Sep. 26, 2014, 6:55 PM
- The cloud-based Watson Analytics service (recently launched) is aimed not only at IBM's mainstay enterprise clients, but also SMBs worried about the costs of an in-house analytics infrastructure. "Large companies are further along in adopting analytics, while SMBs are falling behind," says IBM exec John Mason.
- With an official goal of putting "powerful analytics in the hands of every business user," IBM has furnished Watson Analytics with a number of self-service tools that can be handled by non-technical users, and the ability to quickly integrate with popular business apps from the likes of Salesforce, Oracle, and Google.
- Big Blue has also opted for a freemium pricing model: Users can do basic data analysis for free, but have to pay if they want more advanced features. IBM is aiming for its broader Watson business to produce $10B/year in sales in 10 years; it reportedly produced only $100M as of Oct. 2013.
- Meanwhile, IBM's SoftLayer cloud infrastructure (IaaS) unit is intent on making further inroads with startups, a demographic that historically hasn't been an avid consumer of IBM's wares.
- Though Amazon has an outsized IaaS share among startups, SoftLayer has made some progress with the help of features such as bare metal server support and free private networking between data centers. SoftLayer has especially fared well with gaming startups.
Sep. 11, 2014, 7:08 PM
- After moving back above the $100/share level, Apple (NASDAQ:AAPL) is back over the $600B mark in market cap, pushing it nearly $200B above Exxon Mobil (NYSE:XOM), the next largest company in the U.S.
- XOM is still valued at more than $400B, but Google (NASDAQ:GOOG) at $397B and Microsoft (NASDAQ:MSFT) - which has surged in 2014, adding $74B in market cap to $386B - are closing the gap.
- Berkshire Hathaway (NYSE:BRK.B) completes the top five with a $339B market cap; no other companies are worth more than $300B.
- Rounding out the top 20 market caps: JNJ, WFC, GE, WMT, CVX, PG, JPM, FB, VZ, IBM, PFE, KO, ORCL, T, MRK.
Sep. 6, 2014, 8:43 AM
- The "total" yield of a company combines the dividend yield and the buyback yield - that is the yield boost from reducing the total amount of shares outstanding. Together with S&P's Howard Silverblatt, Barron's puts together a list of the top 20 companies in the S&P 500 based on "total" yield.
- While buybacks don't guarantee a strong stock - witness consistent buyback champs like IBM and Kohl's (NYSE:KSS) - Warren Buffett goes to bed at night praying for IBM's share price to go down so the company can buy back more stock for a given dollar amount (though The Oracle has said he doesn't expect this logic to win many fans).
- The flip-side are those companies - financials and energy come to mind - who tend to buy back stock at high prices only to find themselves forced to reissue it at lower prices when times get tough. A consistent plan helps, and Travelers (NYSE:TRV), under CEO Jay Fishman, has been maybe the best example of this - halving the share count since the end of 2006.
- ETFs? The Powershares Buyback Achievers Portfolio (NYSEARCA:PKW) gained 45.6% in 2013, 1,300 basis points better than the S&P 500. Since inception in 2006, it's up an annualized 9%, more than 200 basis points better than the S&P. A newcomer - the Cambria Shareholder Yield ETF (NYSEARCA:SYLD) - has beaten the S&P by about 250 basis points since its May 2013 inception.
- The list (ranked in order of "total" yield): ADT, CAM, CF, MOS, MPC, VIAB, GLW, ITW, STX, IBM, NOC, CTL, TRV, VRSN, IR, CCE, KSS, NTAP, HES, DO.
Aug. 27, 2014, 7:21 PM
- IDC estimates global server sales rose 2.5% Y/Y in Q2 to $12.6B. That marks a turnaround from the 2.2% drop seen in Q1, and the 4.4% drop seen in Q4. Gartner estimates sales grew 2.8%.
- IDC declares the server market, hurt in recent quarters by system consolidation and a shift in demand towards the white-label gear beloved by Web giants (referred to by IDC as ODM Direct), is seeing "the beginning of a cyclical refresh cycle." It sees the pending launch of Intel's (NASDAQ:INTC) Grantley Xeon CPUs, along with Microsoft's plans to end Windows Server 2003 support, lifting sales into 2015.
- Sales of x86 servers (mostly Intel-based) rose 7.8% in Q2, and now make up 78% of industry revenue. Non-x86 server sales fell 12.8%.
- Market leader H-P's (NYSE:HPQ) share rose 40 bps Y/Y to 25.4%, with x86 growth offsetting Itanium weakness. #2 IBM's share fell 340 bps to 23.6% ahead of the sale of its x86 server ops to Lenovo; on the bright side, IBM's decline narrowed from Q1's 600 bps.
- #3 Dell's share fell 160 bps to 16.2%. #4 Oracle's (NYSE:ORCL) grew 10 bps to 5.9%, with engineered system growth offsetting declines for older UNIX/SPARC server lines. #5 Cisco (NASDAQ:CSCO), which recently proclaimed its UCS server ops are on a $3B/year run rate, saw its share rise 140 bps to 5.8% on the back of 35% growth. Cisco should pass Oracle in a quarter or two.
- ODM Direct vendors saw their share grow 110 bps to 6.6%. The shares of all other vendors rose 190 bps to 16.1%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Aug. 26, 2014, 3:12 PM
- It would be Apple's (AAPL -0.4%) largest-ever iPad (current versions are 9.7" and 7.9"), and production is set to start early next year, reports Bloomberg. The move comes as sales for iPads have declined for two straight quarters, and suggests the company is going to go after enterprise customers where the larger device could replace the traditional laptop.
- Apple, of course, has partnered with IBM, and Tim Cook has said part of the rationale behind the deal was to sell to corporations as a "catalyst for future iPad growth."
- Previously: Apple/IBM deal wins praise; hardware impact debated
Aug. 15, 2014, 4:20 PM
- The U.S. Committee on Foreign Investment (CFIUS) has signed off on the $2.3B sale of IBM's x86 server unit to Lenovo (OTCPK:LNVGY).
- The deal had been closely scrutinized due to the division's sales to U.S. government clients, sales which have included a decent number of supercomputer deals. IBM has tried to soothe concerns in part by promising it would continue handling maintenance work on Lenovo's behalf "for an extended period."
- Chinese regulators cleared the deal in July. Ahead of the sale, IBM's x86 server revenue fell 3% Y/Y in Q2, a much smaller decline than Q1's 18%.
Aug. 15, 2014, 3:38 AM
- Berkshire Hathaway (BRK.B), (BRK.A) disclosed a $366M stake in cable TV operator Charter Communications (NASDAQ:CHTR) in the second quarter, according to a new regulatory filing. Shares of Charter have now rose more +2% in after-hours trading.
- The filing also detailed other new investments including a 1.3% raised stake in Wal-Mart (NYSE:WMT), and other increased holdings including IBM (NYSE:IBM) and Suncor Energy (NYSE:SU).
- However, Berkshire Hathaway reduced its stake in several companies, among them DirecTV (NASDAQ:DTV).
Aug. 11, 2014, 11:44 AM
- IBM (IBM +0.7%) has bought Lighthouse Security, a provider of identity/access management software that sets permissions for cloud-based apps, for an undisclosed sum.
- News of the purchase comes two weeks after Big Blue disclosed it's buying CrossIdeas, an Italian identity/access software firm. Whereas CrossIdeas (with the help of an analytics platform) is used to control employee access to a company's internal apps and data, Lighthouse specializes in controlling employee and 3rd-party access to cloud apps, including ones not controlled by the company.
- "If you are on Facebook and LinkedIn and are a customer in my directory, I need to figure out who you are and interact with you in a seamless way," says IBM exec Kris Lovejoy, describing a use case for Lighthouse's software. Lighthouse's products (like CrossIdeas') will be integrated with IBM's existing identity/access management offerings.
Aug. 7, 2014, 7:12 PM
- Following its FQ1 beat, CSC is still targeting FY15 (ends March' 15) EPS from continuing ops of $4.35-$4.55; consensus is at $4.49.
- Global business services revenue -3% Y/Y in FQ1 to $1.09B, with $1.2B in contract awards Global infrastructure services +1% to $1.13B, with $1.2B in contract awards. North American public sector -3% to $1.02B, with only $300M in contract awards.
- Op. margin fell to 7.7% from 8.3% a year ago. Free cash flow was $70M, below net income of $146M. $148M was spent on buybacks.
- CSC has also announced it's expanding an existing partnership with IBM, with a focus on providing new cloud, mobile, and big data/analytics offerings. Among other things, CSC will create a "center of excellence" for IBM offerings, and integrate its ServiceMesh Agility cloud management platform with Big Blue's SoftLayer cloud infrastructure (IaaS) platform.
- FQ1 results, PR
Aug. 4, 2014, 6:58 PM
- Bloomberg reports IBM offered Globalfoundries $1B in cash to take the company's struggling chip manufacturing unit off its hands, and that Globalfoundries insisted on getting $2B.
- At issue: The unit is reportedly responsible for up to $1.5B/year in losses to go with its employee obligations, and Globalfoundries is said to assign little value to IBM's fabs. Rather, it's Big Blue's chip engineers and IP that mostly interest the foundry.
- Bloomberg previously reported IBM's talks with Globalfoundries broke down over price, but didn't state Globalfoundries was looking to be paid for making the acquisition. It added IBM was interested in a JV agreement that would allow it to retain control of chip design and IP development.
- Analyst Jim McGregor thinks a deal might still happen. "The first rule of negotiating anything is you need to be able to walk away from a deal ... This might just be posturing. You may see this resurrect itself in three to six months."
Jul. 31, 2014, 1:47 PM
- Italy-based CrossIdeas develops identity/access management security software that uses analytics and a constantly-updating data repository to prevent unwanted access to data and apps. IBM hasn't disclosed the acquisition price. (PR)
- The cybersecurity software space has seen plenty of M&A activity this year, as corporate demand from cybersecurity offering rises in the wake of a series of high-profile attacks. IBM plans to integrate CrossIdeas' tools with its existing identity/access management offerings.
- Security has been a bright spot for IBM: Its total security-related revenue rose 20% Y/Y in Q2, helped a bit by last year's acquisition of threat-prevention software firm Trusteer.
- Gartner estimates Big Blue's 2013 security software sales totaled $1.14B (+19.1% Y/Y), giving the company with a 5.7% share of the market (#3 overall)
Jul. 29, 2014, 11:50 AM| 1 Comment
Jul. 28, 2014, 7:22 PM
- 3rd-party servers based on IBM's Power architecture will hit the market in early 2015, says IBM exec Ken King. He adds the first Power systems will be aimed at cloud and high-end applications. They'll run on Big Blue's Power8 CPUs.
- 3rd-party Power CPUs are also expected in time. IBM first announced plans to license Power to third parties a year ago. The company's own Power server sales have been plunging amid a broader decline in UNIX and non-x86 server demand; they fell 28% Y/Y in Q2.
- Early supporters for IBM's effort include Nvidia, Samsung, Micron, and most notably Google, which (like other Web giants) buys huge quantities of Intel (NASDAQ:INTC) CPUs to power its servers. Power8's proponents claim big performance gains relative to Intel's x86 Xeon CPUs; individual Power8 chips can feature 12 cores and support up to 96 threads.
- King says Google, known for its obsession with performance and power efficiency, could be intrigued by the fact Power can support more virtual machines than x86. As with the budding ARM server CPU market, software support will take some time.
- Intel, whose server CPU unit towers over the market and is coming off a strong Q2, is trying to counter the Power/ARM threats both by rolling out new low-power Atom server CPUs, and by expanding its custom chip work for Internet clients. Upcoming products will offer more customization by placing an FPGA and a Xeon CPU in the same package.
Jul. 25, 2014, 3:53 PM
- Bloomberg reports IBM's (IBM -0.5%) talks to unload its struggling chip manufacturing unit to Globalfoundries have ended over differences on price.
- The news service reported in June IBM and Globalfoundries were close to a deal, while adding (citing a source) Big Blue's chip unit has been losing as much as $1.5B/year. Before that, the WSJ reported IBM originally wanted $2B+ for the business, but had seen initial bids closer to $1B.
- The unit's sales fell 18% Y/Y in Q2 amid ongoing share losses to TSMC and other foundry rivals. They fell 16% in Q1, and 33% in Q4.
- Bloomberg states IBM had become interested in a JV arrangement that would allow it to maintain control of chip design and IP development (while ridding itself of manufacturing). Two weeks ago, IBM promised to spend $3B over the next 5 years on advanced chip R&D.
Jul. 18, 2014, 5:24 PM
- IBM's (IBM - unchanged) Q2 hardware sales (-11% Y/Y vs. -23% in Q1,) "delivered meaningful upside" to Cantor's estimates, says analyst Brian White, while reiterating a Buy. Favorable comps and healthy mainframe/storage demand allowed the hardware unit to grow 39% Q/Q, or more than twice historical seasonal growth.
- White also thinks IBM's Chinese revenue (-11%, hurt by NSA issues) has bottomed out. On the CC (transcript), IBM said it saw "a pretty good sequential improvement" in China and India, though it added other parts of Asia-Pac remained weak.
- Citi's Jim Suva is less enthusiastic than White: He observes a one-time asset gain boosted EPS by $0.10, that Global Business Services outsourcing (-9%) remains weak due to price pressure and contract negotiations, and that services signings are down 33% (partly due to tough comps). He also notes mainframe growth isn't expected to continue.
- Credit Suisse's Kulbinder Garcha, meanwhile, has doubts about "the quality" of IBM's forecast for $20 in 2015 EPS, given "results continue to be driven less by revenue growth and more by non-operational items."
- Some bright spots: 1) With the help of SoftLayer, IBM's "cloud delivered as a service" revenue is now on a $2.8B run rate. That's roughly equal to 3% of total revenue. 2) Ahead of the Apple deal, "mobile revenue" (a nebulous term) is up over 100% YTD.
- Prior IBM earnings coverage.
Jul. 17, 2014, 5:00 PM
- With the help of easier comps, IBM's hardware/chip sales fell 11% Y/Y in Q2, a notable improvement from Q1's 23% and Q4's 26%. Mainframe sales -1%, Power servers (UNIX-focused) -28%, x86 servers (due to be sold to Lenovo) -3%, storage -12%, chips (reportedly on the block) -18%.
- Global Technology Services -1% vs. -3% in Q1. Global Business Services -2% vs. flat Q1 growth. The services backlog stood at $136B, -1% Y/Y after backing out the sale of IBM's customer care outsourcing ops to Synnex.
- Software revenue +1% vs. +2%. OS sales (hurt by server weakness) fell 13%, while key branded middleware rose 1%. Global financing +4% vs. +3%.
- Big Blue spent $3.7B on buybacks, less than the whopping $8.2B spent in Q1. Gross margin rose 40 bps Y/Y to 49.1%. Q2 free cash flow was $3B, less than net income of $4.3B (continuing a recent trend).
- Americas revenue -1%, EMEA +1%, Asia-Pac (weak in recent quarters) -9%. "Growth markets" -7%, and BRIC countries -2%.
- Tax rate was 20%, even with Q1 but down from 22% a year ago. IBM ended Q2 with $9.7B in cash, and $17.1B in non-Global Financing debt.
- IBM now -1.1% AH. Q2 results, PR.
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