International Business Machines Corporation (IBM – Free Report) recently inked a deal with Siam Commercial Bank for an undisclosed amount to augment the security of countless digital transactions on its platform and offer improved service to its customers. The collaboration aims to leverage IBM’s key expertise in offering a secure, resilient enterprise platform for mission critical apps and data on hybrid multi-cloud to mitigate risks and minimize fraudulent activities in financial transactions.
Per the agreement, all banking and finance applications of the Thailand-based bank that support massive customer data and online transactions will be made through IBM zSystems – a family name used by the company for all its z/Architecture mainframe computers. Data handled by IBM zSystems (“Z” stands for “zero downtime,” which reflects the reliability of the system) is encrypted by dedicated encryption processors over the complete ecosystem and encryption keys are handled with the most secure hardware security module in the industry, making it highly secured.
In addition, the Siam Commercial Bank has adopted IBM z/OS Connect to enable RESTFul APIs (application programming interfaces) in its core banking applications on IBM zSystems. This, in turn, will help to unlock the value of IBM Z subsystems and create consumable APIs in minutes to make Z applications and data central to the hybrid cloud strategy. It will increase the scalability, accelerate the response time and simplify the integration of its core IT infrastructure for high security, performance and agility of application development for innovative customer-centric and personalized products and services.
IBM expects its 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 boost 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 sprees 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 lost 4.7% over the past year compared with the industry’s decline of 11.2%. We are impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock.
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Clearfield, Inc. (CLFD – Free Report) , sporting a Zacks Rank #1 (Strong Buy), is a solid pick for investors in the broader industry. You can see the complete list of today’s Zacks #1 Rank stocks here.
Clearfield delivered an earnings surprise of 37.5%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 114.7% since June 2021. Over the past year, Clearfield has gained a solid 62.4%.
InterDigital, Inc. (IDCC – Free Report) also sports a Zacks Rank #1. It has a long-term earnings growth expectation of 15% and delivered a stellar earnings surprise of 141.1%, on average, in the trailing four quarters. Earnings estimates for the current year have moved up 69.1% since June 2021.
InterDigital is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. The company aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas. InterDigital’s global footprint, diversified product portfolio and the ability to penetrate different markets are impressive.
Sierra Wireless, Inc. (SWIR – Free Report) carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 15% and delivered an earnings surprise of 223.7%, on average, in the trailing four quarters.
Over the past year, Sierra Wireless has gained 48.6%. Earnings estimates for the current year for the stock have moved up 616.7% since June 2021. The company continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.