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IBM Corp's MobileFirst for iOS Continues to Win Customers

Zacks Equity Research

International Business Machines Corp’s IBM MobileFirst for iOS and cloud-based solutions continues to win airline customers. Recently, IBM collaborated with Japan Airlines (JAL) to jointly develop an improved aircraft maintenance solution based on its MobileFirst for iOS platform.

By using IBM MobileFirst on Apple’s AAPL iPad Pro and iPhone aircraft engineers can easily access tools and processes that speed up aircraft maintenance process. The solution will aid JAL aircraft engineers to focus on higher-level issues by saving more time on routine maintenance checks. The app eliminates the need of manual-based processes and saves time on preparing and reporting technical issues.

Recently, Finland’s largest airline Finnair entered into an agreement with the company to use Mobile at Scale for iOS, which allows clients to deploy multiple iOS apps over a multi-year period. The airline will rollout the first application for aircraft line maintenance in early 2017.

Meanwhile, IBM’s cloud platform was selected by the American Airlines Group AAL to enhance its enterprise scalability, flexibility and reliability. (Read More: IBM's Cloud Platform Selected by American Airlines Group)

Notably, in Oct 2015, IBM had won a ten-year technology services agreement worth approximately $700 million from Etihad Airways. The agreement included plans for the creation of a new cloud data centre in Abu Dhabi.
 

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Cloud & Acquisitions Key Catalyst for IBM

IBM’s strategic imperatives (cloud, analytics, mobility and security) are its long-term growth drivers. In the latest quarter, revenues from strategic imperatives increased 16% on a year-over-year basis to $8.3 billion. Notably, cloud revenues jumped 44%.

We note that IBM continues to expand its cloud footprint by announcing new cloud centers in South Korea, Norway and UK. The company now has more than 50 cloud centers globally. Further, IBM’s partnership with Workday and VMware VMW is expected to drive cloud adoption going ahead.

Moreover, aggressive acquisitions boost IBM’s growth prospects and competitive position. Recent addition of Sanovi Technologies and Promontory Financial Group into the company’s business will strengthen footprint in different industries like continuity & hybrid cloud recovery and risk management & regulatory compliance.

Notably, IBM has underperformed the broader Zacks Computer Integrated Systems industry on a year-to-date basis. While the industry generated a return of 31%, the stock returned 22.5%. However, strong growth from strategic initiatives and acquisitions will aid the stock to rebound in the quarters ahead.

 



Zacks Rank & Key Pick

Currently, IBM carries a Zacks Rank #3 (Hold). VMware with Zacks Rank #2 (Buy) is a better-ranked stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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