Valuing IBM's Software Franchise
Zero Gravitas • 132 Comments
Zero Gravitas • 132 Comments
Tue, Sep. 20, 10:18 AM
- Through a multi-year arrangement with MIT's Department of Brain & Cognitive Sciences.
- IBM (IBM +0.5%): "The new IBM-MIT Laboratory for Brain-inspired Multimedia Machine Comprehension's (BM3C) goal will be to develop cognitive computing systems that emulate the human ability to understand and integrate inputs from multiple sources of audio and visual information into a detailed computer representation of the world that can be used in a variety of computer applications in industries such as healthcare, education, and entertainment."
- Pattern recognition and predictions methods relating to audio and visual data streams highlighted as a main focus.
- Collaboration to be led by MIT Professor James DiCarlo (head of Department of Brain & Cognitive Sciences) and involve brain, cognitive and computer scientists.
- With the spotlight on machine vision and computer vision technology heightened of late (Tesla and Mobileye, Intel and Movidius), expect further developments in these areas from a range of companies going forward.
Mon, Sep. 12, 9:24 AM
- The Wall Street Journal takes a look at the rise in use of and revenue derived from flash-based storage products over recent years.
- Pure Storage (NYSE:PSTG) and Nimble Storage (NYSE:NMBL) are highlighted with respective 9,650% and 641% annual revenue increases from 2013 to the present trailing 12 months period.
- The examination, however, cites a 20% decrease in share price for Pure Storage on the year with a 9% lower price for Nimble Storage over the same term. Competition in the enterprise data storage space, particularly in regard to flash solutions, is cited as becoming increasingly tight as demand for more efficient data centers continues to rise.
- Flash arrays offered by competitors EMC (NYSE:DVMT), IBM (IBM), NetApp (NASDAQ:NTAP), Hewlett Packard Enterprise (NYSE:HPE), Hitachi, Oracle (NASDAQ:ORCL) and others are expanding onto the market and subsequently heightening pricing pressure within it.
- Despite a competitive strain, the report goes on to assert current downcast valuations for small players in the area, especially Pure and Nimble, could pose appealing buyout opportunities going forward.
Tue, Sep. 6, 12:52 PM
- Box Relay is part of a redesigned Box (BOX +1.9%) platform expected to be detailed tomorrow.
- Box co-founder and CEO Aaron Levie: "Workflow in the enterprise is broken – complex, fragmented software and manual processes are getting in the way of productivity. The all new Box is a place where all of your work comes together. Box Relay delivers on this vision by providing anyone with an easy way to create, track and manage routine processes without ever having to leave Box. Box Relay is enterprise workflow made simple."
- IBM Analytics' (IBM +0.2%) general manager of collaboration solutions, Inhi Cho: "As businesses embark on the journey to become cognitive, the ability for teams to collaborate and iterate on content, surface new insights, and collaborate naturally are key. Our successful partnership with Box is helping companies along this journey. This first joint solution from IBM and Box enables businesses to create a simpler digital workflow across different functions to help reduce the time spent managing projects and boost team productivity. This is possible by combining the power of IBM Cloud with Box’s leading content management platform."
- Box Relay is set for a beta launch in Q4 and general availability in H1 2017 as an add-on feature for business users.
- Press release
- IBM and Box
- IBM blog post
Tue, Sep. 6, 11:40 AM
- August monthly performance was: -1.5%
- 52-week performance vs. the S&P 500 is: +9%
- $0.18 in dividends were paid in August
- Top 10 Holdings as of 7/29/2016: AT&T Inc (T): 5.5853%, Exxon Mobil Corp (XOM): 5.12068%, Verizon Communications Inc (VZ): 4.31268%, Chevron Corp (CVX): 3.62281%, General Electric Co (GE): 3.38972%, Pfizer Inc (PFE): 3.01797%, Procter & Gamble Co (PG): 3.0115%, Wal-Mart Stores Inc (WMT): 2.93033%, Philip Morris International Inc (PM): 2.78531%, International Business Machines Corp (IBM): 2.28424%
Mon, Aug. 15, 5:07 AM
- Workday (NYSE:WDAY) is expected to announce a seven-year deal today to use IBM's cloud-computing services for some internal operations, sources told WSJ.
- The deal, in which Big Blue is winning a marquee customer with solid cloud credentials, comes soon after two recent reports from analysts raised questions about IBM's ability to compete in the contentious market for computing horsepower delivered over the internet.
Fri, Aug. 12, 2:47 PM
- Sacconaghi cites IBM's (IBM -1%) core revenues declining by $29.7B over the past five years, total revenue declines in each of the last four years and materially slowing strategic imperatives growth (7% on a constant currency basis in Q2). Strategic imperatives grew 22% and 16% in FY 2015 and FY 2014, respectively. He believes the company needs this segment to grow around 15% in FY 2017 to achieve a flat organic revenue result, factoring in core business decline.
- He further notes: "Given that there is likely some shift in customer buying behavior from IBM’s “older” offerings to its “new” offerings, we might have expected the recent slowdown in IBM’s strategic imperatives to lead to more modest declines in the legacy/core… which has not been the case."
- He maintains a Market perform rating and $140 price target ($161.87 current price).
- Revenue mix infographic
Mon, Aug. 1, 4:47 PM
- Revel Systems is an iPad based point-of-sale company.
- The company proclaimed a more than $500M valuation last August.
- Talks are reportedly nascent and trials of Revel Systems' product may be under initial consideration.
- Should a deal materialize, Revel Systems' technology would appear to fit within IBM's (NYSE:IBM) Retail solutions segment.
- Toshiba Tec had previously acquired a point-of-sale business from IBM for $850M in 2012.
Tue, Jul. 26, 10:55 AM
Tue, Jul. 19, 3:39 AM
- Scientists reveal method for storing rewritable digital data at record density.
- Involves rearranging individual chlorine atoms on a sheet of copper.
- Provides roughly 100x more data per square inch than the world's most efficient hard drive.
- Could write the entire contents of the Library of Congress in a space smaller than a dust mite.
- Key challenge is speed.
- Source links: Nature, Popular Mechanics
- Also see Richard Feynman's There's Plenty of Room at the Bottom lecture
- Disk drive stocks: OTCPK:CBEX, EMC, HILL, HTCH, IBM, IMN, IVAC, NTAP, QBAK, SXCL, SMIT, STX, VECO, WDC
Mon, Jul. 18, 6:57 PM
- VMware (NYSE:VMW) shares are rising in extended trading after beating expectations with a favorable Q2 earnings report.
- EPS of $0.97 vs. $0.95 expected and revenue of $1.69B vs. $1.59B expected.
- From VMware CEO Pat Gelsinger: "Q2 was a continuation of the good start to the year we experienced in Q1, both for results and against our strategic goal of building momentum for our newer growth businesses and in the cloud. Customers are turning to VMware to help them run, manage, secure and connect their applications across all clouds and all devices, with unparalleled connectivity, security and visibility."
- Also having released earnings today, IBM (NYSE:IBM) heavily considers cloud services an area of growth that warrant increased focus. With VMware specializing in cloud computing and virtualization coupled with today's encouraging report, it seemingly appears the company is well positioned within this arena.
Mon, Jul. 18, 5:35 PM
Mon, Jul. 18, 4:49 PM
- IBM (NYSE:IBM) came in above estimates with its Q2 earnings report.
- $2.95 EPS vs. $2.89 expected ($3.84 Q2 2015).
- $20.24B revenue vs. $20.03B ($20.81B Q2 2015).
- Though beating expectations, IBM has now reported declining figures for the last 17 quarters.
- The announcement highlights IBM's transition and further expansion into the cloud and places an emphasis on these services going forward.
- From IBM chairman, president and CEO Ginni Rometty: "IBM continues to establish itself as the leading cognitive solutions and cloud platform company. In doing so, IBM is pioneering new business opportunities beyond the traditional IT marketplace. In the second quarter we delivered double-digit revenue growth in our strategic imperatives, driven by innovations in areas such as analytics, security, cloud video services and Watson Health, all powered by the IBM Cloud and differentiated by industry. And we continue to invest for growth with recent breakthroughs in quantum computing, Internet of Things and Blockchain solutions for the IBM Cloud."
- IBM is trading +2.7% after hours following the report.
Mon, Jul. 18, 4:09 PM
Sun, Jul. 17, 5:35 PM
Fri, Jul. 15, 10:39 AM
- Morgan Stanley analyst Katy Huberty is upbeat on IBM (IBM -0.8%), restating an Overweight rating with a price target of $168 ahead of Monday's earnings report (current price $159).
- Initiatives in analytics, cloud, mobile, security, and social are noted as having a growing share in revenue, up 37% in Q1 2016 compared to 30% in early 2015.
- She also pegs this growing percentage as a key factor in the balancing of recent overall revenue slowdowns, adding that sales are on track to improve by next year with constant currencies worked into these projections.
- Citing 20% revenue acceleration in Q1 over 12% last year, IBM Security is highlighted in the note as an area with even further room to grow.
- IBM Watson hauling in $1.1B in recently gained revenue also observed.
- Viewing consensus revenue estimates as excessively cautious, Huberty's recent checks have led her to a more confident overall outlook.
Fri, Jul. 15, 10:02 AM
- Thomas Lee from Fundstrat Market & Equity Research ("our research process combines both top-down strategy and bottoms-up fundamental views, to develop a roadmap of practical and useful investment insights for our clients") identifies 15 stocks that meet his criteria for his current “highest conviction” strategies, which he calls “laggards become leaders” and “stocks are the new bonds.”
- The following stocks are in 1 of 16 groups that have lagged in the bull market (laggards), and have dividend yield greater than the their long-term bond yield (stocks are the new bonds): APD, CAT, CSCO, CVX, HP, IBM, OXY, PCAR, PG, PX, RL, SLB, T, VZ, XOM.