Is it possible to cut your way to growth? IBM
For Dassault, the deal brings key assets that had been managed by IBM in-house. For IBM, the deal trades a nonessential piece of its business for greater liquidity.
That's the theory, anyway. Yet PLM is important technology, a well-established method for managing the creation and introduction of large-scale products and related manufacturing operations -- precisely the sort of complex project that IBM manages via its services arm.
Importantly, the deal doesn't require Big Blue to walk away from PLM services gigs. Instead, Dassault joins SAP
What changes is account control, and that's key for Dassault. The French company derives a large portion of revenue from global manufacturers such as Boeing
This isn't the first time that IBM has sold assets; Lenovo now operates what was Big Blue's PC business. Nor is it uncommon for Big Blue to cut expenses. Lower operating costs helped IBM boost gross margin and deliver an 18% gain in third-quarter earnings per share.
That's no small feat, and it means Big Blue's diet plan is working. But there are only so many assets to sell before management begins to cut businesses that really do matter. Don't let these disposals become a habit, IBM.
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Fool contributor Tim Beyers is a member of the market-beating Motley Fool Rule Breakers stock-picking team. He owned shares of IBM at the time of publication. Dassault Systems is a Motley Fool Stock Advisor recommendation. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has never entered into an alliance. Is it missing out?