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
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.
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