Tue, Jan. 20, 4:35 PM
- IBM's gross margin rose 60 bps Y/Y in Q4 to 53.9%, helping EPS beat estimates in spite of a revenue miss. Cost controls also helped: R&D spend -9% to $1.32B; SG&A +1% to $6.03B.
- On the other hand, buybacks played almost no role: Only $132M was spent on them in Q4, down from $1.7B in Q3 and $3.7B in Q2.
- Segment performance: Global tech services revenue -8% Y/Y to $9.4B; op. profit of $1.46B. Global business services -8.9% to $4.5B; op. profit of $733M. Software -6.6% to $8.4B; op. profit of $3.8B. Hardware (hurt by the x86 server unit sale) -39% to $2.5B; op. profit of $388M. Global financing -5.8% to $1.1B; op. profit of $526M.
- Geographic performance: Americas sales -9% to $11.1B. EMEA -13% to $8B. Asia-Pac -17% to $4.9B. IBM claims total revenue only fell 2% after adjusting for divestitures and forex.
- The services backlog fell by $15B Y/Y to $128B; IBM claims it was flat after adjusting for the Synnex deal and forex. Within hardware, Power server sales fell 13%, mainframes 26% (ahead of a refresh), and storage 8%. Software was hurt by a 6% drop in middleware revenue, and a 19% drop in OS revenue (affected by lower server sales).
- "Cloud delivered as a service" revenue rose 75% in 2014 to $3B, and security revenue rose 19%. Full-year free cash flow was $12.37B, -18% Y/Y and below net income of $16.7B. Full-year capex was roughly flat at $3.8B.
- Q4 results, PR
Tue, Jan. 20, 4:10 PM
Mon, Jan. 19, 5:35 PM
Sun, Jan. 18, 12:57 PM
- TechCrunch reports Google (NASDAQ:GOOG) is interested in acquiring Softcard, the mobile payments platform launched by AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile (NYSE:TMUS) in 2010 - it was previously known as Isis, before changing its name for obvious reasons. Though Softcard's owners have invested hundreds of millions in the venture, sources state Google's purchase price could be below $100M.
- Like Apple Pay and Google Wallet, Softcard relies on NFC radios to enable transactions. And like Wallet, it has struggled to get off the ground, as U.S. consumers overwhelmingly stick with card swipes. Hard data on Apple Pay usage remains limited for now.
- Softcard recently laid off 60 employees. Meanwhile, it was reported in 2013 that Google had spent $300M on Wallet-related acquisitions, with little to show for it. The adoption of EMV (chip-and-PIN) readers by U.S. retailers could give NFC solutions a boost, by making card payments a little less convenient.
- The WSJ reports Google is partnering with consulting giant PwC to bid on a $2B+ contract to update the DoD's electronic health records system. PwC says Google's tools could both improve the system's security and performance, and lower costs. A group featuring IBM, HP (NYSE:HPQ), and CSC has made a rival bid.
- Ad tech firm Marin Software (NYSE:MRIN) provides some encouraging mobile search data ahead of Google's Jan. 29 Q4 report. A Marin study found mobile accounted for 49% of Q4 U.S. search ad spend, up from 42% in Q3, and that smartphone ad click rates were 38% higher than PC rates (thanks in part to accidental clicks?). On the other hand, mobile still only accounted for 32% of conversions.
- Medium writer Backchannel provides a deep dive into Google Search's evolution in an era where users increasingly want search engines to know the precise meaning of their queries. Part 1 looks at Google's efforts to optimize for mobile (aided by its Knowledge Graph and Google Now). Part 2 looks at Google's real-world research into the information needs of users. Part 3 looks at Google's investments in A.I./deep learning to deliver far more intelligent search results and spontaneously surface useful information.
Wed, Jan. 14, 1:02 AM
- The z13, declared by IBM (with typical enterprise sales boastfulness) to be "the most powerful and secure system ever built," is the first major refresh for the System z mainframe line since 2012. It supports up to 141 CPU units - a custom 8-core CPU is used - 10TB of memory, and 8K virtual servers. (datasheet - .pdf)
- Other features include faster/more reliable I/O connectivity, cryptography and compression co-processors for each CPU, and architecture changes meant to boost analytics workload performance. Like other System z hardware, it runs both Linux and IBM's proprietary z/OS (updated to offer faster analytics and data serving). IBM claims the z13 can handle 2.5B transactions/day.
- The refresh doesn't come a moment too soon: IBM's hardware division sales fell 15% Y/Y in Q3 amid share losses to HP, Dell, EMC, and many smaller rivals. With customers waiting for a new model, System z sales fell 35%. Hardware sales, of course, drive a sizable amount of software/services revenue.
- Though IBM's mainframe line still claims a large enterprise/government base that swears by its scalability, reliability, and partitioning features, x86 servers have been steadily gaining ground against proprietary platforms. HP recently launched x86 hardware for its rival Superdome and NonStop server lines, and age-old mainframe competitor Unisys (NYSE:UIS) is embracing x86 as well.
- Previously: IBM slides following 2015 estimate cuts
Mon, Jan. 12, 2:34 PM
- Jefferies, Deutsche, and Stifel have slashed their 2015 IBM (IBM -1.9%) estimates. Shares are underperforming on a down day for equities.
- Jefferies' James Kisner (Underperform) has cut his 2015 revenue and EPS estimates to $87B and $15.85 from $89.75B and $16.30, while citing a strong dollar. His Q4 estimates have been cut to $24.6B and $5.27, below a consensus of $24.93B and $5.48.
- "We believe revenue growth will be significantly challenged for IBM over the next few years," says Deutsche's Sherri Scribner, cutting her 2015 EPS estimate by $0.40 to $15.90. She notes cloud revenue (on a $3B/year run rate) is only ~3% of total sales, and that free cash flow has trailed GAAP EPS during the last three years (previous).
- Stifel's David Grossman has cut his 2015 EPS estimate all the way to $15.17, but maintains a Buy. "Headwinds from the hardware business should abate as 2015 progresses and product issues are being addressed; the cyclical issues are harder to predict, but comparisons get much easier in 2015, particularly in the second half."
- The estimate cuts follow a report from The Register stating CEO Ginny Rometty is planning a major reorg "that will see IBM try to shed the dusty hardware, software and services silo structure." Microsoft did something similar in 2013.
- IBM's main post-reorg units will reportedly "include Research, Sales & Delivery, Systems, Global Technology Services, Cloud, Watson, Security, Commerce, [and] Analytics." Such an approach would allow Big Blue to more easily break out the performance of faster-growing businesses (cloud, Watson, security, etc.) from slower-growing ones.
- Q4 results arrive on Jan. 20.
Thu, Jan. 1, 2:19 AM
- Dow: INTC +41%; UNH +35%; HD +28%; CSCO +25%; MSFT +25%.
- S&P 500: LUV +125%; EA +106%; EW +95%; AGN +92%; AVGO +91%.
- Nasdaq: AAL +112%; EA +106%; AVGO +91%; GMCR +78%; ILMN +68%.
Dec. 18, 2014, 2:04 PM
- With the help of stronger-than-expected hardware sales, Oracle (ORCL +9.2%) beat FQ2 estimates in spite of a 400 bps forex headwind (twice what was originally expected). FQ3 guidance was conservative after taking forex pressures into account.
- The numbers have been good enough for Oracle to surge to new highs and receive a slew of target hikes, and to lead many enterprise tech names to outperform amid a big market rally. The Nasdaq is up 1.9%.
- Microsoft (MSFT +3.2%), Cisco (CSCO +2.3%), EMC (EMC +3.7%), VMware (VMW +5.1%), and beaten-down IBM (IBM +2.8%) are among the enterprise tech names outperforming today. Others: SPLK +4.6%. CA +3.5%. RHT +3.4%. VRNS +6.3%. PCTY +5.8%. JIVE +4.6%. VMEM +5.2%. SAAS +4.7%. BRCD +3.8%.
- Oracle's healthy cloud software numbers are drawing attention: While traditional software license revenue fell 4% Y/Y, its SaaS/PaaS revenue rose 41%. SaaS/PaaS bookings totaled $170M, and are expected to be "well over" $1B in FY16 (ends May '16). Fusion cloud app bookings rose over 100%.
- On the CC (transcript), Oracle performed its customary trash-talking of cloud app rivals. "We are clearly growing faster than Salesforce (CRM +4%) and were more than three times the size of Workday (WDAY +3.2%)." Both firms are posting solid gains.
- Oracle's numbers come as Bloomberg reports the Chinese government is looking to "purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020." IBM, Cisco, and other U.S. firms have already seen their Chinese sales fall sharply following last year's NSA spying uproar.
Dec. 12, 2014, 12:23 PM
Dec. 10, 2014, 9:32 AM
- The first ten iOS apps to stem from Apple's (NASDAQ:AAPL) alliance with IBM are now "available to enterprise customers in banking, retail, insurance, financial services, telecommunications and for governments and airlines." Initial clients for the products, offered under the IBM MobileFirst for iOS label, include Citi, Air Canada, and Sprint.
- As promised when the partnership was first announced, the apps feature embedded analytics, and are integrated with IBM cloud services built specifically for them. Initial apps include Advise & Grow (for bankers with small business clients), Retention (for insurance agents), Sales Assist (for retail workers), and Case Advise (for government caseworkers). They'll be offered by IBM's massive services arm.
- The solutions bolster Apple's growing enterprise sales push, as the company tries to win over traditionally wary CIOs, fend off Google and Samsung's enterprise efforts, and maintain an outsized share of corporate smartphone/tablet activations. Reuters reported in November Apple is also working with various startups to bring enterprise iOS apps to market.
Dec. 4, 2014, 7:04 PM
- With a corporate upgrade cycle and Web/cloud demand boosting sales, IDC estimates global server revenue rose 4.8% Y/Y in Q3 to $12.7B, an improvement from Q2's 2.5% growth and Q1's 2.2% decline. Gartner is more conservative, estimating revenue only rose 1.7%.
- "IDC has seen increasing market influence from Greater China, hyperscale datacenters, ODMs and native Chinese OEMs, all of which grew sharply in the third quarter," says VP Matt Eastwood. Like others, IDC expects Intel's recent Grantley Xeon CPU launch, together with the pending end of Windows Server 2003 support, to keep demand healthy.
- Thanks to weak demand for its high-end, Itanium-based, Integrity servers, market leader H-P's (NYSE:HPQ) share fell 140 bps Y/Y to 26.5%, after having risen 40 bps in Q2. H-P just rolled out Integrity servers running (x86-based) Intel Xeon CPUs in an attempt to stop the bleeding.
- #2 IBM's share fell 500 bps to 18.2%, thanks to both high-end (mainframe/Power) and x86 weakness. The sale of IBM's x86 server unit to Lenovo closed early in Q4. #3 Dell's share rose 80 bps to 17.8%.
- Cisco (NASDAQ:CSCO) passed Oracle (NYSE:ORCL) to take the #4 slot: Cisco's share rose 130 bps to 6.2% on the back of 31% revenue growth, while Oracle's was flat at 4.1% (3.4% revenue growth). Today, Cisco and IBM announced a converged hardware solution that pairs the former's UCS servers with the latter's Storwize storage arrays.
- As expected, white-label servers sold to Internet giants (called ODM Direct by IDC) continued gaining ground: Their share rose 250 bps to 8.9%. Everyone else saw their share collectively rise 210 bps to 18.4%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Dec. 2, 2014, 6:02 PM
- WPP (NASDAQ:WPPGY), the world's biggest ad company in terms of revenue, has given IBM a 7-year, $1.25B contract to "transform and manage WPP's global technology platform." (PR)
- The deal, which expands an existing alliance between the companies, covers the building of a "hybrid cloud infrastructure" that IBM asserts will allow WPP to expand its use of big data/analytics, and to more quickly deploy new products/services (details are vague).
- IDC observed last year IBM will increasingly "collaborate and compete" with ad giants such as WPP, Omnicom, and Publicis, as it tries to profit from a shift in IT spend towards CMOs. Big Blue has made a string of marketing-related software acquisitions, looking to better compete against Oracle, SAP, Salesforce, and others chasing the opportunity.
- Yesterday: IBM strikes multi-billion dollar services deal with ABN Amro
Dec. 1, 2014, 5:54 PM
- IBM's deal with the Dutch banking giant is good for 10 years. It covers "the implementation of a private IBM cloud," as well as "fully managed services for mainframe, servers, storage, end-user computing, help desk as well as application support." Its exact price tag is undisclosed.
- The agreement comes on the heels of a $1.25B, 7-year deal with Lufthansa. IBM's services backlog was at $128B at the end of Q3, down 7% Y/Y.
Nov. 24, 2014, 3:43 PM
- Twenty-two spinoffs have been completed in 2014, the most in a decade, and another 28 have been announced. Among the catalysts are activist investors, so Credit Suisse screened for companies with multiple business segments, slow growth, and stocks trading for lower multiples than peers, in other words, "good, quality companies that are struggling to grow."
- The list is heavy on big media names like Time Warner (NYSE:TWX) and Twenty-First Century Fox (NASDAQ:FOXA), big tech like Oracle (NYSE:ORCL), Symantec (NASDAQ:SYMC), and IBM, and big industry like Lockheed Martin (NYSE:LMT), Ingersoll-Rand (NYSE:IR), and Raytheon (NYSE:RTN), but just two financial names - Travelers (NYSE:TRV) and Torchmark (NYSE:TMK).
- The rest: MO, CA, WU, DPS, PBI, SJM, HRS, SWK, EMR, WLP, MAT, GE, SNA, LLL, ITW, STJ, PDCO, HPQ, DLPH, HAS, NAVI, GME, CBS, JNJ, SLB.
Nov. 18, 2014, 5:17 PM
- Hoping to differentiate itself from Microsoft, Google, and other business e-mail rivals, IBM has launched Verse, an e-mail solution that integrates calendar data, IMs, social media updates, video chats, and file-sharing tools. The product will be offered both through the Web, and via Android/iOS apps, on a freemium basis.
- Verse relies on integrated analytics to learn a user's priorities, and to quickly provide important material (e-mails or otherwise) in an "at-a-glance" view. IBM will also include an option to conduct Watson queries (previous).
- Exec Carolyn Pampino says IBM is trying to differentiate Verse by having "more of a focus on people" and relevant conversations than rival solutions. "[Verse is] an easy and fast way to immediately filter on a person’s name."
- The product has some things in common with Google's recently-launched Inbox app, which tries to intelligently place e-mails into bundles and surface content such as photos, phone numbers, and appointment times. However, Google's solution is consumer-focused for now.
- Shares fell 1.4% today, and remain close to a 52-week low of $160.05 The Nasdaq was up 0.7%
Nov. 18, 2014, 6:44 AM
- IBM (NYSE:IBM) has won a €1B ($1.25B) outsourcing contract from Lufthansa (OTCQX:DLAKY), as the latter looks to restructure and cut costs to compete with fast-growing rivals in both Europe and the Gulf.
- Under the seven-year deal, IBM will take over the airline's information technology infrastructure services division, saving Lufthansa ~€70M a year. Around 1,400 Lufthansa Systems employees will now transfer to IBM.
- Previously: Lufthansa, IBM in talks over IT infrastructure unit sale
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