Big Blue reported its worst quarterly revenue in 14 years as its cloud and mobile computing offerings failed to offset miserable numbers from its traditional businesses.
Revenues of the world’s largest technology services company fell 4.6 percent to $18.68 billion in the first quarter, but beat analysts’ average estimate of $18.29 billion.
It was the 16th straight quarter of revenue decline for IBM.
Chief Executive Ginni Rometty had been banking on cloud-based services, security software and data analytics, while trimming its traditional hardware business by exiting low margin businesses.
It looks like this new revenue is not cutting the mustard and is failing to make up for declines in its traditional segments. This is mostly because the falloff in IBM’s traditional businesses was dwarfing the company’s ability to capture new revenue.
To be fair the new businesses such as includes cloud and mobile computing, data analytics, social and security software, rose about 14 percent in the first quarter. But revenue from the services fell 4.3 percent and hardware slumped by 21.8 percent.
Big Blue did better than Wall Street expected, helped by a $1 billion refund in the quarter that lowered its effective tax rate to a negative 95.1 percent compared with 19.5 percent last year.
The company maintained its full year adjusted earnings guidance of at least $13.50 per share. Analysts on average were expecting $13.55.
We thought it was dead, but it turns out that the anti-Linux badboy SCO is going to have another appeal.
For those who came in very very late SCO tried to claim that Linux used its Unix code and started issuing writs against those using the open saucy software in their systems. However it found itself involved in a long running battle against IBM. As a result, SCO’s Unix business collapsed, the outfit went bankrupt, but a court case continued for 13 years.
We thought it was over at the beginning of the year, but now it seems that SCO is having another crack at IBM and has appealed. Last we heard SCO’s arguments claiming intellectual property ownership over parts of Unix had been rejected by a US district court. That judgment noted that SCO had minimal resources to defend counter-claims filed by IBM due to SCO’s bankruptcy.
At the beginning of the month that filing was backed up by the judge’s full explanation, declaring IBM the emphatic victor in the long-running saga.
SCO has filed yet again to appeal that judgment, although the precise grounds it is claiming it are unknown.
How is managing to lurch along like a zombie who always manages to shot in the head? The outfit is being represented by Boise, Schiller & Flexner, which successfully represented the US government against Microsoft in the antitrust case in the late 1990s. However SCO is bankrupt so how it can come up with the readies is impossible to say.
IBM has fought SCO tooth and claw every stretch of the way and pretty successfully. Our guess is that it will try to get the case thrown out quickly.
The ever shrinking Big Blue appears to have ordered huge lay-offs in its US offices – nearly a third of its employees.
To make matters worse Biggish Blue recently changed its severance policy, reducing a potential maximum of six months of benefits to a month. The new policy only applies to those who lose their jobs due to the elimination of a position which appears to be what is happening.
The WatchingIBM Facebook group released details of suits who have been in the company for nearly 40 years and have been told to clean out their desks with just a month’s pay.
Apparently IBM is moving the work to Hungary and Brazil although some H1B visa workers are staying.
Managers are reading redundancies off scripts claiming that one third of the U.S. workforce is being ‘rebalanced.’ with it.
They are giving us 90 days paid working notice, one-month severance, and $2500 in money for retraining.
IBM is telling staff that it is just a skill set change but it is more to do with shifting jobs off-shore many of the staff are telling the press.
A Big Blue spokesman said that rumours of layoffs affecting a third of the U.S. workforce today are untrue, and IBM “currently has more than 25,000 open positions” as part of “transforming its business to lead in a new era of cognitive and cloud computing”.
Although that does not really explain what staff are telling the media.
IBM and SCO filed an agreement with the US District Court in Utah to accept a ruling of dismissal of the last remaining claims by SCO against IBM meaning that anti-Linux bad-boy really is deader than a Norwegian Blue.
The move finally brings to an end a long running court case which at one point threatened the development of Linux. SCO’s case against IBM started in 2003 and it ends with a one page agreement between SCO and IBM which calls “for certification of the entry of final judgment on the Court’s orders concerning all of SCO’s claims.
“There is no just reason for delaying SCO’s appeal from such Orders, as the final resolution of SCO’s claims may make it unnecessary, as a practical matter, for the Court to decide the several pending motions concerning IBM’s counterclaims, given SCO’s bankruptcy and its explanation that it has de minimis financial resources beyond the value of the claims on which the Court has granted summary judgment for IBM,” the notice said.
Basically SCO is bankrupt and the only assets it has left are its claims against IBM, which have been ruled as pants by ages of litigation. The agreement keeps IBM’s claims against SCO open should IBM ever decide to move forward with them, which is doubtful.
The agreement was expected. On February 10, Judge David Nuffer with the US District Court in Utah dismissed a couple of interference claims SCO had filed against IBM, and had ordered both parties to reach an agreement.
The ever-shrinking Biggish Blue has written a cheque for Ustream, which is an online video streaming service provider, as part of its cunning plan to rule the clouds.
Ustream, has customers which include NASA, Samsung, Facebook, Nike and Discovery Channel offers both live and on-demand video to about 80 million viewers per month.
IBM not say how much it paid for the company. Fortune magazine claimed that the transaction could be valued at $130 million.
Big Blue has been shifting away from hardware by selling low-margin businesses such as low-end servers and semiconductors to focus on high-margin products such as cloud-based services, mobile security and big data. So far the new businesses have so far failed to make up for revenue lost to divestitures.
The company reported on Thursday that revenue dropped to $22.06 billion in the quarter ended Dec. 31 from $24.11 billion a year earlier. However, revenue from the cloud business jumped 57 percent to $10.2 billion.
Ustream, which is headquartered in San Francisco, will be part of IBM’s newly-formed IBM cloud video services unit, currently led by General Manager Braxton Jarratt.
Shares in the ever shrinking Big Blue have tumbled 3 per cent after the outfit predicted weak earnings for this year.
IBM reported an 8.5 percent fall in fourth-quarter revenue thanks to the strong US dollar and corporates reducing their IT spending.
Shares of the company, which receives more than half its revenue from markets outside the United States, fell 3 percent in extended trading on Tuesday.
Chief Financial Officer Martin Schroeter said the strong US dollar shaved off $7 billion from IBM’s 2015 revenue and reduced its profit by $300 million in the fourth quarter. He expects currency levels to lower 2016 pretax profit by $1.3 billion.
The dollar index, which rose over nine percent last year, is expected to rise 3.4 percent this year.
IBM has been shifting away from hardware by selling low-margin businesses such as low-end servers and semiconductors to focus on high-growth areas such as security software and data analytics, besides cloud-based services.
Yet the new businesses have so far failed to make up for revenue lost to the selloff.
IBM’s fourth-quarter revenue fell to $22.06 billion in the quarter ended Dec. 31. Analysts on average had estimated $22.02 billion.
Revenue from cloud and mobile computing, data analytics, social and security software, rose about 10 percent in the fourth quarter.
Net income fell to $4.46 billion from $5.48 billion a year earlier.
IBM’s shares have fallen 18.5 percent in the past year.
After years of trying to drag IBM kicking and screaming into the 19th century world of collective bargaining, theAlliance@IBM has given up.
Formed in 1999 to turn IBM into a union shop, theAlliance@IBM, a Communications Workers of America local has announced that the men in suits are too tough and it is “suspending” its organising efforts.
Basically Big Blue has shrunk so much that theAlliance@IBM does not have the members to pull off any serious action.
The group came close when it had 400 g members at its peak, now it has about 200.
But the whole thing was not a failure. The Alliance became a key source of public information for employees and the news media about job cuts, benefit changes and restructuring actions by the tech giant.
So while it only had 200 members it was the only source of information on job cuts for the rest of staff. During a job layoff, the number of website visitors could reach 140,000 or more.
Employees shared with the Alliance documents and knowledge about the firm’s restructuring activities.
In the mid-1980s, IBM employed some 230,000 in the US. The Alliance estimates that the number of US workers is now about 71,000. IBM stopped disclosing its US-specific headcount about five years ago. IBM is believed to have more employees in India than in the US.
The Facebook page will remain active, and there are plans to build a new website. The existing website will remain up but will not be updated.
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It is the end of an era at IBM after long serving executive vice president, software and systems, Steven Mills announced that he has retired.
Mills has a career spanning more than four decades at Big Blue and was a key player in the development of IBM Software Group since its inception in 1995.
Under his leadership the company acquired over 30 software firms since 2001. He was appointed to his latest position in January last year. As Biggish Blue became less interested in hardware, his role became increasingly important.
Mills was responsible for IBM’s products that contribute $40B of IBM’s revenue and provide critical business integration infrastructure for more than 100,000 Biggish Blue customers around the world.
Mills, who joined IBM in 1973, had rejected an offer from HP in 2010 to become the software company’s chief executive.
Big Blue has announced it will lead the development of a new blockchain financial transaction infrastructure called Open Ledger.
This is designed for major banking and financial institutions including Wells Fargo, JP Morgan and the London Stock Exchange
The project will create a more flexible exchange ledger of exchange and will share some concepts to the blockchain that underpins Bitcoin and other cryptocurrency systems. The new system will be ‘semi-private’ with an open source approach to development.
Open Ledger will be overseen by the non-profit Linux Foundation. IBM has been researching blockchain technology for the past year together with Digital Asset Holdings. The pair are to be joined by Microsoft, VMware, Fujitsu, Mitsubishi UFJ Financial Group and financial application-builder SWIFT.
Marley Gray, Director of Technology Strategy US Financial Services at Microsoft Azure, also told Fortune that the new system could provide additional security and operate as a major impediment to stock market gaming. It might also kill off the need for ‘expensive middlemen’, or the need to put trust into particular individuals and organisations.
Big Blue said that it has established an internet of things (iOt) centre in Munich.
The centre will be the HQ for its Watson iOt unit and is intended to bring 1,000 IBM developers, consultants researchers and designers to work on cognitive computing and the internet of things.
IBM said it is its biggest investment in Europe for over 20 years.
The company said the centre will offer Watson APIs and services on its iOt Cloud Platform.
The idea is that academics, customers, startups and silicon and device vendors to direct access its cloud based services. It expects automotive, electronics, healthcare, insurance and industrial manufacturers to take advantage of the centre.
IBM believes that although the internet of things will become the biggest data mountain on the planet, 90 percent of that data just hangs around, unused.