24 October 2017
Elton Cane

Elton Cane

Elton Cane - writer & tech geek

116Posts 526,142Views 54Comments

IBM results are good news for fintech sector

18 January 2008  |  4286 views  |  1

After previewing its fourth quarter results on Monday, IBM yesterday provided more details yesterday, which provided a boost for the tech sector generally. And although it may be too early to tell, they could also show that any falls in bank tech spending resulting from the current financial crisis aren't too severe (yet).

The company saw earnings per share for the quarter of $2.80, beating analysts' forecast of $2.60 and representing a 24% increase over the same period in 2006.

The company said growth was especially strong in emerging markets and in its services and software groups, although the company's System z mainframe business didn't perform as well due to a new release on the horizon.

But the most interesting section for us in the earnings call was when CFO Mark Loughridge outlined perfomance in its financial services vertical:

We had growth in all sectors with particular strength in Communications but let me spend a minute on Financial Services sector. This quarter, growth in Financial Services was 11%, or 5% at constant currency. This is consistent with IBM’s total sector performance and also more in line with FSS growth in the first half of the year.

Similar to last quarter, by brand, the largest impact was in System z worldwide as customers look forward to the new product. So this impact was more a function of the product transition than the sector.

By geography the U.S., which represents about 25% of the total, was flat. But 75% of the Financial Services business is outside the U.S., and was up 15%, or 6% at constant currency. So our very good performance outside of the U.S. drove solid results in the sector.

Can we take IBM's results as an indicator of wider financial technology spending worldwide? Well, the company is by revenue terms far and away the largest supplier of technology and services to the industry. But when faced with budget pressures, perhaps banks are more likely to go with "safe" purchase decisions, required upgrades on critical infrastructure licenses, and cost-saving outsourcing agreements -- all areas that play to IBM's strengths.

It's interesting to note that in the US, where bank losses have been the most severe, tech spending has already gone flat, while other geographies continued to grow. Whether that continues to be the case throughout this year will depend largely on whether Western Europe and the US enter into recession, and how well banks outside the US are insulated from the ongoing deflation of the credit bubble.

TagsWholesale banking

Comments: (1)

Steve Ellis
Steve Ellis - Metia - London | 18 January, 2008, 18:45

Sramana Mitra has a good follow up to her review of HP's results -  in it she also emphasizes the significance of the contribution from Emerging Markets http://sramanamitra.com/2008/01/17/trend-radar-2008-emerging-markets/

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Latest posts from Elton

Would you pay to put your mortgage out to tender?

18 September 2014  |  3016 views  |  0 comments | recomends Recommends 0 TagsMobile & onlineRetail bankingGroupFuture Finance

Contactless payments are not a choice

29 August 2014  |  4283 views  |  4 comments | recomends Recommends 0 TagsCardsSecurityGroupFuture Finance

Cryptocurrency can cure cancer

07 August 2014  |  2515 views  |  1 comments | recomends Recommends 0 TagsBlockchainInnovationGroupFuture Finance

Will regulation strangle or enable 'quasi-banks'?

26 March 2014  |  6437 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationInnovationGroupFuture Finance

Good at maths? Ask your bank for a better mortgage rate

03 March 2014  |  3684 views  |  0 comments | recomends Recommends 1 TagsRisk & regulationRetail bankingGroupFuture Finance

Elton's profile

job title Journalist copywriter and marketer
location Brisbane
member since 2012
Summary profile See full profile »
Writer and media production person

Elton's expertise

Member since 2007
116 posts54 comments

Who's commenting on Elton's posts