International Business Machines Corporation (NYSE:IBM) entered into a deal with Tencent on clound computing


International Business Machines Corporation (NYSE:IBM), a firm facing severe difficulties in order to keep its feet steady in the market, recently signed a deal with one of the biggest internet portal companies of China, Tencent. It is important to note here that the company was previously hopping to seal the deal with Twitter Inc (NASDAQ:TWTR)

Although the deal with Tencent sounds senseless and the researchers are not very sure as to whether it will prove beneficial for the company, but then again, the twitter deal would not have made much of a difference either. What is worth noting is that International Business Machines Corporation (NYSE:IBM) is in a habit of entering into deals with other companies even though the deals do not make much sense most of the time. The company previously had a deal with Apple Inc. (NASDAQ:AAPL) whereby it agreed to promote and sell company’s products to big enterprises.

According to the latest news, the management of Tencent and IBM has signed a memorandum of collaboration and both companies have agreed to cooperate in business matters. The companies will be focusing on public cloud services and the software will be made widely available for industries as a service solution. IBM and Tencent plan to target the small to medium sized companies, especially the ones that are located in the smaller cities. Healthcare industry will be their main focus.

Focusing on the healthcare industry might actually prove beneficial for IBM as it can help acquiring cloud transformation in this modern age of mobility. The company will have to integrate mobility in their cloud computing in order to transform operations and internal processes.

It is important to note here that the target audience will be the smaller firms; this portion of the deal looks promising even though it is very unlikely that Tencent will prove to be an effective marketing tool in the country of China.

International Business Machines Corporation (NYSE:IBM) is aware of the fact that it has no other way to pierce through the population of China. However, it is worth appreciating that the company found itself a good deal in the Chinese market, especially when no other similar cloud companies offered IBM their services.

International Business Machines Corporation (NYSE:IBM) has successfully diverted the attention of the observers from its bad financial figures by sealing this modest deal with a Chinese company and making it seem significant.

Coming to the stock prices of the company, International Business Machines Corporation (NYSE:IBM), on the last trading day, October 31, 2014, started its stocks at a price of $165.48 and closed at a price of $164.40, after hitting the highest figures of $165.59. The intraday range for the company’s stocks was recorded to be from $163.62 to $165.59.

The company has a total market capitalization of $162.65 billion and a P/E (price to earnings) ratio of 10.32. As far as the dividend yield of the company’s stocks is concerned, the figures are recorded to be around 2.68 percent.