Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  International Business Machines Corporation    IBM

INTERNATIONAL BUSINESS MACHINES CORPORAT

(IBM)
  Report  
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsOfficial PublicationsSector newsAnalyst Recommendations

In biggest Indian IT deal, HCL Tech to buy $1.8 billion of IBM software

share with twitter share with LinkedIn share with facebook
share via e-mail
0
12/07/2018 | 06:22am EDT
The logo for IBM is displayed on a screen on the floor of the NYSE in New York

MUMBAI/BENGALURU (Reuters) - HCL Technologies will buy some software assets from U.S.-based IBM Corp for $1.8 billion (1.41 billion pounds), the companies said on Friday, marking the largest purchase ever by an Indian IT services firm.

HCL Tech will buy seven software platforms from IBM, giving it a larger clientele and allowing it to step up its presence in areas such as commerce, security, and marketing — an over $50 billion market opportunity that the Indian firm said would help boost profits.

The deal will also help HCL collect additional revenue of about $650 million in the second year of the acquisition on a run-rate basis, though sales would take a roughly $25 million hit in the first year.

Shares in HCL, which lags bigger local rivals Tata Consultancy Services and Infosys in big data, analytics and cloud computing, tumbled as much as 7.7 percent on Friday to their lowest since July 6 after the deal was announced.

The fall knocked some $1.5 billion off the market value of the company chaired by India's sixth-richest person Shiv Nadar.

Some IT analysts said the deal did not make strategic sense for HCL over the long term because it already maintained a partnership with IBM for a bulk of the products it was buying and was overpaying for the purchase.

The products being acquired were in the middle or end of their life cycles and would likely not show more than a mid-single digit percentage growth, Indian brokerage Axis Capital said in a note.

"This deal is a negative from HCL's standpoint," said Sudheer Guntupalli, an analyst with Ambit Capital in Mumbai, adding that HCL would have to keep investing in these products to ensure they don't become obsolete.

HCL recorded revenue of 505.69 billion rupees (5.60 billion pounds) in the last fiscal year. TCS, the largest listed company in India, made 1.23 trillion rupees in revenue, while Infosys raked in 705.22 billion rupees.

The company plans to fund the deal — which is expected to close by mid-2019 — through internal accruals and debt of $300 million at close and pay most of the acquisition price after the first year.

For IBM, the deal is an opportunity to further trim its legacy businesses as it focuses on cloud computing. The U.S. company has been hurt by slowing software sales and wavering demand for mainframe servers, making a turnaround difficult.

The products it is selling include its secure-device management product BigFix, marketing automation software Unica and workstream collaboration product Connections.

(Additional reporting by Vibhuti Sharma in Bengaluru; Editing by Sayantani Ghosh, Gopakumar Warrier and Sai Sachin Ravikumar)

By Sankalp Phartiyal and Krishna V Kurup

Stocks mentioned in the article
ChangeLast1st jan.
HCL TECHNOLOGIES -0.76% 1019.65 End-of-day quote.6.55%
INFOSYS LTD 0.71% 784.85 End-of-day quote.18.27%
INTERNATIONAL BUSINESS MACHINES CORPORATION 0.42% 144.02 Delayed Quote.25.57%
TATA CONSULTANCY SERVICES -1.85% 2106 End-of-day quote.13.35%
VALUE8 -1.43% 5.5 Delayed Quote.17.72%
WIPRO 0.04% 260 End-of-day quote.4.74%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on INTERNATIONAL BUSINESS MAC
06:28aWall Street finds blockchain hard to tame after early euphoria
RE
06:28aFACTBOX - BLOCKCHAIN PROJECTS : A status update
RE
07/15MARKET SNAPSHOT: Should Investors Prepare For A 'shock And Awe' Campaign From..
DJ
07/15MEDIA LIVESTREAM : IBM TO REUNITE ORIGINAL APOLLO 11 MISSION TECHNICIANS AHEAD O..
PU
07/12INTERNATIONAL BUSINESS MACHINES : IBM Strengthens Hybrid Cloud With Red Hat Acqu..
DJ
07/12INTERNATIONAL BUSINESS MACHINES : Judge sides with Pentagon and Amazon in cloud ..
AQ
07/12US AIR FORCE : AFRL, IBM to pioneer Quantum Information Technology for DOD
AQ
07/11INTERNATIONAL BUSINESS MACHINES : ECB hires ex-Goldman Sachs banker as watchdog
RE
07/11ARTIFICIAL INTELLIGENCE MARKET 2019 : is Expected to Grow $54 Billion by 2026 wi..
AQ
07/11INTERNATIONAL BUSINESS MACHINES : Amazon, Microsoft wage war over the Pentagon's..
AQ
More news
Financials (USD)
Sales 2019 77 203 M
EBIT 2019 13 813 M
Net income 2019 10 976 M
Debt 2019 30 645 M
Yield 2019 4,50%
P/E ratio 2019 11,6x
P/E ratio 2020 11,1x
EV / Sales2019 2,04x
EV / Sales2020 1,99x
Capitalization 127 B
Chart INTERNATIONAL BUSINESS MACHINES CORPORATION
Duration : Period :
International Business Machines Corporation Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends INTERNATIONAL BUSINESS MAC
Short TermMid-TermLong Term
TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 22
Average target price 149  $
Last Close Price 143  $
Spread / Highest target 20,7%
Spread / Average Target 4,00%
Spread / Lowest Target -19,8%
EPS Revisions
Managers
NameTitle
Virginia M. Rometty Chairman, President & Chief Executive Officer
James J. Kavanaugh Chief Financial Officer & Senior Vice President
John E. Kelly Senior VP-Cognitive Solutions & Research
Martin Jetter SVP-Global Technology Services
Sidney Taurel Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
INTERNATIONAL BUSINESS MACHINES CORPORATION25.57%125 229
ACCENTURE38.52%124 032
TATA CONSULTANCY SERVICES13.35%115 303
AUTOMATIC DATA PROCESSING25.85%71 904
VMWARE, INC.25.58%68 948
INFOSYS LTD18.27%45 019