series, we learned about IBM’s (IBM) approach to boost Watson’s capabilities and about initiatives such as investing in the IoT (Internet of Things) and blockchain technology.

As corporate IT (information technology) spending made its way towards the cloud, IBM changed its strategy and announced that its Strategic Imperatives segment would constitute 40% of its business by the end of 2018 and be worth approximately $40 billion.

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IBM’s Strategic Imperatives segment, which comprises the company’s investments in cloud, analytics, mobile, social, and security technologies, rose 16.0% to $8.0 billion. In the last 12 months, IBM’s Strategic Imperatives has garnered $32.0 billion in revenue, which is about 40.0% of its overall revenue. BM’s Cloud Services revenue rose 42.0% to $3.4 billion, while the cloud-as-a-service run rate rose 65.0% to reach an annual run rate of $7.5 billion. IBM’s current pace indicates that it will likely meet or even exceed its expectations.
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Synergies expectations from IBM’s strategic acquisitions in 2017

Morgan Stanley (MS) analyst Katy Huberty believes the market has underappreciated IBM’s growth potential and its initiatives toward analytics and cloud businesses. Morgan Stanley’s faith in IBM likely stems from the fact that it believes data is the “holy grail of AI” and IBM’s strategic acquisitions to boost Watson revolve around the same idea.

In 2016 alone, IBM spent more than $5 billion on acquisitions. Market and industry analysts are keeping a close eye on these acquisitions to ascertain if it can integrate and harness the synergies expected and boost strategic imperatives in 2017.

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