International Business Machines IBM and Airbnb ABNB jointly announced the settlement of the patent lawsuit filed by the former. The terms of the settlement remained undisclosed and the lawsuit has been dropped by IBM.
Earlier in March, IBM sued Airbnb for the infringement of its four e-commerce-related patents in the United States District Court of Delaware. Also, IBM proposed to restrict Airbnb from using its technology along with compensation for the damages due to the violation.
Per the company, it had been trying to negotiate with Airbnb to reach a patent license agreement since May 2014, but to no success, which prompted it to file a lawsuit against the latter.
International Business Machines Corporation Price and Consensus
International Business Machines Corporation price-consensus-chart | International Business Machines Corporation Quote
A Wide Range of Patents Reflects Innovation
As of Jan 8, 2020, IBM maintained the lead spot for the 27th consecutive year, with 9,262 patents, reflecting growth of 2% year over year. This brings the total count of IBM’s U.S. patents to more than 140,000.
Notably, IBM patented more than 1,800 AI-related inventions in 2019 and more than 2,500 cloud-related U.S. patents, with hybrid cloud being a top priority.
The patents represent inventions in artificial intelligence (AI), cloud, cybersecurity and other key growth areas. Moreover, IBM’s leading position with the highest number of patent wins stands as a witness of its technical expertise in innovative research and development.
Meanwhile, IBM shares have lost 2.2% year to date compared with the Zacks Computer - Integrated Systems industry’s decline of 5.4%.
Developments in Cloud Platform to Drive Prospects
IBM largely benefits from the robust adoption of its hybrid cloud-based solutions and cloud migration services across enterprises, primarily due to the current digital transformation wave. Also, its ongoing initiatives to expand the cloud services platform with recent acquisitions and partnerships are major positives.
Notably, synergies from the Red Hat acquisition serve as a key catalyst. Revenues from Red Hat in the third quarter of 2020 rose 17% (up 16% at cc). Moreover, the company reported that more than 2,600 clients were utilizing Red Hat and IBM’s hybrid cloud platform.
Further, earlier this month, the company announced the takeover of Canada-based, Expertus Technologies Inc, a startup that specializes in providing innovative cloud-based electronic payment options to enterprises in the financial services sector.
Also, IBM announced the acquisition of Finland-based cloud-based startup, Nordcloud. The acquisition is likely to advance its hybrid cloud business and boost its competitive position in the cloud professional services market. Moreover, the acquisition of Instana, LLC in November 2020 will aid the management of cloud-based applications’ performance across the hybrid cloud environment.
Additionally, on Oct 8, IBM announced the spin-off of its Managed Infrastructure Services business to drive the acceleration in its hybrid cloud growth strategy, to provide clients with accelerated digital transformation. The spin-off is anticipated to bolster IBM’s hybrid cloud platform and AI expertise.
Moreover, the company partnered with Amazon’s AMZN cloud platform Amazon Web Services (AWS) to improve cybersecurity for customers across AWS and hybrid cloud environments.
Markedly, the company’s total Cloud revenues were $6 billion during third-quarter 2020, up 19.2% year over year, driven by a solid uptake in cloud services along with its digital modernization solutions.
Zacks Rank & A Stock to Consider
IBM currently has a Zacks Rank #4 (Sell).
A better-ranked stock in the broader technology sector is NVIDIA Corporation NVDA. NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for NVIDIA is currently pegged at 18.3%.
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