Erich Clementi, senior vice-president of IBM Global Technology Services, stated that IBM’s cloud based revenues should grow to about $7 billion in 2015. Three billion dollars of that revenue will be the direct result of the acquisition. However, Mr. Clementi realizes that IBM is still in the early stages of gaining market share from companies like Amazon.com, Inc. (NASDAQ:AMZN). In fact, he expects total industry cloud revenues in the ballpark of $250 billion in 2015. A measly 2.8% of total sales may seem small, but it is near priceless considering the massive move toward cloud technologies.
To compete against Amazon, International Business Machines Corp. (NYSE:IBM) had to acquire SoftLayer Tech. It had no choice. Now, IBM can attract small and medium size businesses that need to store information or rent space.
International Business Machines Corp. (NYSE:IBM) is in a great position to amend its tactical approach as necessary. For instance, IBM’s excessive free cash flow enables it to pursue opportunities that can further increase shareholder value. While Amazon.com, Inc. (NASDAQ:AMZN) is consistently strapped for cash, IBM has the freedom to move as needed.
Since taking office early last year, CEO Ginni Rometty pledged to deliver long-term shareholder value and performance. She is doing so. With a P/E ratio of 14.05 and an EPS of $14.50, IBM is well on its way to achieve its target of $20 in EPS by 2015. IBM’s EPS is expected to reach $15.53 by this year’s end, and acquiring SoftLayer Technology will help the company meet its $20 EPS target.
Both Under Armour Inc (NYSE:UA) and International Business Machines Corp. (NYSE:IBM) are sailing into uncharted territory. However, they both have a history of executing well and achieving shareholder value. Jumping on board for the ride will prove to be a phenomenal move.
The article The 2 Biggest Opportunities You May See for a While originally appeared on Fool.com and is written by Brendan Marasco.
Brendan Marasco has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Nike, and Under Armour. The Motley Fool owns shares of Amazon.com, International Business Machines., Nike, and Under Armour. Brendan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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