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IBM Sells Weather Assets to Francisco Partners for Core Focus
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International Business Machines Corporation (IBM - Free Report) has inked a definitive agreement with Francisco Partners to divest its weather business to focus on core operations. The transaction for an undisclosed amount is likely to close by the end of first-quarter 2024, subject to the fulfillment of regulatory approvals and other mandatory closing conditions.
In 2015, IBM acquired The Weather Company to leverage its own cloud infrastructure to provide accurate weather forecasts around the globe that aggregate more than 25 billion forecasts a day. The company expected to profit from the wave of data-crunching software by improving the Weather Company’s modeling technology and developing a new generation of predictive applications for incremental revenues.
However, over a period of time, IBM has streamlined its operations to focus on its core hybrid cloud and artificial intelligence businesses. It has spun off its legacy Managed Infrastructure Services business in a bid to accelerate its hybrid cloud growth strategy, focusing on enabling clients with accelerated digital transformation. It has further restructured its segments post the separation of its managed infrastructure services business from Kyndryl.
The Weather Company's assets set to be acquired by Francisco Partners include digital consumer-facing offerings, The Weather Channel mobile and cloud-based digital properties including Weather.com, Weather Underground and Storm Radar. It will also own the enterprise offerings for broadcast, media, aviation, advertising technology and data solutions for other emerging industries.
IBM, however, will retain the sustainability software business, including its Environmental Intelligence Suite (EIS), to help clients curate, measure, report and operationalize ESG (Environment Social and Governance) data for informed decision making. It intends to continue leveraging The Weather Company's weather data for EIS for tracking changes in land use, monitoring natural disasters and predicting crop yields.
Since its inception about two decades ago, Francisco Partners has invested in more than 400 technology firms to provide the best possible products and services for its customers and partners. This global investment firm is expected to replicate the same investment focus in The Weather Company to bring new tools and offer greater value to its customers.
IBM expects 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 drive its profitability.
The company has expanded its partner relationships in AI, network automation and security to help the telecommunications industry evolve as 5G and Edge Computing take center stage. It has extended the secured cloud services for business enterprises while improving their performance through reduced latency and higher data security features.
The stock has gained 6.2% over the past year compared with the industry’s rise of 0.9%. We are impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock.
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 8.8% in the last reported quarter. It has a VGM Score of B.
Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company offers services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 18.7% and delivered an earnings surprise of 12.8%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
AudioCodes Ltd. (AUDC - Free Report) is a Zacks Rank #2 stock. It has a long-term earnings growth expectation of 4.3% and delivered an earnings surprise of 2.2%, on average, in the trailing four quarters.
Headquartered in Lod, Israel, AudioCodes offers advanced communications software, products, and productivity solutions for the digital workplace. It provides a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.
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IBM Sells Weather Assets to Francisco Partners for Core Focus
International Business Machines Corporation (IBM - Free Report) has inked a definitive agreement with Francisco Partners to divest its weather business to focus on core operations. The transaction for an undisclosed amount is likely to close by the end of first-quarter 2024, subject to the fulfillment of regulatory approvals and other mandatory closing conditions.
In 2015, IBM acquired The Weather Company to leverage its own cloud infrastructure to provide accurate weather forecasts around the globe that aggregate more than 25 billion forecasts a day. The company expected to profit from the wave of data-crunching software by improving the Weather Company’s modeling technology and developing a new generation of predictive applications for incremental revenues.
However, over a period of time, IBM has streamlined its operations to focus on its core hybrid cloud and artificial intelligence businesses. It has spun off its legacy Managed Infrastructure Services business in a bid to accelerate its hybrid cloud growth strategy, focusing on enabling clients with accelerated digital transformation. It has further restructured its segments post the separation of its managed infrastructure services business from Kyndryl.
The Weather Company's assets set to be acquired by Francisco Partners include digital consumer-facing offerings, The Weather Channel mobile and cloud-based digital properties including Weather.com, Weather Underground and Storm Radar. It will also own the enterprise offerings for broadcast, media, aviation, advertising technology and data solutions for other emerging industries.
IBM, however, will retain the sustainability software business, including its Environmental Intelligence Suite (EIS), to help clients curate, measure, report and operationalize ESG (Environment Social and Governance) data for informed decision making. It intends to continue leveraging The Weather Company's weather data for EIS for tracking changes in land use, monitoring natural disasters and predicting crop yields.
Since its inception about two decades ago, Francisco Partners has invested in more than 400 technology firms to provide the best possible products and services for its customers and partners. This global investment firm is expected to replicate the same investment focus in The Weather Company to bring new tools and offer greater value to its customers.
IBM expects 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 drive its profitability.
The company has expanded its partner relationships in AI, network automation and security to help the telecommunications industry evolve as 5G and Edge Computing take center stage. It has extended the secured cloud services for business enterprises while improving their performance through reduced latency and higher data security features.
The stock has gained 6.2% over the past year compared with the industry’s rise of 0.9%. We are impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock.
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You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Picks
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 8.8% in the last reported quarter. It has a VGM Score of B.
Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company offers services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 18.7% and delivered an earnings surprise of 12.8%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
AudioCodes Ltd. (AUDC - Free Report) is a Zacks Rank #2 stock. It has a long-term earnings growth expectation of 4.3% and delivered an earnings surprise of 2.2%, on average, in the trailing four quarters.
Headquartered in Lod, Israel, AudioCodes offers advanced communications software, products, and productivity solutions for the digital workplace. It provides a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.