Back to top

Analyst Blog

In a bid to strengthen its presence in Morocco, International Business Machines Corp (IBM - Analyst Report) will setup a new Global Delivery Center in Casablanca. This initiative is expected to create approximately 400 jobs in the country over the next three years.

Through this delivery center, the IT bellwether will deliver solutions and services to its growing clientele in the region, including solutions related to big data, cloud and mobile. Currently, the company provides IT support to a number of government institutions and private organizations in Morocco.

The new center is in accordance with the company’s extensive expansion policy in Africa. In 2012, IBM opened its second branch office in Rabat, Morocco. Apart from this, the company’s Innovation and Technical Exploration Center in the city of Casablanca has been operational since 2008. The company operates through more than 20 offices across the continent. By 2015, it expects to expand its operations to at least 50 cities across the continent.

The company has already invested more than $300 million over the last few years and it expects the IT market to grow to $12.5 billion in 2015. IBM already has a strong presence in Africa despite the socio-political instability and underdeveloped economic conditions. Its strong presence is expected to help the company explore this under-penetrated market, which will likely ensure growth opportunity over the long term.

IBM expects the growth markets (Asia-Pacific, EMEA and Latin America) to contribute 30.0% of its total geographic revenue by 2015, up from 24.0% in 2012.

We believe that the IT major remains well positioned for long-term growth based on its four key growth initiatives: smarter planet, growth markets, business analytics and cloud computing, which are expected to deliver at least $50 billion in revenues by fiscal 2015. We also believe that IBM’s strong product pipeline, expansion into emerging markets and continuous acquisitions will help it to achieve its growth target going forward.

However, we remain cautious on the overall IT spending environment and believe macroeconomic concerns will continue to hurt IBM’s growth in the near term. Increasing competition from Accenture (ACN - Analyst Report), Hewlett-Packard (HPQ - Analyst Report) and Microsoft (MSFT - Analyst Report) are the headwinds for the company.

Currently, IBM has a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.