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Sep. 3, 2015, 3:01 PM
- IBM (IBM +1.3%) is partnering with CPU core giant ARM (ARMH +1.2%) to enable devices supporting ARM's mbed IoT software/services platform to automatically register with IBM's IoT Foundation platform, and thereby access cloud-based IBM analytics services.
- IBM: "This unifies [mbed and IoT Foundation] at the point where information gathered from deployed sensors in any connected device is delivered to the cloud for analysis. The IoT connection also enables delivery of actionable events to control equipment or provide users with alerts or other information. For example, the triggering of an alarm message on a washing machine to ask the owner to confirm a breakdown engineer appointment if a fault is detected."
- With ARM's CPU cores used by billions of mobile and embedded devices (and billions more on the way), a wide variety of products can be covered. In addition to analytics tools, IBM's IoT Foundation supports the development of cloud apps (through the Bluemix platform) for analyzing IoT-generated data, and security tools for protecting it.
- ARM, meanwhile, has followed up on mbed by launching IFC, a framework for quickly creating networks of embedded, Web-connected, ARM-based devices.
Aug. 26, 2015, 1:49 PM
- Noting shares trade at 9.2x 2015E EPS and 8.8x 2016E EPS (compares with a 5-year average of 11.6x), Argus Financial has upgraded IBM (IBM +2.1%) to Buy, while setting a $175 target.
- Argus also expects Big Blue to see margin expansion as its sales mix shifts away from commodity offerings to higher-margin software and services tied to "strategic imperatives" in fields such as analytics, security, and cloud services. "[A]t this stage IBM is still rolling off significant low-margin and slow growth business. This transition will be a negative for revenue in the near term and an upturn is still some time away. However, EPS comparisons could turn positive by the end of this year or early next year, depending on end-market conditions."
- Consensus is for EPS to drop to $15.73 this year from 2014's $16.53, before rising to $16.13 in 2016. Revenue, affected by forex, hardware/services weakness, and the x86 server unit sale, is expected to drop 10.6% in 2015 and 0.6% in 2016.
- Separately, IBM has made a few cloud-related product announcements. 1) IBM's Bluemix cloud app platform (PaaS) has been updated to better support Java tools and resources. 2) Cloud management software from Blue Box (acquired earlier this year) can now be used to manage private clouds at IBM data centers. 3) IBM's Spectrum Protect backup software (competes against the likes of Symantec and CommVault) now supports direct cloud backups.
- IBM is higher on a day the S&P is up 2%, and the Nasdaq 2.1%.
Aug. 17, 2015, 2:55 PM
- While IBM (IBM +0.1%) has supported Linux on its System z mainframes for 15 years, its new LinuxONE systems are the first mainframes to exclusively run on the open-source OS, and thus eschew IBM's proprietary z/OS.
- A high-end mainframe called LinuxONE Emperor (named after the penguin) supports up to 8K virtual machines or hundreds of thousands of lightweight app containers. The less powerful LinuxONE Rockhopper (ditto) is said to be "designed for clients and emerging markets seeking the speed, security and availability of the mainframe but in a smaller package."
- Like System z mainframes, LinuxONE supports Red Hat (RHT +0.5%) and SUSE's Linux distributions, while also adding support for Canonical's Ubuntu Linux distribution. Big Blue also promises to support a slew of open-source software tools/platforms popular with Linux users, such as MariaDB (database), Apache Spark (in-memory big data engine, an area of interest for IBM), and Docker (container platform).
- Notably, IBM will offer subscription-based/pay-as-you-go pricing options for LinuxONE, as it tries to win over businesses worried about the traditional up-front costs of deploying a mainframe.
- Thanks to an upgrade cycle, IBM's mainframe revenue rose 9% Y/Y in Q2 and 118% in Q1, after falling sharply in 2014. After adjusting for the highs and lows of cycles, servers based on Intel's Xeon CPUs have been gradually taking share from mainframes for years.
Aug. 14, 2015, 5:56 PM
- Berkshire Hathaway (BRK.A, BRK.B) disclosed in its latest 13F filing that it sold off its shares in Phillips 66 (NYSE:PSX) and National Oilwell Varco (NYSE:NOV) during Q2, as it continued to cut its positions in energy companies.
- Meanwhile, BRK kept unchanged its stakes in its “Big Four” holdings American Express (NYSE:AXP), Coca Cola (NYSE:KO), Wells Fargo (NYSE:WFC) and IBM.
- Warren Buffett seemed to hint during a CNBC interview this week that BRK may have built up its IBM stake in the current quarter, saying "I love it when it goes down" when asked whether he was concerned about the stock’s recent performance.
- Buffett’s only new stake in the quarter was a 20M-share investment in auto paint maker Axalta Coating Systems (NYSE:AXTA), which BRK bought from Carlyle Group.
Aug. 6, 2015, 9:38 AM
- IBM is buying Merge Healthcare (NASDAQ:MRGE), a top provider of software for managing and processing medical images, for $1B in cash after factoring net debt, or $7.13/share. The price represents a 32% premium to Merge's Wednesday close. The deal is expected to close later this year.
- Merge's software is said to be "used at more than 7,500 U.S. healthcare sites, as well as most of the world's leading clinical research institutes and pharmaceutical firms." IBM plans to integrate Merge with its recently-launched Watson Health unit, with the goal of providing image analytics that leverage Watson's A.I./deep learning technology.
- Big Blue: "IBM plans to leverage the Watson Health Cloud to analyze and cross-reference medical images against a deep trove of lab results, electronic health records, genomic tests, clinical studies and other health-related data sources, already representing 315 billion data points and 90 million unique records. Merge's clients could compare new medical images with a patient's image history as well as populations of similar patients to detect changes and anomalies."
- In April, when Watson Health was launched, IBM announced it's buying cloud patient data analysis software firm Phytel and clinical database/healthcare analytics app provider Explorys. The company also announced healthcare-related partnerships with Apple, Medtronic, and Johnson & Johnson.
Jul. 29, 2015, 5:45 PM
- Leidos Holdings (NYSE:LDOS) spiked to a 5% gain just minutes before the close, after the U.S. Defense Department said it chose a team led by the company to build a new electronic health record system for 9.6M current and retired military service members.
- The contract has an initial value of up to $4.34B and runs for 10 years, the Pentagon says.
- LDOS and Cerner (NASDAQ:CERN) beat out a team of IBM and Epic Systems, and another team that included Allscripts (NASDAQ:MDRX), Hewlett-Packard (NYSE:HPQ) and Computer Sciences Corp. (NYSE:CSC)
Jul. 28, 2015, 10:56 AM
- International Business Machines (NYSE:IBM) declares $1.30/share quarterly dividend, in line with previous.
- Forward yield 3.27%
- Payable Sept. 10; for shareholders of record Aug. 10; ex-div Aug. 6.
Jul. 21, 2015, 3:01 PM
- With IBM's Q2 EPS benefiting from a non-GAAP tax rate of 17.2% (down 280 bps Q/Q and 330 bps Y/Y), many firms are cutting their full-year EPS estimates on account of Big Blue's top-line pressures. However, no downgrades have arrived.
- Janney's Joseph Foresi (Neutral): "Strategic-Imperative revenue growing more than 30% y/y was impressive, but implies a worse than expected performance in the legacy business. Most segments were close to flat in either direction, and we see little prospect of overall y/y growth until 2016." Likewise, Deutsche's Sherri Scribner (Hold) continues to forecast "secular challenges related to the shift to the cloud to be a negative headwind for IBM and [expects] near-term growth to be difficult.”
- JPMorgan's Tien-tsin Huang (Neutral) is worried about services margins. "[Services] signings were up nicely; backlog was up 1% (first increase since end of 2013), as IBM encouragingly won 22 large deals. However, services pretax margins deteriorated 390 basis points year/year ... Given forex is essentially neutral to margin % on pretax basis, we attribute much of this margin deterioration to need for investments in Strategic Imperatives which should continue and hurt near term Services margins."
- Stifel's David Grossman (Buy) makes a bull case centered around low multiples, services backlog conversion, and a software business believed to be faring better than generally believed. "IBM is trading at 13 times 2015 free cash flow, which includes $0.80/share of forex-related headwinds and represents a 25% discount to the S&P earnings multiple. In our view, this stock offers attractive risk/reward given the various headwinds."
- On the CC (transcript), CFO Martin Schroeter stated IBM's mobile-related sales (benefiting from the Apple partnership?) quadrupled in 1H15, and that demand for scale-out systems is giving a lift to Power server sales (weak in recent years, but down only 1% in Q2). 25% and 16% Y/Y drops in Chinese and Brazilian revenue hurt BRIC revenue in Q2, and a fresh $200M "workforce rebalancing" charge was taken.
- Q2 results, details, SA IBM commentary
Jul. 21, 2015, 9:15 AM
Jul. 20, 2015, 5:39 PM
Jul. 20, 2015, 4:38 PM
- IBM has sold off to $165.64 AH after posting mixed Q2 results and affirming its full-year EPS guidance.
- Cost cuts helped IBM beat EPS estimates in spite of a revenue miss: SG&A spend fell 7.4% Y/Y to $5.18B, and R&D spend 4.5% to $1.36B. Also helping: Gross margin (non-GAAP) rose 20 bps Y/Y to 50.9% (in spite of a 10% Y/Y revenue drop for continuing ops), and $1.1B was spent on buybacks.
- Free cash flow (exc. financing receivables) rose 13% Y/Y to $3.37B. Big Blue now expects a "modest increase" in FCF this year vs. prior guidance for flat growth.
- Segment performance: Global Tech Services revenue -10.6% Y/Y to $8.3B; op. profit -25.2% to $1.2B. Global Business Services -11.9% to $4.5B; op. profit -35.3% to $656M. Software -10.1% to $6.6B; op. profit -15.3% to $2.3B. Hardware (affected by x86 server unit sale) -32.4% to $2.2B; op. profit +26.2% to $255M; Global Financing -0.6% to $1.2B; op. profit +3.5% to $613M.
- Geographic performance: Americas revenue -8% Y/Y to $9.8B; EMEA -17% to $6.6B. Asia-Pac -19% to $4.3B. BRIC markets -35%. Forex had a 9% impact on total revenue growth.
- Other details: The quarter-ending services backlog was $122B, up $1B Q/Q and down $14B Y/Y. Middleware revenue -7% Y/Y; mainframes +9% (upgrade cycle); Power systems -1%; storage -10%. "Cloud delivered as a service" revenue is now on a $4.5B/year run rate, up from $3.8B/year at the end of Q1. Business Analytics revenue was up over 10% Y/Y.
- IBM ended Q2 with $8.8B in cash, and $12.6B in non-Global Financing debt.
- Q2 results, PR
- Update (5:20PM ET): On its earnings call, IBM says it expects Q3 revenue to be "similar" to a Q1 level of $19.59B. Consensus is at $19.98B.
Jul. 20, 2015, 4:06 PM
- International Business Machines (NYSE:IBM): Q2 EPS of $3.84 beats by $0.06.
- Revenue of $20.81B (-14.6% Y/Y) misses by $140M.
- Continues to expect 2015 EPS of $15.75-$16.50. Consensus is at $15.88.
- Shares -0.6% AH.
- Update (4:56PM ET): IBM is now down 4.4% AH.
Jul. 19, 2015, 5:35 PM
Jul. 13, 2015, 6:39 PM
- With CRAY producing 7 of the 26 new supercomputers on Top500.org's June top-100 supercomputer list, the company managed to grow its top-100 share to 31% from last November's 28%, reports Stifel's Aaron Rakers. In the top-500, Cray accounted for 12 of 87 new supercomputers.
- IBM, meanwhile, didn't add any new supercomputers to the top-100 list, leading its share within the segment to fall to 21% from 28%. Rakers also notes IBM and Lenovo (bought Big Blue's x86 server unit) only added 8 systems between them to the full list. "We believe this continues to highlight IBM and Lenovo’s competitive dislocation in the supercomputing industry."
- Looking at the supercomputer market in general, Stifel observes deployed CPU cores and petaflops respectively rose 16.4% and 32.6% Y/Y, a pick up in growth from November's 12% and 24%, albeit down from 2013 growth rates. There are now 68 systems on the list with over 1 petaflop of performance, up from 50 last November and 37 in June 2014.
Jul. 9, 2015, 6:21 AM
- IBM (NYSE:IBM) has announced a new kind of ultra-dense chip, which squeezes in four times as much computing power as the best silicon currently available.
- The new chips will usher in the possibility of creating 7-nanometer transistors (a strand of DNA in comparison measures 2.5 nanometers in diameter).
- IBM made the research advance by using silicon-germanium instead of pure silicon, allowing transistors to switch faster and use less power by sitting more densely on a chip.
Jul. 1, 2015, 10:32 AM
- Following final approval by U.S. regulators, IBM (IBM +1%) has closed the sale of its money-losing chip manufacturing ops to GlobalFoundries, the world's second-biggest chip foundry (behind TSMC).
- The deal was originally announced last October. Big Blue is paying GlobalFoundries $1.5B to take its chip manufacturing unit and related obligations off its hands. GlobalFoundries will be IBM's "exclusive semiconductor processor technology provider for the next 10 years."
- In spite of the sale, IBM is still investing heavily in chip development R&D, with the idea that the designs produced will be manufactured by GlobalFoundries. Areas of interest including Power server CPUs - the CPUs are now being offered to 3rd-party OEMs, and their architecture licensed to 3rd-party chip developers - and futuristic technologies such as carbon nanotubes, graphene, and quantum computing.
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