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Bolt from the Blue

Ben Rossi | Aug. 14, 2013
In an exclusive interview with CNME, Amr Refaat, GM, IBM Middle East, says that, whilst emerging markets were partly attributed for the dip, the Gulf has nothing to worry about.

"In our region, we're still bringing a lot of values in the team," says Refaat, IBM's Middle East GM. "We don't have the history of 30 years of people in the organisation.

"We have been growing a lot, so we're moving fast. In some areas, we're moving even faster than others. For sure, the areas that we have the potential to build more values are pillars that are really growing faster than others. If you look at it from a services perspective, the potential is very high and the growth is tremendous."

So perhaps the real worry doesn't lie at IBM, but further afield. Part of IBM's long-term appeal has always been its steady earnings growth in spite of uncertain tech spending in recent years.

What's more, in what comes as a sign of the company's importance as an indicator for markets in general, IBM is the most heavily weighted stock on the Dow Jones Industrial Average index.

Thus, a quarter of single-digit growth following many of double-digit growth is certainly a concern for IBM, but probably more so for competitors like Dell and HP, which continue to report plunges in revenue and profit in line with the unrelenting decay of the PC market.

"The analysts always expect to have great results for IBM," Refaat says, "So if you are a little off the expected numbers from the analysts, they get mad. It's a big thing.

"But then you have other competitors with nothing happening in the last 10 quarters and lost market share. The likes of HP and Dell have areas where I don't think the value is there. So you see now Dell is looking for somebody to buy because the value in the company is becoming lower and lower every day.

"These companies, I don't see the vision and how they will continue. They are really struggling because they don't have the same vision that we had a long time ago to bring the value."

That value, Refaat says, comes in delivering a solution "from A to Z".

"In IBM, we have a unique value proposition because we have all the pillars -- the hardware, the software, the platforms, the system integration, the consultancy -- to make it happen for our clients. This is the big difference between IBM and other players."

However, there is still no hiding the fact that IBM's value proposition was not enough to reach analyst earnings expectations for the first quarter.

Aside from the supposed stagnated growth in emerging markets, other analysts pointed to the dramatic decrease witnessed in hardware sales, which IBM did not counteract enough using the large growth in cloud services.


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