Friday, May 01, 2009

I.B.M Gives $2 Billion For Economic Recovery

I.B.M.The economic stimulus plan, set by Obama and the government, has lots and lots of money, an excess of $30 billion, set off for high-technology projects smarter electric grids, health information, and broadband networks for rural communities. However, this money isn't coming yet so to get individual projects underway, there is a requirement for upfront investments to help with planning and design. I.B.M. announced that the company's big finance unit is going to put aside $2 billion for what is called "bridge" financing high-tech infrastructures that of which will most likely qualify for the federal grants and incentive programs that are under the new American Recovery and Reinvestment Act of 2009.

According to John Callies, the general manager of the global finance unit at I.B.M., "The idea is to accelerate the benefits to communities and companies by letting them begin the investment now."

"The I.B.M. program looks like a sound stem that will hasten the arrival of high-tech projects. The irony is that Washington has promised all this money, but you need funding to start the projects." says John Pucciarelli, an IDC analyst. But, is the including of high-tech and complex programs a wise choice in a plan that was designed to pull our country out of a recession? Especially with the fact that private funds, like the ones from I.B.M., are such a necessity. But, despite what we want, what we think, or what we were "promised", high-tech incentives are a part of our government's policy now and there isn't much we can do about it.

I.B.M. expects its bridge funding program to have an appeal to other businesses like medical centers who might be interested in adopting electronic health records, municipal utilities investing in smart grids, as well as other projects. According to Callies, "The money will be used to start projects led by I.B.M.'s big services arm. We are not doing this for altruistic reasons."

But one has to wonder about the high risks in putting up finance for a government project whose funding is still not in hand? according to analysts, I.B.M. is at an extra risk. But the company is experienced in seeing the risks of such high-tech and complex projects and dealing with them, much more so than older, more traditional companies which focuses having funding for purchases of software and hardware. Mr.Callie and I.B.M. are convinced that hey are not taking a huge credit risk on this funding.

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