WASHINGTON — Despite less than favorable stock ratings from Wall Street, IBM Corp. chief Ginni Rometty is trumpeting the company’s innovations as it heads into 2015. In her words, IBM is “cool”.
“We will change the face of healthcare,” the company’s chairman, president and CEO said to a crowded ballroom at the Renaissance Hotel, the setting Wednesday for a breakfast hosted by the Economic Club of Washington.
IBM is set to roll out an oncology advisor, an evolution of the Watson supercomputer that processes and spits out information more like a human brain than a traditional arithmetical computer. Rometty said the machine has “learned” or ingested hundreds of medical journals, information from leading cancer specialists, and patient medical records. It will serve as an assistant to doctors treating 1 million cancer patients in Asia.
It doesn’t end with healthcare, Rometty said. Next week IBM will launch a dozen professional apps, including one in partnership with Apple Inc. that would enable flight attendants to re-book a flight from the air when a delay causes a passenger to miss a connection. How this would actually be implemented and which airlines would adopt it remains to be seen.
The firm, known historically for its mainframe hardware business, is now what Rometty calls an enterprise solutions company. The CEO said hardware will account for only 10 percent of the company’s business in 2015.
With a focus on the technology needs of its top clients, IBM is transitioning into the arena of cloud computing, social and mobile platforms, and data analytics.
Yet Wall Street analysts are hesitant to board the bus to Rometty’s new frontier. After lower than expected reported earnings in the third quarter ending on Sept 30, Credit Suisse managing director Kulbinder Garcha lowered projected company earnings by 10 percent in 2014 to $16.16 per share, and by 23 percent in 2015 to $15.24 per share.
In his report following the earnings release, Garcha said Credit Suisse “remain[s] concerned that the fundamental headwinds facing IBM are challenging and accelerating.” Among the issues: a decline in organic revenue, meaning revenue produced by the firm and not through activities such as mergers and acquisitions.
Analysts from Credit Suisse and Jefferies & Company Inc. rated the stock as underperforming.
“You always steward for the long term,” Rometty said. “We constantly improve and change [the] portfolio on our own.”
For now, IBM is investing cash in areas like research and development instead of handing the dollars right back to its shareholders. Steve Mills, a senior executive with IBM’s systems and solutions division, discussed the company’s top investment interests with Garcha Thursday at a Credit-Suisse technology conference webcast.
“We’re plowing money into the areas that are fastest growing,” Mills said.