A leading provider of Information technology (IT) solutions and services, International Business Machines Corp. (IBM) continued its expansion policies in Africa by opening a new office in Dar es Salaam, Tanzania.
The Dar es Salaam office is a part of IBM’s East Africa operations and will complement IBM's other East African branch office in Nairobi, Kenya, which acts as a business hub in the region.
The branch office will enable IBM to deliver solutions and services to its growing clientele in East Africa. IBM already serves a number of clients in key sectors spanning the telecommunications, oil & gas, finance and government verticals.
In Tanzania, IBM is collaborating with the National Microfinance Bank (NMB) to help transform the latter’s core banking technology infrastructure and support business growth. NMB is using IBM’s Power servers and storage technologies to serve a customer base of more than 1.4 million.
IBM is also aiding the Tanzanian government to support the adoption of information technologies and Tanzania's development in key areas such as education and research and development. IBM is also engaged in supporting a number of Universities in Tanzania, for imparting information technology training to the students in the region.
The new branch office in Dar es Salaam is a part of IBM’s strategy of expanding its footprint in the emerging markets of Africa. IBM has offices in more than 20 countries in Africa, including Senegal, South Africa, Morocco, Egypt, Tunisia, Algeria, Ghana, Nigeria, Kenya and Mauritius.
Recently, IBM opened a new office in Dakar, Senegal as a part of its West African operations. IBM has also been chosen by the Customs Directorate of Senegal's Ministry of Finance to help modernize Senegal's import and export processes.
IBM and its partner CFAO Technologies is also providing services to Cameroon’s Ministry of Finance by upgrading and securing the payroll process of government employees in the country.
In Nigeria, IBM is collaborating with several West African banks to help increase efficiencies and with Bharti Airtel across 16 African countries to develop its telecommunications operations.
IBM plans to open 10 new offices in Africa, bringing its total number of offices in the continent to 35 by 2015 as it starts operations in Tanzania and Angola, besides Senegal. By 2015, IBM expects to expand its operations to at least 23 countries across the continent.
IBM has invested approximately $300 million in Africa since 2006 and plans to increase its spending by 47.0% to $12.5 billion by 2015. This will help IBM tap the growing mobile-banking market in Africa over the long term.
IBM generates more than 50.0% of its revenue outside the U.S. especially from emerging economies such as South Africa, Malaysia, Poland, Ecuador, Singapore, Peru, Romania, the Czech Republic, the Middle East, Vietnam and Australia, thereby enabling the company to maintain stability in its business despite fluctuating economic conditions in the U.S.
IBM has been gaining a lot of traction in emerging markets, with many government agencies from different countries in the Asia-Pacific and African regions choosing IBM’s services and technical support for their operations, thus ensuring a steady flow of orders and market share gains across regions.
IBM expects these growth markets to drive revenues in 2011 and beyond. In 2010, IBM generated 29.0% of its total systems revenues from these markets. The company expects revenues from these markets to grow at least 40% by 2015.
IBM expects growth markets to contribute 30.0% of its total geographic revenue by 2015, up from 21.0% in 2010.
Recommendation
We believe that IBM will continue to benefit from its spate of new initiatives like smarter planet, business analytics and optimization, and cloud computing over the long term.
However, IBM continues to face stiff competition from a number of companies, including Hewlett Packard Co. (HPQ), Microsoft Corp. (MSFT), Oracle Corp. (ORCL) and EMC Corp. (EMC).
We remain Neutral over the long term (6-12 months) based on the belief that the company’s shares are fairly valued at current levels.
Currently, IBM has a Zacks #3 Rank, which implies a short-term Hold rating.
EMC CORP -MASS (EMC): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis Report
Be the first to comment