Apr. 23, 2014, 3:31 PM
- Squashing rumors he's turned sour on IBM, Warren Buffett - appearing on CNBC - says he's not surprised by the company's weak Q1 results. He hasn't sold a share of the stock, he says, and expects to add more to his holdings. The stock has run about $0.50 higher on the Oracle's comments, now back to flat on the session.
Apr. 17, 2014, 2:29 PM
- Though IBM (IBM -3.2%) reiterated its 2014 EPS guidance, it was "really reset lower" given the company lowered its full-year tax rate forecast to 20% from 23%, says Cowen's Moshe Katri, reiterating a Hold. "The big issue is IBM's legacy businesses are getting hit by multiple points."
- Bernstein's Toni Sacconaghi reiterates an Outperform, but nonetheless states IBM's Q1 numbers "likely reinforced prevailing concerns about revenue growth, cash flow and earnings quality."
- Wells Fargo (Market Perform) sees some silver linings: Services margins grew, WebSphere middleware sales were up 12% Y/Y, and cloud, security, and mobility sales are growing well. But it also notes services signings of $11.2B missed a $13B consensus, and that Power (-22% Y/Y), mainframe (-40%, six quarters into a product cycle), and Chinese (-20%) sales remain weak.
- Mentioned on the CC (transcript): 1) IBM still expects to grow 2014 free cash flow from last year's $15B, in spite of producing just $600M in Q1. 2) Though $8.2B was spent on buybacks in Q1, full-year buybacks are expected to be less than 2013's $13.9B. 3) IBM's app outsourcing ops have seen "pretty substantial price pressure."
- Cloud-related revenue (boosted by SoftLayer) rose 50% Y/Y, and is now on a $2.3B/year run rate, but that still makes it less than 3% of total revenue. Meanwhile, job cuts led opex to fall 8% Y/Y to $7.4B.
- Q1 results, guidance/details, PR
Apr. 16, 2014, 5:37 PM
Apr. 16, 2014, 4:31 PM
- IBM is reiterating full-year guidance for EPS of at least $18 (consensus is at $17.84).
- Big Blue spent an eye-popping $8.2B on buybacks in Q1, up from $5.8B in Q4. That allowed EPS to nearly meet estimates in spite of a $450M revenue miss. On the other hand, IBM's tax rate (the subject of recent scrutiny) rose to 20% from Q4's 11% and Q3's 16%. A 90 bps Y/Y increase in gross margin to 47.6% also boosted EPS.
- Hardware/chip sales remain bleak: They fell 23% Y/Y vs. 26% in Q4. Software +2% vs. +3%, global technology services -3% vs. -4%, global business services flat vs. +1%, global financing +3% vs. flat. The services backlog stood at $138B at quarter's end, down $5B Q/Q and $3B Y/Y.
- Asia-Pac remains a weak spot: Sales fell 12% Y/Y. Americas were down 4%, and EMEA up 4%. "Growth markets" and BRIC sales each fell 11%.
- Q1 free cash flow was just $0.6B, well below net income of $2.6B. Cash on hand fell to $9.7B from $11.1B at the end of Q4, and non-global financing debt rose to $15.7B from $12.2B.
- Q1 results, PR
Apr. 16, 2014, 4:12 PM| 19 Comments
Apr. 16, 2014, 12:10 AM
Apr. 15, 2014, 5:35 PM
Apr. 15, 2014, 10:05 AM
- Citing valuation, Citi has cut IBM (IBM -0.7%) to Neutral ahead of the IT giant's Wednesday Q1 report. The firm's PT has been cut to $200 from $235.
- IBM only goes for 11x 2014E EPS after handily underperforming the tech sector since last summer. But worries about the company's earnings quality (low tax rates have boosted EPS, and free cash flow has been deteriorating) and growth outlook remain high following a string of revenue misses.
- Shares are modestly lower on a morning when equities are up slightly.
Apr. 10, 2014, 11:36 AM
- IBM (IBM +1.1%) is acquiring Silverpop, a developer of cloud-based marketing automation software to 8K+ clients, for an undisclosed sum.
- Big Blue praises Silverpop's ability to enable personalized interactions with potential clients, and to provide "sophisticated automation capabilities more commonly applied in lower volume B2B scenarios to complex B2C environments."
- Its software will be leveraged by IBM's 140 Ready for Smarter Commerce marketing partners, and integrated within a new IBM cloud marketing suite - details for the latter are due in May.
- Silverpop competes to varying degrees against Oracle-acquired Eloqua and Responsys, Salesforce-acquired ExactTarget, and Adobe's Marketing Cloud platform. It also competes against Marketo (MKTO -7.5%) and Constant Contact (CTCT -4.5%), which are selling off hard today amid a tech rout. Both companies have been lifted by M&A speculation in the past.
- The companies are all looking to profit from a shift in IT spend towards CMOs. IDC has observed IBM's efforts in this area could lead it to face off more against ad agencies such as WPP and Omnicom.
- Past marketing-focused IBM acquisitions: DemandTec, Xtify, Unica
Apr. 3, 2014, 4:43 PM
- Private Globalfoundries is "the lead candidate" to acquire IBM's (IBM -0.4%) struggling chip manufacturing/foundry ops, sources tell the WSJ. Market leader TSMC (TSM -0.5%) is said to have dropped out of talks, and though Intel is said to be involved, Globalfoundries is showing more interest.
- Sources add a deal isn't imminent, and that price remains an issue: IBM originally wanted $2B+ for the business, whose sales tumbled 33% Y/Y in Q4 (evidence of share loss) and is in the midst of seeing layoffs, but initial bids have only been north of $1B.
- The business was first reported to be on the block in early February. Bernstein has estimated it had 2013 revenue of $1.75B, and an op. loss of $130M.
- Though presenting integration challenges, acquiring IBM's chip unit would give Globalfoundries more scale as it battles against TSMC, which is estimated to have nearly 50% of the foundry market and claims a long list of blue-chip clients.
- TSMC shares slipped yesterday after Globalfoundries announced a wafer supply deal with ex-parent AMD that includes GPU and console processor manufacturing (thus far handled by TSMC). Nonetheless, Digitimes has reported TSMC's capacity is booked through the end of Q3 thanks to strong mobile/PC chip demand.
Mar. 10, 2014, 4:32 AM
- IBM (IBM) CEO Ginni Rometty tells it like it is, acknowledging in a letter to investors that the company "did not meet our expectations."
- IBM will continue to alter its focus to cloud services and data analytics while modifying its hardware products. "While we continue to remix to higher value, we must also address those parts of the business that are holding us back," said Rometty.
- Declining demand for hardware and soft sales in growth markets have hit revenue for almost two years, prompting IBM to offload assets and reduce staff.
Mar. 7, 2014, 5:52 PM
- After falling 3.5% Y/Y in Q3, external disk storage system sales rose 2.4% in Q4, says IDC. The growth came even though sales of the servers that interact with these systems fell an estimated 4.4%.
- Total disk storage sales, which include storage subsystems found within servers, rose 1.3% in Q4 after dropping 5.6% in Q3. IDC attributes the turnaround to "traditional year-end budget flushes, improved economic sentiment, and a strong desire to address long-standing storage infrastructure inefficiencies."
- Market leader EMC, which posted strong Q4 numbers to go with light guidance, saw its external disk share rise 220 bps Y/Y to 32.9%, and its total disk share rise 200 bps to 25.8%. The gains largely came at the expense of restructuring IBM, whose shares respectively fell 190 bps and 200 bps to 13% and 14%.
- H-P's (HPQ) external disk share rose 30 bps to 9.6%, and its total disk share 40 bps to 16.3%. NetApp (NTAP), which delivered nearly in-line revenue and soft guidance last month, saw its external share fall 10 bps to 11.5%, and its total share stay flat at 9%. Private Dell's total share fell 140 bps to 9.9%.
- Hard drive/assembly suppliers: STX, WDC, HTCH
Feb. 28, 2014, 12:36 PM
- A source tells CNET IBM's (IBM +0.3%) layoffs involve up to 25% of employees in its hardware/chip unit (i.e. the Systems & Technology Group).
- The division saw a 26% Y/Y sales drop in Q4, bleeding share to rivals ranging from from H-P to EMC to TSMC. Since then, IBM has announced it's selling its x86 server business (sales -16% in Q4) to Lenovo for $3.2B, and the WSJ has reported Big Blue is thinking of unloading its chip manufacturing ops (believed to be losing money).
- IBM expects to record a $1B workforce rebalancing charge in Q1.
- Previous: Major IBM job cuts reportedly set to start
Feb. 27, 2014, 7:07 PM
- With enterprise server sales under pressure and the cheap white-label servers used by the Googles and Amazons of the world gaining more ground, IDC estimates global server revenue fell 4.4% Y/Y in Q4, a decline steeper than Q3's 3.7%. Gartner estimates revenue fell 4.5%.
- IDC thinks market leader H-P (HPQ), which posted relatively healthy enterprise hardware numbers for its January quarter, saw its share rise 260 bps Y/Y to 26.9%. #2 IBM, whose hardware ops had a brutal Q4, saw its share drop 910 bps to 26.8% in what's typically a seasonally strong quarter for the company.
- #3 Dell is assigned a 14.5% share (+30 bps). #4 Cisco (CSCO), whose UCS server unit remains a bright spot, is given a 4.5% share (+130 bps). Following many quarters of share losses, engineered systems growth allowed #5 Oracle's (ORCL) share rose 10 bps to 4.1%.
- White-label server sales, referred to by IDC as ODM Direct, soared 47% Y/Y, and now make up 6.4% of industry revenue. "Density-optimized" server sales, which include white-label gear and OEM offerings, soared 70%. H-P has a 34.9% share.
- A positive for Intel (INTC): x86 server sales rose 7.8%, up from Q3's 2.8% clip. A positive for Red Hat (RHT): Linux server sales rose 14.4% vs. 5.6% in Q3, and now make up 28.5% of industry revenue. Windows server sales (45.7% of revenue) were nearly flat, Unix sales (13.6% of revenue) fell 20.2%.
Feb. 25, 2014, 11:32 AM
- Citing sources within the company, IBM (IBM +0.1%) workers group Alliance@IBM says the IT giant will begin notifying employees affected by a major round of job cuts tomorrow.
- Big Blue has already said it expects to record a $1B workforce rebalancing charge in Q1, as it tries to improve its cost structure in the face of ongoing revenue declines.
- Bernstein's Toni Sacconaghi thinks it costs IBM ~$70K, on average, to let an employee go. He previously forecast at least 13K of the company's 434K employees could be laid off.
- IBM, still maintaining a 2015 EPS goal of $20, has promised to keep 3,100 jobs in its home state of New York through 2016. That's up from a prior pledge of 2,350.
Feb. 24, 2014, 11:36 AM
- IBM (IBM +1%) is acquiring Cloudant, provider of a distributed cloud database platform for app developers. Terms are undisclosed.
- Cloudant's customer base includes Samsung, Microsoft, Adobe, and Fidelity. The company already relies on IBM-acquired SoftLayer's cloud infrastructure platform to deliver its services, which compete against Amazon Web Services' DynamoDB and solutions based on the open-source MongoDB.
- All three solutions rely on NoSQL, a database architecture that differs from the age-old SQL (used by IBM's DB2, as well as ORCL's bread-and-butter database) through its support for semi-structured and unstructured data.
- This feature, along with NoSQL's superior performance and scalability for certain apps, is leading the technology to be widely adopted for handling Web/cloud services and big data projects.
- Separately, IBM is promising to invest $1B to bolster SoftLayer's cloud software/app platform offerings. Last month, Big Blue, increasingly looking to cloud services to halt its ongoing revenue declines, said it would invest $1.2B to build 15 new data centers for SoftLayer.
- IBM/SoftLayer rival Rackspace (RAX +2.4%) owns a piece of Cloudant.
IBM vs. ETF Alternatives
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.
Other News & PR