IBM Credit Rating Boosted as Company Shifts to Software

International Business Machines Corp. (IBM) had its corporate credit rating upgraded to AA- from A+ by Standard & Poor’s Rating Services, which cited the company’s lucrative shift to software and services.

S&P also boosted its short-term rating on IBM to A-1+ from A-1, according to a report today. The outlook is stable.

IBM, the world’s largest computer-services provider, expects software to deliver half of its earnings in 2015. The Armonk, New York-based company is relatively low risk and its effort to get more revenue from software and services is improving profit margins, Martha Toll-Reed, an S&P analyst in New York, said in the report.

“IBM’s good market position and broad product and revenue base provide cash flow and ratings stability,” she said. “Highly competitive industry conditions, a moderately acquisitive growth strategy, and significant share repurchases currently constrain the potential for a higher rating.”

IBM shares fell less than 1 percent to $194.53 at the close in New York. The stock has climbed 5.8 percent this year.

To contact the reporter on this story: Nick Turner in New York at nturner7@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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