Mar 19, 2009|
Big Blue eyes the Sun
IBM to take on HP in the server market
IBM, the world's second largest technology company after HP, has shown interest in buying out the server computer maker Sun Microsystems for a consideration of US$ 7 bn. While there is no official comment from the two companies, the deal, if it goes through, will give IBM (also known as Big Blue) a bigger control of the server market and make it a fitting rival for the likes of HP, Dell and Microsoft.
Anyways, this deal comes at a time when the global IT budgets are seen shrinking on the back of recession in the developed world and severe slowdown in developing economies. Per the IT market trends tracker IDC Inc. as quoted in today's DNA Money, the worldwide server market declined 14% to US$ 13.5 bn in the fourth quarter of 2008. Revenues for the full year 2008 declined by 3.3% to US$ 53 bn.
So why is IBM eyeing a slowing market where the overall profitability is not so great? Possibly because Sun is a very strong player in the open source market, and has a strong presence in the BFSI (banking, financial services and insurance), telecom and government verticals. In India, for instance, Sun boasts of large customers like HDFC Bank, Punjab National Bank and Tata Teleservices. As per IDC data, the combination of IBM and Sun makes up around 42% of the global server market.
Stocks in Asia open mixed
Following the strength witnessed in the US markets yesterday, stocks in Asia have opened today on a mixed note. With the exception of China and Hong Kong, benchmark indices of all the other key markets are trading amidst strength currently. In the US yesterday, stocks rallied following the Federal Reserve (US central bank) announcement that it will buy up to US$ 300 bn in long term government bonds in order to bring down interest rates and push borrowing and spending in the economy.
While the US markets have seen the Fed's bond buying as a positive, we are reminded here of the warning given by Jim Rogers and Marc Faber that such actions will lead to high inflation in the future that will eventually lead to a crash in the bond market. Rogers, in fact, thinks the US government bonds to be "one of the great shorts of our time somewhere down the road."
India Inc.'s hopes lie on public deposits
The global financial crisis and the paucity of funds have compelled many Indian companies to look for different ways of raising funds. One such means of raising resources that has caught the fancy of India Inc. is fixed deposits from the public and shareholders. Take the case of Indian Hotels. As reported yesterday on the Wall Street Journal, the company is offering an annual interest rate of 9.5% on a two-year fixed deposit and 10% on a three-year term with a minimum deposit of Rs 25,000.
In fact, Indian Hotels is the second Tata Group company to adopt this route. Tata Motors earlier invited fixed-term deposits for the first time in 13 years as it seeked to refinance debt it took on to buy the Jaguar and Land Rover brands. Of course, many companies of the Tata Group have been facing liquidity problems due to a host of factors such as capex plans and expensive acquisitions. But the Tatas are not the only one going in for deposits. Recently, Mahindra Finance had invited fixed deposits from the public for the first time after 3 years. Just goes to show that Indian companies are being pushed to the limit when it comes to raising finances in these crunch times.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407