IBM Reports 1Q 2019 Results, Accelerates Cloud Revenue

IBM announced its first quarter 2019 financial results this afternoon, with the lead being it both accelerated its cloud revenue growth and continued its margin expansion.

The top line: 

• GAAP EPS from continuing operations of $1.78
• Operating (non-GAAP) EPS of $2.25
• Revenue of $18.2 billion, down 4.7 percent (down 0.9 percent adjusting for currency)
• Cloud revenue growth accelerated in the quarter; now $19.5 billion over the last 12 months, up 10 percent (up 12 percent adjusting for currency)
• As-a-service annual exit run rate for cloud revenue of $11.7 billion, up 10 percent year to year (up 15 percent adjusting for currency)
• Gross profit margin: GAAP, up 100 basis points; Operating (non-GAAP), up 90 basis points — GBS gross profit margin up 280 basis points; GTS up 110 basis points
• Pre-tax income margin: GAAP, up 440 basis points; Operating (non-GAAP), up 320 basis points
• Maintains full-year EPS and free cash flow expectations ARMONK, N.Y.

“In the first quarter, our cloud revenue growth accelerated, and we again grew in key, high-value areas in Cloud and Cognitive Software and in consulting,” said Ginni Rometty, IBM chairman, president and chief executive officer. “IBM’s investments in innovative technologies coupled with our industry expertise and our commitment to trust and security position us well to help clients move to chapter two of their digital reinvention.”

Apple, Qualcomm Settle

Well I certainly didn’t see that one coming!

CNBC is reporting the Apple and Qualcomm has settled their royalty and patent dispute that was going to trial in San Diego this week.

According to the report, as part of the settlement all legal action worldwide between the two companies will be dropped, and Qualcomm said it expected a $2 increase in earnings per share as its stock rose over 15% on the announcement.

Apple shares were up less than 1%.

The trial started yesterday and was expected to last until May, according to the report from CNBC, and both sides were asking for billions in damages.

Their legal battle centered around modem chips and had been going on since 2016.

Apple had bought those chips from Qualcomm for years, but “chafed under Qualcomm’s prices and requirement that any company using its chips would also pay licensing fees for its patents.”

Here’s the lede from the Apple press release:

Qualcomm and Apple today announced an agreement to dismiss all litigation between the two companies worldwide. The settlement includes a payment from Apple to Qualcomm. The companies also have reached a six-year license agreement, effective as of April 1, 2019, including a two-year option to extend, and a multiyear chipset supply agreement.

Fast Burning Algos

Watching Notre Dame burn yesterday seemed like yet another undeserved heavy punch dealt to one of my favorite cities across the globe, Paris.

But I’ve also seen the resilience of Parisians in years past, including after the Charlie Hebdo and November 2015 terrorist attacks, and was really happy to wake up to headlines that the church is still structurally sound and rebuilding is on the horizon once the investigation into what started the fire is complete.

However, some algos apparently got tripped up during coverage of yesterday’s Notre Dame fire. The Verge reported that many news networks were, logically, providing live coverage of the breaking news. But on YouTube, the algos apparently confused the breaking news from Paris with an undercarriage explaining the September 11, 2001 terror attacks in NYC.

The Verge explains that the small paragraph regarding 9/11 was actually part of YouTube’s fact-checking to "prevent the spread of misinformation and conspiracy theories on the platform." Said a YouTube spokesperson, "These panels are triggered algorithmically and our systems sometimes make the wrong call."

And though real fires may drive algos, in turn, algos can also drive virtual fires, as apparently was the case with Facebook and news media organizations when the social network essentially de-emphasized media sites with algo changes it made early last year. WIRED goes deep on the disenfranchisement across the board in a new feature entitled "15 Months of Fresh Hell Inside Facebook."

I wonder if WIRED’s ranking just lost a few points on Facebook’s News Feed with that headline??