Sat, Mar. 7, 3:26 PM
- With Intel's (NASDAQ:INTC) Grantley Xeon CPU launch and Web data center investments offsetting weak high-end server demand, IDC estimates global server revenue rose 1.9% Y/Y in Q4 to $14.5B, and Gartner estimates it rose 2.2% to $14B; those figures compares with Q3 growth estimates of 4.8% and 1.7%, respectively.
- Likewise, IDC estimates global enterprise storage revenue rose 7.2% Y/Y in Q4, aided by Web investments and healthy demand for mid-range systems featuring integrated flash. Q3 growth was pegged at 5.1%.
- IBM had a rough time its both the server and storage markets: IDC believes its storage share fell to 9% (tied for #3) from 12.7% a year earlier, and Gartner estimates its server revenue fell 14% if one excludes Big Blue's x86 server unit, which was just sold to Lenovo. After accounting for the x86 sale, IDC estimates IBM's server share was at 13.7% (#3) vs. 26.8% a year ago.
- HP (NYSE:HPQ) fared a little better: IDC has its server share falling fractionally to 26.8% (still #1 overall), and its storage share falling to 13.8% (#2) from 14.1%. The company's x86 server unit has been gaining ground against IBM's former business, but its high-end server sales remain weak.
- Cisco's (NASDAQ:CSCO) UCS server line (recently refreshed) continues to gain ground: Its share rose to 5.3% (#5) from 4.5%, with full-year revenue pegged at $2.9B. With the help of aggressive pricing and x86 growth, Dell's server share rose to 16.7% (#2) from 15.2%, while its storage share slipped to 9% (tied for #3) from 9.2%. Lenovo (OTCPK:LNVGY) claimed a 7.6% server share (#4) thanks to the IBM deal, kicking Oracle (NYSE:ORCL) out of the top-5 along the way.
- EMC, whose high-end storage sales have been pressured (mid-range/flash demand has been better), saw its storage share drop to 22.2% (still #1) from 23.1%. NetApp (NASDAQ:NTAP), which posted an FQ3 miss and light guidance last month amid tough mid-range competition from EMC and others, saw its share drop to 7.2% (#5) from 8%.
- Not surprisingly, the white-label hardware beloved by Google, Facebook, Amazon, etc. continued to take share. IDC estimates such hardware, referred to as ODM Direct, claimed server and storage shares of 8.2% and 12.8% vs. 6.4% and 9.9% a year ago.
- Sales of x86 servers, the lion's share of which run on Intel CPUs, rose 7.1% to $11.5B. Sales of non-x86 servers fell 14% to $3B, thanks to declining demand for both mainframes and UNIX servers running proprietary RISC CPUs. "Early-stage revenue" was seen for ARM (NASDAQ:ARMH) servers, largely via HP's Moonshot line.
- Other companies with strong server and/or storage exposure: STX, WDC, SMCI, MLNX, AVGO, QLGC, RHT
Wed, Mar. 4, 6:02 PM
- Bloomberg reports production of a 12.9" iPad (NASDAQ:AAPL) is "now scheduled to start around September because of delays involving the supply of display panels." Sources state Apple previously planned to start production in calendar Q1.
- The larger iPad is expected to be aimed at enterprises and creative pros - there have been rumors of a stylus accessory for it - and bolster a business sales push that already includes partnerships with IBM and various indie developers to create enterprise-focused iOS apps. On Monday, IBM launched new iOS apps aimed at banking/financial services, retail, and travel/transportation clients.
- While iPhone and Mac sales have been growing, the iPad has been a weak spot for Apple lately: iPad sales have been down Y/Y during the last four quarters, and fell 22% in FQ1 (the December quarter).
- Update: The WSJ backs up Bloomberg's report, stating production will begin in 2H15. It also reports Apple is thinking of including USB 3.0 ports on the 12.9" iPad.
Wed, Mar. 4, 9:29 AM
- IBM has acquired AlchemyAPI, a provider of software APIs for companies looking to add A.I./deep learning capabilities to their apps. Terms are undisclosed.
- AIchemy offers both cloud-based and on-premise versions of its API offerings, which cover image and text analysis tools. The company asserts its platform "makes it easy to create smart apps that deeply understand the world's conversations, reports and photos."
- IBM plans to integrate Alchemy's deep learning tech with its Watson A.I. hardware/software platform, declaring it will strengthen "Watson's ability to quickly identify hierarchies and understand relationships within large volume data sets." Big Blue also states the deal will "greatly expand the number and types of scalable cognitive computing APIs" available to clients, developers, and partners.
- The IT giant stated last year it wants Watson to produce $10B in revenue within 10 years - all signs suggest it has a ways to go. IBM rolled out the cloud-based Watson Analytics service last year to good reviews, as well as a cloud app development platform (Bluemix) that supports Watson services and APIs. It also bought a virtual assistant startup (Cognea) to help Watson deliver "conversational services."
Mon, Mar. 2, 7:48 AM
- "When Charlie's letter came in and it referenced Greg and Ajit, it was news to me that he was writing that," Warren Buffett tells CNBC after this weekend's annual investor letters ratcheted up speculation Greg Abel and Ajit Jain were first in line to be the next chiefs at Berkshire Hathaway (BRK.A, BRK.B). There's "no jockeying" at all going on between the two, he says.
- Minimum wage: We could afford to pay $20 nationwide, but there'd be a lot of people without jobs. It "distorts the market."
- IBM: "People have this misconception that - when we buy a stock - we want it to go up. That's the last thing we want it to do ... There's been no surprises at IBM since we started buying it a few years ago ... We expected revenue to come down."
- AXP - The company has a strong position in its antitrust lawsuit (which it just lost, but plans to appeal). The partnership with Costco ended when the two couldn't come to terms.
- Previously: Buffett, Munger talk succession and more in annual letters (Feb. 28)
Thu, Feb. 26, 11:13 AM
- IBM (IBM -0.6%) uses its 2015 analyst day (webcast) to declare it's looking to generate $40B in 2018 revenue from cloud, analytics, mobile, social, and security solutions, up from $25B (27% of total revenue) in 2014.
- To help achieve the goal, Big Blue plans to shift another $4B in spending in 2015 towards the businesses in question; the company is just a week removed from committing $1B over the next 5 years to storage software investments. Nonetheless, the size of the 2018 target suggests major new acquisitions are a possibility.
- Of note: IBM often has very broad definitions of what it considers to be revenue attached to a growth business. For example, "cloud" revenue might not just cover cloud software and infrastructure services, but also sales of servers, databases, IT services, etc. that went towards a cloud deployment. Thus, while IBM's 2014 "cloud revenue" totaled $7B, its "cloud delivered as a service revenue" was only $3B.
- IBM is also reiterating guidance (provided with its Jan. 20 Q4 report) for 2015 EPS of $15.75-$16.50, and for free cash flow to be "consistent" with a 2014 level of $12.37B. However, it now expects forex to respectively have a 7%+ and 6%+ impact on Q1 and full-year sales growth, more than previously forecast.
Tue, Feb. 17, 5:11 PM
- Warren Buffett added to his IBM bet amid the IT giant's Q4 selloff: Berkshire Hathaway (BRK.A, BRK.B) owned 77M IBM shares at the end of Q4, up from 70.5M at the end of Q3. (13F filing)
- Berkshire also upped its stake in Suncor (NYSE:SU) by nearly 4M shares to 22.4M as oil prices plunged. However, the firm dumped the 41M-share stake in Exxon Mobil (NYSE:XOM) it held at the end of Q3, and its 5M-share stake in ConocoPhillips (NYSE:COP). Its 449K-share stake in Express Scripts (NASDAQ:ESRX) was also liquidated.
- A new 8.4M-share stake was taken in Restaurant Brands (QSR - rose 8.7% today following earnings), and a 4.7M-share stake in 21st Century Fox (NASDAQ:FOXA). Existing stakes in GM, DirecTV, MasterCard, and Visa were moderately upped (among others), and stakes in Bank of New York and National Oilwell moderately lowered.
- Berkshire owned 17.1M Deere (NYSE:DE) shares at the end of Q4, up from 7.6M at the end of Q3 (the Q3 stake was kept confidential). Deere is up 1.6% AH.
- Overall, Buffett's firm created or expanded positions in 15 companies, and cut or liquidated positions in 5.
Tue, Feb. 10, 3:20 AM
- IBM (NYSE:IBM) is suing Priceline (NASDAQ:PCLN), accusing it of infringing on four patents and claiming billions of dollars in royalties.
- "Priceline has refused to engage in any meaningful discussion on the merits, resorting instead to delay and non-responsive answers," IBM said in its complaint.
- The patents cover methods of tracking prior conversations with a user, Internet transmissions and advertising, and one that improves on a single sign-on.
- PCLN -0.8% AH
Sat, Jan. 31, 2:56 PM
- IBM has approved a 2015 compensation package for CEO Ginni Rometty that includes a $1.6M base salary (up from 2014's $1.5M), $13.3M in restricted stock units (up from 2014's $12.75M), and a potential $5M bonus (up from 2014's $4M, of which $3.6M was earned). The stock units, whose granting is tied to hitting EPS and cash flow targets, will be distributed in 2018. (8-K)
- The pay hike follows a 2014 in which IBM's dividend-adjusted stock price fell 12%, and its EPS and free cash flow respectively declined 1% and 18% amid top-line pressures that cut across hardware, software, and services. The year also saw Big Blue pull its $20 2015 EPS target.
- After factoring dividends, IBM's shares are down 11% since Rometty became CEO at the beginning of 2012.
Tue, Jan. 27, 12:10 PM| Comment!
Mon, Jan. 26, 10:44 AM
- "IBM (IBM +1.5%) does not comment on rumors, even ridiculous or baseless ones," says Big Blue in response to a report it's laying off over 110K workers. "If anyone had checked information readily available from our public earnings statements ... they would know that IBM has already announced the company has just taken a $600 million charge for workforce rebalancing."
- IBM adds it currently has ~15K job openings worldwide, and that it "continues to remix its skills to match where we see the best opportunities in the marketplace."
- Workers' union Alliance@IBM suggests taking a cautious view of the report. "Various members of the media are picking up on Robert Cringley's assertion that 100,000 IBMers will lose their jobs next week in a massive reorg at IBM. The Alliance has no information that this is true ... But as you all know, anything can happen at IBM anymore and this is the time of year that IBM cuts jobs."
- Though IBM has carried out plenty of layoffs in recent years, 110K+ workers would be a far larger restructuring move than anything previously launched. As Hong Kong's The Standard notes, a $600M charge likely covers the layoff of several thousand workers.
- The Register reported earlier this month IBM is planning a big reorg that will see the company "try to shed [its] dusty hardware, software and services silo structure."
- Update: CNBC's Jon Fortt reports IBM is laying off less than 10K workers.
Mon, Jan. 26, 7:44 AM
- A massive reorganization know as Project Chrome will result in layoffs of more than 110K employees, or 26% of the workforce, writes Robert Cringely, who describes the move as "pure accounting resource action" driven by the C-suite's desire to make the numbers over the next few quarters look good.
- Related: IBM Set To Cut 26% Of Workforce (Jan. 26)
- IBM +1.2% premarket
Wed, Jan. 21, 1:55 PM
- Not surprisingly, many sell-side firms are cutting their IBM (IBM -3.3%) estimates after the IT giant provided light 2015 EPS and free cash flow guidance to go with mixed Q4 results. Shares are less than $1.50 removed from a 52-week low of $150.50.
- Goldman's Bill Shope: "We were discouraged by both fourth-quarter results and 2015 guidance ... We believe 2015 will be another transition year, and we expect the company to provide a road map for recovery in 2016 and beyond at its analyst day next month."
- JPMorgan's Tien-tsin Huang is worried about weakening software sales (-6.6% Y/Y in Q4, responsible for a large % of op. profit), and says he's taking a "wait-and-see approach" to how Big Blue grows cash flow.
- Citi's Jim Suva wants to see stabilizing sales and organic EPS growth before turning bullish. "Given the rapid rate of innovation within the competitive landscape, we are not convinced IBM fully grasps the severity of these competitive dynamics."
- On the CC (transcript), CFO Martin Schroeder attributed IBM's 60 bps Y/Y gross margin gain to better services margins and the x86 server unit sale. He added IBM's 2015 EPS guidance assumes a 20% tax rate, and "a 2 to 3 point impact from share repurchase" (implies less buybacks than in 2014). Capex is expected to rise by over $500M from 2014's $3.8B thanks to cloud and software investments.
- Prior IBM earnings coverage
Tue, Jan. 20, 5:31 PM
- IBM guides on its Q4 CC for 2015 EPS of $15.75-$16.50, below a $16.53 consensus.
- The company also states revenue as reported in 2015 isn't expected to grow Y/Y, and that free cash flow (down 18% in 2014 to $12.37B) is expected to be flat.
- In its CC slides (.pdf), Big Blue states forex had a 440 bps impact on Q4 revenue, bigger than a prior forecast of 300 bps. Adjusted for forex and divestitures, IBM reports Americas revenue fell 4%, EMEA 1%, and Asia-Pac 2%. BRIC markets remain a weak spot, falling 8% if one adjusts for forex/divestitures and 21% if one doesn't.
- Two bright spots: 1) Though the services backlog fell to $128B, global services signings rose 5% Y/Y to $18.4B in actual dollars, and 13% adjusted for forex. 2) The "cloud delivered as a service" annual run rate is up to $3.5B.
- IBM -2.1% AH. Q4 results, details.
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
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