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
Nov. 14, 2014, 11:34 AM
- The Department of Energy has awarded $325M in contracts to IBM (IBM +0.6%) to create two GPU-accelerated supercomputers declared to be at least 3x more powerful than any existing system.
- The systems will rely on IBM's Power CPUs, Nvidia's (NVDA +0.5%) Tesla GPUs and NVlink GPU interconnects, and Mellanox's (MLNX +2.1%) 100Gb/s InfiniBand interconnects. Installation is expected in 2017.
- IBM asserts the systems will lower energy consumption by limiting data movement. The deal acts as a nice reference win for Power - Big Blue is trying to stem Power's share losses to Intel's Xeon CPUs by selling to 3rd-party server OEMs and licensing the architecture to other chip developers. Its powerful Power8 CPU (12 cores supporting 96 simultaneous threads) began shipping earlier this year.
- Separately, the DOE says it will invest $100M in FastForward2, an R&D program to create more powerful/energy-efficient supercomputers. IBM, Nvidia, Intel, AMD, and supercomputer maker Cray (CRAY +0.1%) are among the companies taking part.
- PRs: IBM, Nvidia, Mellanox
Nov. 4, 2014, 2:13 AM
- IBM (NYSE:IBM) is replacing the head of its struggling technology-services unit, the latest move by CEO Ginni Rometty to get Big Blue growing again.
- Martin Jetter, who currently heads IBM's operations in Japan, has been named head of its global technology services unit, effective immediately.
- Last month, IBM paid $1.5B to Globalfoundries to take over its loss-making semiconductor unit.
Nov. 3, 2014, 3:38 PM
- 11 days after Amazon (NASDAQ:AMZN) disclosed its main AWS reporting segment saw revenue rise 15% Q/Q and 40% Y/Y in Q3, Synergy Research estimates the company's combined cloud infrastructure (IaaS) and app platform (PaaS) revenue share totaled 27% in Q3, still more than 2x that of any rival.
- Nonetheless, competitors are gaining ground. Synergy thinks Microsoft (MSFT +0.9%), which saw 128% Y/Y Commercial Cloud growth in Q3 (covers both Azure and other services), saw its share rise above 10%. IBM (IBM -0.1%), which reported an 80% Y/Y Q3 increase in "cloud delivered as a service" revenue, is assigned a 7% share. Google, Salesforce, and Rackspace are close behind.
- In a PR, IBM states Synergy declared it to be "the #1 hybrid and private cloud provider for the enterprise." Big Blue has committed $1.2B to building up to 15 new data centers from which to deliver IaaS/PaaS services.
- Hybrid clouds are also pivotal to Microsoft's efforts to gain ground against Amazon. Last month, the company unveiled a new hardware platform (to be sold by Dell) that can handle Azure private cloud services, and link with Microsoft's public cloud services to create a hybrid cloud.
- Synergy thinks industry IaaS/PaaS revenue rose 49% Y/Y on a rolling annualized basis, and that trailing 12-month revenue has topped $14.5B. IDC expects public IT cloud services revenue (IaaS, PaaS, and SaaS) to post a 22.8% CAGR from 2014-2018, growing from $56.6B to over $127B.
Oct. 31, 2014, 6:49 PM
- Tencent's (OTCPK:TCEHY) MyApp Android app store is now seeing 100M daily downloads, up from just 76M in July. The figure covers both apps downloaded directly from the MyApp store, and from Tencent's WeChat and Mobile QQ messaging platforms.
- Qihoo and Baidu's 91 Wireless unit remain the leaders in China's fragmented Android app store market - 91 Wireless averaged 130M downloads/day in Q2. But the near-ubiquitous reach of WeChat/QQ within China, together with Tencent's mobile gaming clout, is helping Tencent gain ground.
- Separately, Tencent, which is best known for its consumer offerings, has signed an MOU with IBM to jointly sell cloud apps and related services to Chinese SMBs. Tencent's cloud services unit will host the apps, and IBM will provide consulting and IT services.
Oct. 29, 2014, 12:10 PM
- The partnership will allow businesses to "incorporate Twitter (TWTR -2.1%) data into their decision-making through an established set of IBM (IBM +0.1%) tools, solutions and consulting services." (PR)
- IBM plans to "offer Twitter data as part of select cloud-based services, including IBM Watson Analytics," and allow 3rd-party developers to integrate Twitter data into services they're creating via IBM's cloud app platform (PaaS) offerings.
- The first joint solution will involve IBM's ExperienceOne customer engagement software/services. Eventually, the companies will offer "solutions for specific industries such as banking, consumer products, retail, and travel and transportation."
- Twitter: "While companies have long listened to what their customers are saying on Twitter, complex enterprise decisions often require input from a lot of different systems. IBM’s expertise is in integrating complex systems and data to make better decisions."
- While IBM's total revenue fell 4% Y/Y in Q3, its business analytics revenue was up 8%; Big Blue has made a string of acquisitions to bolster its analytics portfolio.
- No details are given on the revenue Twitter will receive for providing its data. Twitter's data licensing/other revenue rose 171% Y/Y in Q3, and made up 11% of total revenue.
Oct. 28, 2014, 12:37 PM
- Along with declaring its regular dividend, IBM (IBM +0.2%) has announced it's adding $5B to its buyback plan, raising its total authorization to $6.4B. The company expects to request a new authorization at its April 2015 board meeting.
- With free cash flow declining - it's down 13% Y/Y over the first 9 months of 2014 - IBM has slowed its buyback pace in recent quarters. Big Blue spent $1.7B on buybacks in Q3, down from $3.7B in Q2, and stated earlier this year it would spend less on buybacks in 2014 than the $13.9B spent in 2013.
Oct. 28, 2014, 12:27 PM| 2 Comments
Oct. 22, 2014, 4:15 AM
- Lufthansa (OTCQX:DLAKY) is close to selling its IT infrastructure unit to IBM (NYSE:IBM), including an outsourcing agreement for the services, as part of a restructuring to better position itself to compete with low-cost carriers and Gulf rivals.
- The move will reduce Lufthansa's annual IT costs by around €70M a year, but will result in a €240M ($305.2M) charge this year.
- Under the planned deal, Lufthansa will outsource all of its IT infrastructure services to IBM under a seven-year agreement. A final price for the sale is still being negotiated.
Oct. 21, 2014, 10:54 AM
- Evercore has downgraded IBM (IBM -4.2%) to Hold a day after the company missed Q3 estimates, offered light full-year guidance, pulled its 2015 EPS target, and reported a 7% Y/Y services backlog drop. Not surprisingly, many other firms have cut their targets.
- Credit Suisse's Kulbinder Garcha, bearish for some time, has slashed his target by $35 to $125. Though calling the resetting of expectations a positive and noting a mainframe upgrade cycle is on the way, Garcha argues IBM "continues to face multiple issues to revenue growth including high mainframe exposure, negative cloud impact and weak IT spending."
- BofA/Merrill's Wamsi Mohan tries to find a silver lining. "In our opinion, the reset in expectations provides an opportunity for IBM to redefine the broader strategy without the rigidity of near term targets. We expect a detailed business strategy update at the Analyst day in 2015 but near term headwinds will likely keep the stock range bound and we remain Neutral."
- The WSJ observes IBM could lose its status as one of the S&P 500's 20 most valuable companies for the first time in history.
- Yesterday's earnings coverage
Oct. 20, 2014, 12:03 PM
- After badly missing Q3 EPS estimates (in spite of backing out the losses of its soon-to-be-sold chip unit), IBM (IBM -6.7%) guided on its Q3 CC for 2014 EPS from continuing ops. to be down 2%-4% Y/Y. That implies a range of $15.97-$16.30, soundly below a $17.87 consensus.
- Big Blue also says it took a $3.3B Q3 post-tax charge related to the chip business; the figure includes the $1.5B payment to Globalfoundries.
- During a CNBC interview, CEO Ginny Rometty suggested fresh layoffs are on tap. The company recorded a $1B workforce rebalancing charge back in Q1; its headcount was at 431K at the end of 2013.
- IBM's closely-watched services backlog fell 7% Y/Y in Q3 to $128B, a much sharper drop than Q2's 1%; the company declares it saw "insufficient" services productivity. Also worrying investors: Gross margin fell 90 bps to 49.2%, ending a long string of Y/Y gains.
- Other pressures on EPS: 1) The non-GAAP tax rate rose 80 bps Q/Q and 320 bps Y/Y to 20.8%. 2) Buybacks fell to $1.7B from Q2's $3.7B. 3) Opex for continuing ops rose 2% Y/Y, while revenue from continuing ops fell 4% (helps explain the job cut talk).
- Hardware revenue (excludes chips) -15% Y/Y; software -2%; global tech services -3%; global business services -2%; financing -3%. Within hardware: Mainframes -35%; Power systems -12%; x86 servers (just sold to Lenovo) -10%; storage -6%.
- Two strong points: "Cloud delivered as a service" revenue is up over 80% YTD ($3.1B/year run rate), and security revenue is up over 20% YTD.
- Americas revenue -2%; EMEA -2%; Asia-Pac -9%. "Growth markets" -6%, with BRIC countries down 7%.
- Free cash flow ($2.2B) was once more well below net income ($3.7B). IBM ended Q3 with $9.6B in cash, and $17.1B in non-financing debt.
- Q3 results, details, PR
Oct. 20, 2014, 9:21 AM
Oct. 20, 2014, 7:30 AM
- "We are disappointed in our performance," says CEO Ginni Rometty. "We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry."
- Non-GAAP operating income from continuing operations (excludes semiconductor business whose acquisition by Globalfoundries was announced today) of $3.7B is off 18%; operating EPS of $3.68 is lower by 10%. Gross profit margin of 49.2% down 90 basis points.
- Guidance will be discussed further in the 8AM ET conference call, but the presentation slides say the company no longer expects to deliver at least $20 in operating EPS in 2015.
- More from Rometty: "We again performed well in our strategic growth areas cloud, data and analytics, security, social and mobile - where we continue to shift our business. We will accelerate this transformation."
- IBM -8% premarket
- Previously: International Business Machines misses on revenue
Oct. 20, 2014, 7:09 AM
- International Business Machines (NYSE:IBM): Q3 EPS of $3.68 misses by $0.64.
- Revenue of $22.4B (-4.0% Y/Y) misses by $970M.
- Shares +1% PM.
- Press Release
- Previously: Globalfoundries to take control of IBM's semiconductor operations
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International Business Machines Corp is an Information Technology (IT) company. It creates business value for clients and solves business problems through integrated solutions that leverage information technology & knowledge of business processes.
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