Re: DB2 entering Wall Street. Will Oracle be left behind??

elcaro_at_softhome.net (Yasenko Yorgich) wrote in message news:<ba8b6976.0211140405.1209321b_at_posting.google.com>...
> >>I read an article that JP Morgan is entering into an agreement with
> IBM to
> >>outsource its tech operations.
>
> Huh, is this the step too far in wrong direction:
>
> "Moody's Investors Service on Wednesday cut J.P. Morgan Chase & Co.'s
> JPM.N long-term debt ratings, reflecting concern about the No. 2 U.S.
> bank's near-term ability to maintain "acceptable profitability" as
> investment banking revenue falls and loan losses mount."

The odd accounting facts of outsourcing: It is definitely more expensive to outsource, however, it changes the computer department from a whole lot of capital and labor expense, to pure expense. So it can immediately free up capital to work on other projects (and not have to be depreciated over decades for new equipment), improving the bottom line from the point of view of quarterly stock analysis. Long term, it is stupid, but who thinks long term when you are a public company? When the red ink is flowing, _anything_ that can temporarily reduce the problem of "acceptable profitability" is grabbed at. Investment banking and insurance divisions are likely to be in the toilet for at least the next 4-6 quarters.

It could be worse. Look at Japan, ten years of toilet economy, that's what happens when you're a bank and don't write down losses.

>
> And when I worked for them they used CSC and boy they were utter
> rubbish.

Hey, I worked for CSC! On a gummint contract they took over from PRC!  Who you callin' rubbish? :-)

jg

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