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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.

"We've been in the hardware market for a long time, and to keep growing every quarter is not an easy task," Refaat admits. "So for sure there are some areas where we need to enhance, but I see the steps that IBM is following as ones that will bring back the positive signs on the hardware."

Refaat was also keen to reveal that, perhaps surprisingly to some, IBM hardware sales are in fact growing in the Middle East. In this segment, the region that he's charged with managing has escaped much of the global woes. "It's not growing as fast as services," he says. "But it is growing."

No reboundA rebound for IBM failed to materialise in the second quarter, as profit, sales and revenue further declined. However, operating earnings per share, excluding restructuring charges, was $3.91, above the analyst forecast of $3.77, and IBM raised its forecast for earnings per share for the year.

The decline in both profit and revenue was worse than last quarter, but traders, apparently pleased by IBM earnings-per-share numbers, boosted company shares in after-hours trading.

Though services and overall hardware sales dropped during the second quarter, company officials stressed strength in software and big systems.

"In the second quarter, we delivered strong performance in our higher-value software and mainframe businesses," said Ginni Rometty, IBM Chairman, President and CEO. She added that she expects improvement in the last half of the year, partly as a result of a number of restructuring efforts that include acquisitions, sales of non-strategic businesses and further skills rebalancing.

However, it was revenue in the Americas and Asia-Pacific which saw the dips, as EMEA revenue remained flat at $7.8 billion. Whilst figures were not revealed specifically for the Middle East, it is thought that revenue grew in the region.

"Things are changing," Refaat says. "And this is a constant in our typical IT market.

"So in the areas where we think values are lowering, we do some shuffling. This is the way we see it -- we need to bring value and be more effective with our clients. This is the only way we have been perceived in the marketplace," he explains.

Despite these changing times, Refaat is far from worried about the future of IBM. In fact, he believes competitors are looking to IBM to know what to do next.

"Other companies are not shy to try to copy IBM models or even say so," he says. "When you talk to some of the executives from other competitors, they say they are trying to copy IBM."

And on one of his firm's competitors, Refaat adds, "You have seen HP saying it loudly in the market. They bought a consultancy firm and are trying to integrate it. I don't know how it's moving now, but I don't think it's moving well."


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