Offshore nations may keep U.S. tech firms in the black

[OhioChick]

Emerging markets boost IBM, but will they recession-proof other U.S. firms?

January 20, 2008 (Computerworld) -- IBM's third quarter earning statement wasn't just about numbers. It was also a defense of globalization, with the company describing the opportunities in emerging markets as equivalent to the "California Gold Rush."

And Mark Loughridge, IBM's chief financial officer, made sure that no one missed his point in the company's fourth quarter earnings call Thusday. He used the term "gold rush" three different times, adding in "virtual gold rush" and the "gold rush of the 21st Century" by countires anxious to build out their infrastructures with modern technologies. This is spending from the same countries that have also been getting U.S. tech jobs thanks to offshore outsourcing.

IBM backed its assertions with numbers, showing that 65% of its business is now overseas with emerging markets growing by double digits. In the 2006 calendar year, IBM's non-U.S. operations accounted for 60% of its revenue; IBM signed $1.4 billion in services deals last quarter in India alone. The company's fourth-quarter revenue was $28.9 billion, a 10% increase from the year ago quarter.

But will these emerging markets continue to grow, and will they avoid being dragged down by the U.S. in a downturn here? Based on its forecasts, IBM is confident of their success, and it will exceed analysts' expectation into 2010. That confidence is due to a broad range of countries such as Malaysia, Poland, South Africa, Ecuador "and dozens more around the world, with insatiable demands created by a growing middle class for public and private infrastructures to support explosive economic growth," said Loughridge on the earnings call.


http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9058079&intsrc=news_ts_head

[EV_Ares]

1. Yeah, had seen that and also you might add, looks like with the investments of Merrill, Citigroup

and others, we are having to rely on globalization a lot. Not exactly the same thing as the IBM earnings statement but still if things keep going with more ownership of our companies, real estate, etc, a huge change a coming.

[Deja Q]

2. Well, change the cost of living to match Poland's and the US will be competitive again too.

If other countries' middle classes are rising, the reasons seem fairly obvious.