S&P likes IBM’s strategy, ups its credit rating

Standard & Poor’s Rating Services likes the direction IBM (NYSE: IBM) is taking.

On Wednesday, S&P raised IBM’s corporate credit rating to AA- from A+, citing Big Blue’s 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. The outlook is stable, Bloomberg news reported.

IBM, the world’s largest computer-services provider which employs some 10,000 people across North Carolina, 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.

However, Toll-Reed also noted: “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.

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