On the day when IBM Corp (NYSE:IBM) signed a $1.25 billion contract with WPP, a discussion was held on CNBC wherein the point of discussion pertained to the future of this prominent tech brand.
Meant to last over seven years, the intention is to offer cloud services to its European users. What is even more noteworthy is the fact that this deal is not the first of its kind and comes in the wake of several deals worth billions with organizations like Lufthansa and ABN Amro. As GM of IBM, Bart Van den Daele, explains –
“(There’s) a new wave of these deals which is still continuing and we see it going forward. Now you see the first results with Lufthansa, ABN Amro and WPP and there will be others.”
Given such optimism, it is but natural for experts and investors alike to feel good about the stock but unfortunately the reality is far from it. David Nelson, a financial analyst with Belpointe Asset Management, painted a grim picture for IBM Corp (NYSE:IBM) when he classified it as a bearish case on CNBC. He claimed to have based his opinion on the company’s fundamentals, saying that their revenue, cash-flow and more importantly cash on the balance sheet was on the decline while debt was on the rise. Another indicator which he took into account was the buy-back policy of the company.
On the other hand, another expert hailing from Lido isle Advisors, Jason Rotman, labeled IBM Corp (NYSE:IBM) as bullish owing to the recently concluded deals. As far as the buy-back issue was concerned, he said that previous records of companies which had opted for buy-back had been positive, meaning the outlook could be equally bright for IBM too, if not more. Therefore, the company was far from dead – in fact it appears to be well on its way towards resurrection.
Since the latest acquisitions are a part of the new CEO Ginni Rometty’s efforts to revive and revamp IBM Corp (NYSE:IBM), it remains to be seen which of these experts is proven right in the near future.
This article has been written by Vinita Basu.