IBM’s Watson May Add $2.65 Billion to 2015 Sales, Analyst Says

International Business Machine Corp. (IBM)’s Watson computer, best known for beating champions of the quiz show “Jeopardy!” may contribute $2.65 billion in revenue in 2015, according to a Credit Agricole Securities USA analyst.

With health-care companies including WellPoint Inc. (WLP) and Seton Health Family embracing Watson’s technology to help analyze data for treatments, IBM’s star quiz-show machine may add 52 cents of earnings per share, Ed Maguire, an analyst at Credit Agricole, said in a research note dated Nov. 27. He has an “outperform” rating on the shares.

Watson’s technology for answering questions in natural language may help Armonk, New York-based IBM “meet and exceed” its $20 per share earnings target for 2015, Maguire said in the note. Watson, capable of understanding human speech and consulting vast volumes of information to find likely answers to complicated questions, is being marketed for use where industries and government need to synthesize data.

“This technology has the potential to drive meaningful and potentially material revenue and earnings growth over time,” Maguire wrote. “In terms of identifying how to commercialize the technology, IBM even asked Watson.”

IBM, the world’s biggest computer-services provider, reported revenue of $99.9 billion in 2010 and earnings of $11.52 a share. The company had sales of $26.2 billion in the third quarter of this year.

To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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