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In China, International Business Machines Corp. (NYSE:IBM), Cisco Systems (CSCO) Face Possible Sales Blow

Boston, MA 06/03/2014 (wallstreetpr) – In the wake of the claims about the U.S. doping activities against foreign governments and the recent claims that a group of Chinese military officers were stealing trade secrets from U.S. companies, China appears to be taking retaliatory steps. There are widespread but denied rumors that Chinese authorizes have ordered local banks to replace International Business Machines Corp. (NYSE:IBM) servers over spying fears.

In post-Edward Snowden spying revelations, China appears to have become wary of U.S. technology companies. Cisco Systems Inc (NASDAQ:CSCO) was among the first companies to claim that the alleged spying by the U.S. National Security Agency was hampering its business in China and other foreign markets.

However, International Business Machines Corp. (NYSE:IBM) had not said a word about the impact on the alleged spying on its Chinese operations. Even in the latest claims that Chinese banks have been asked to drop its servers over financial security fears, IBM said it has no idea about such developments, and only cited its 30 years of faithful business in China.

According to Jeff Cross, a spokesman for IBM, the company is not aware of any government directive recommending elimination of its servers in Chinese banking industry. Instead, the IBM official said the company is a trusted partner in China and looks forward to growing in the country.

Big Server Business

If the rumored review of U.S. technologies in China results in the removal of IBM systems from the Chinese banking industry, the blow would be big on the company’s sales given the anticipated opportunity in the country’s server market. The Chinese server technology spending is expected to grow 8.4 percent per year through 2017. That will be higher than the anticipated 2.2 percent globally growth during the same period.

Promoting Domestic Brands

Reports emerged last week that China directed state-owned companies to cut business tied with U.S. consulting companies as the government vets technology companies operating in the country. Such moves could lead to aggressive promotion of domestic companies at the expense of International Business Machines Corp. (NYSE:IBM) and its U.S. peers Microsoft Corporation (NASDAQ:MSFT) and Cisco Systems, which have already felt some impact of the change of heart in China.

Published by Pamela Garcia

Pamela Garcia is a keen follower of U.S. stock market

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