International Business Machines Corp IBM is rapidly becoming a preferred provider of Blockchain technology globally, as evident from its recent deal wins and collaborations.
IBM was recently selected by the Digital Trade Chain Consortium – a group of seven European Bankers – to develop and host a Blockchain-based platform based on Hyperledger Fabric. The platform will help in simplifying trade financing transactions for small-and medium-sized enterprises (SMEs) in Europe.
The company has also partnered Japan-based AEON Financial Service and Colombia-based AOS to develop Blockchain-based solutions to serve the Asian financial market along with Colombian logistics and transport industry, respectively.
We note that IBM won 40 new Blockchain contracts in first-quarter 2017. Further, the company was working on more than 400 Blockchain processes with customers like Maersk, Northern Trust and others. The plethora of contract wins and partnerships will drive IBM's top-line growth going forward.
International Business Machines Corporation Revenue TTM
International Business Machines Corporation Revenue TTM | International Business Machines Corporation Quote
Blockchain Adoption to Drive IBM's Growth
Lately, Blockchain technology has gained significant acceptability among financial providers due to its speed and security. Blockchain is much faster than legacy technologies in completing a transaction as there is no need for manual processing or authentication by intermediaries.
Moreover, each block in a Blockchain represents an electronic record that cannot be revised or tampered with once it has been included in the chain. Additionally, each block has its own timestamp and a link to an earlier block in the chain, which provides all the parties easy access to information through a secure network.
We believe that Blockchain's growing adoption as a mainstream technology bodes well for IBM. This along with improving penetration of Watson, new system product launches in the second-half of 2017 and lower spending on systems development will boost profitability, which will eventually help the shares to rebound.
Notably, the stock has underperformed the S&P 500 on a year-to-date basis. While the Index gained 8.3%, the stock lost 6.4%.
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