Clue for Investment
The business software group is a sector that needs to be closely watched on the heels of a positive EPS report from International Business Machines. While IBM technically falls under the computer hardware group, it has been transforming its business for years and now greatly benefits from its service arm. One of the positives from the report was that IBM also offered a brighter outlook for 2011 on the heels of a recent increase in signed outsourcing agreements. IBM's outsourcing business had declined the previous three quarters compared with the same periods a year earlier, a trend that worried analysts. The positive comments should provide a boost for service-oriented stocks. While it's not a certainty that IT spending will increase this year, the fact that a large player like IBM is seeing an increase in business may act as a potential catalyst for the group.
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