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IBM Boosts Hybrid Multicloud Services With Neudesic Buyout
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International Business Machines Corporation (IBM - Free Report) recently inked a definitive agreement to acquire Neudesic for an undisclosed amount. The transaction aims to complement its hybrid cloud growth strategy by augmenting its multicloud service capabilities and accelerating digital transformation for clients.
Headquartered in Irvine, CA, Neudesic offers a plethora of digital transformation services across advisory, application development, cloud migration, DevOps, integration, data engineering, data visualization and hyper-automation. It operates as a Gold Partner of Microsoft Corporation (MSFT - Free Report) with key expertise in multiple Azure competencies. Neudesic delivers Microsoft Azure cloud services across diverse sectors, including health and life sciences, financial services, energy and utilities, professional services and retail industries.
The transaction is likely to extend IBM Consulting’s certifications across the hybrid cloud ecosystem and bring on board deep Microsoft Azure cloud, data engineering and data analytics expertise. This, in turn, will likely facilitate the digital transformation of clients and improve their operational agility through application development, modernization and higher data capabilities.
Since April 2020, IBM has acquired more than 20 companies to strengthen its cloud transformation capabilities. The company expects its future growth to be driven primarily by analytics, cloud computing and security services. A better business mix, improving operating leverage through productivity gains and increased investments in growth opportunities will likely drive its profitability.
However, IBM’s ongoing, heavily time-consuming business model transition to the cloud is likely to be a headwind in the near term. Although the public cloud market is expected to be one of the fastest-growing IT categories with about 25% to 30% CAGR over the next five years, IBM is unlikely to keep up with its competitors. High integration risks from continuous acquisition spree are potent challenges. In addition, weakness in its traditional business and foreign exchange volatility remain significant concerns. Also, higher profit on lower revenues indicates that the company has been lowering costs to maintain profits. We believe that the scope for further cost-cutting is limited. Consequently, if costs are further reduced, there could be a negative impact on product quality. It could also lead to an additional delay in launching products, denting its long-term growth potential to some extent.
The stock has gained 8.3% over the past year compared with the industry’s growth of 4.8%. We remain impressed with the inherent growth potential of this Zacks Rank #4 (Sell) stock.
Viavi delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 10.8% since February 2021, while that for the next year is up 9.2%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
Vocera Communications, Inc. , sporting a Zacks Rank #1, is another key pick. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 115.4%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 66.5%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.
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IBM Boosts Hybrid Multicloud Services With Neudesic Buyout
International Business Machines Corporation (IBM - Free Report) recently inked a definitive agreement to acquire Neudesic for an undisclosed amount. The transaction aims to complement its hybrid cloud growth strategy by augmenting its multicloud service capabilities and accelerating digital transformation for clients.
Headquartered in Irvine, CA, Neudesic offers a plethora of digital transformation services across advisory, application development, cloud migration, DevOps, integration, data engineering, data visualization and hyper-automation. It operates as a Gold Partner of Microsoft Corporation (MSFT - Free Report) with key expertise in multiple Azure competencies. Neudesic delivers Microsoft Azure cloud services across diverse sectors, including health and life sciences, financial services, energy and utilities, professional services and retail industries.
The transaction is likely to extend IBM Consulting’s certifications across the hybrid cloud ecosystem and bring on board deep Microsoft Azure cloud, data engineering and data analytics expertise. This, in turn, will likely facilitate the digital transformation of clients and improve their operational agility through application development, modernization and higher data capabilities.
Since April 2020, IBM has acquired more than 20 companies to strengthen its cloud transformation capabilities. The company expects its future growth to be driven primarily by analytics, cloud computing and security services. A better business mix, improving operating leverage through productivity gains and increased investments in growth opportunities will likely drive its profitability.
However, IBM’s ongoing, heavily time-consuming business model transition to the cloud is likely to be a headwind in the near term. Although the public cloud market is expected to be one of the fastest-growing IT categories with about 25% to 30% CAGR over the next five years, IBM is unlikely to keep up with its competitors. High integration risks from continuous acquisition spree are potent challenges. In addition, weakness in its traditional business and foreign exchange volatility remain significant concerns. Also, higher profit on lower revenues indicates that the company has been lowering costs to maintain profits. We believe that the scope for further cost-cutting is limited. Consequently, if costs are further reduced, there could be a negative impact on product quality. It could also lead to an additional delay in launching products, denting its long-term growth potential to some extent.
The stock has gained 8.3% over the past year compared with the industry’s growth of 4.8%. We remain impressed with the inherent growth potential of this Zacks Rank #4 (Sell) stock.
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Viavi Solutions Inc. (VIAV - Free Report) , carrying a Zacks Rank #2 (Buy), is a solid pick for investors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Viavi delivered a modest earnings surprise of 15.6%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 10.8% since February 2021, while that for the next year is up 9.2%.
Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. Its wireless and fiber test solutions are in the early stages of a multi-year investment cycle fueled by the transition of OEMs and service providers to superfast 5G networks. Viavi expects growth to be driven by the secular demand for 5G wireless, fiber and 3D sensing.
Vocera Communications, Inc. , sporting a Zacks Rank #1, is another key pick. It has a long-term earnings growth expectation of 18% and delivered a stellar earnings surprise of 115.4%, on average, in the trailing four quarters.
Over the past year, Vocera has gained 66.5%. It offers an all-inclusive digital platform for hands-free communication via secure text messaging, alert and alarm management. This, in turn, augments clinical workflow by enabling the interoperability of the solution with a significant number of clinical and operational systems used in hospitals today.