Hiding in Plain Sight

Happy Thursday. 

The U.S. Markets are only down about 3% for the week…then again, it’s only October 3.

Friendly reminder: It was October 19, 1987 that saw the biggest one-day percentage loss in history: 22.6%. If we panic hard and enough, we can try and break the record!

A quick Hong Kong update…after dampening the CCP’s 70th anniversary on Tuesday with more protests, HK protesters are losing a tech edge in their ability to elude authorities.

Fast Company is reporting that Apple has removed an app from its app store called “HKmap Live,” which allowed anyone using it to track both protesters and police movements around HK. The app was removed on Tuesday, the same day as the Chinese celebration, and the makers of the app suggest that Apple’s decision was “more a bureaucratic f up than censorship.”

Whatever the case, the web-based version of the HKmap is still live….For now.

Today’s tech funding brief: Unqork, a platform for developing enterprise app without code, has raised an $80M Series B led by CapitalG. 

The company is focused on “no-code” solutions for enterprise insurance and financial services (Think drag and drop development.)

Hello world.

IBM Reports 2018 Third-Quarter Results

IBM today announced its 2018 third-quarter results, generating its best year-to-year gross margin performance in three years, which reflected the company’s move towards higher value businesses.

Highlights are as follows:

• GAAP EPS from continuing operations of $2.94; Operating (non-GAAP) EPS of $3.42
• Revenue of $18.8 billion, down 2 percent (flat adjusting for currency)
• Strategic imperatives revenue of $39.5 billion over last 12 months, up 13 percent (up 11 percent adjusting for currency)
• Cloud revenue of $19.0 billion over last 12 months, up 20 percent (up 18 percent adjusting for currency) 
• As-a-service annual exit run rate for cloud revenue of $11.4 billion in the quarter, up 21 percent year to year (up 24 percent adjusting for currency)
• Strong services gross profit margin expansion year to year
• Maintains full-year operating (non-GAAP) EPS and free cash flow expectations

“IBM’s progress and momentum this year in the emerging, high-value segments of the IT industry are driven by our innovative technology, deep industry expertise and commitment to trust and security,” said Ginni Rometty, IBM chairman, president and chief executive officer.  “Our leadership in the technology and services that deliver hybrid cloud, AI, blockchain, analytics and security has helped drive our overall performance, and is helping our clients unleash the full business value of these innovations.”

IBM Announces 2Q18 Earnings, Revenue Up 4% YOY

IBM announced its 2Q 2018 earnings a few moments ago.

Some highlights:

• GAAP EPS from continuing operations of $2.61; Operating (non-GAAP) EPS of $3.08; both up 5 percent
• GAAP Pre-tax income up 14 percent; Operating (non-GAAP) pre-tax income up 11 percent — Pre-tax margins expanded more than 100 basis points year to year
• Revenue of $20.0 billion, up 4 percent (up 2 percent adjusting for currency)
• Strategic imperatives revenue of $39.0 billion over last 12 months, up 15 percent (up 12 percent adjusting for currency); represents 48 percent of IBM revenue
• Cloud revenue of $18.5 billion over last 12 months, up 23 percent (up 20 percent adjusting for currency)
• As-a-service annual exit run rate for cloud revenue of $11.1 billion in the quarter, up 26 percent year to year (up 24 percent adjusting for currency)
• Maintains full-year operating (non-GAAP) EPS and free cash flow expectations

“We delivered strong revenue and profit growth in the quarter, underscoring IBM’s progress and momentum in the emerging, high-value segments of the IT industry,” said Ginni Rometty, IBM chairman, president and chief executive officer. “More clients are engaging IBM on their journey to the cloud, and deploying IBM Cloud, Watson AI, analytics, blockchain and security solutions. This demonstrates IBM’s unique leadership in providing innovative technology coupled with deep industry expertise, trust and security.”

Don’t Look at the Dow

Hey, it’s the Friday afternoon before Super Bowl LII (that’s 52 in Roman numerals to you), don’t look at your Dow Jones ticker or your Bloomberg Terminal. Really, it will just ruin your weekend.

This was the worst week of trading since February 2016, with the Dow having plunged 650+ points for the week.

Ready for some uplifting and silly Super Bowl ads yet?

Why the sudden drop?

Earlier in the day, all looked rosy. The jobs report was pretty good, and even showed that average hourly earnings rose 2.9 percent YOY, some of the fastest growth seen in years.

But the interest rates have started an upturn, and the yield on the 10-year Treasury note rose to more than 2.8 percent, the highest level it has witnessed in four years.

You sure you’re not ready for some Super Bowl ads?

The markets be simply be responding to the idea that the era of “easy money” is finally coming to an end.

Now, I’ll quote from one of my favorite, classic Budweiser ads.

“Wazzzzzuppppppppp!!!????”

Today, not the stock market!

Open Sesame

Lest my blog become too Western-centric, it’s time to return to the China Internet watch, this time for Alibaba’s earnings.

Please remember, Jack Ma’s empire is vast and ever-expanding, with businesses that include two of the world’s largest and most popular online retail marketplaces, Taobao and Tmall, an affiliation with Ant Financial, its new Digital Media and Entertainment Group, and Alibaba.com and Alipay (among others).

Earlier today, Alibaba Group Holding Ltd. indicated its third-quarter revenue jumped 56 percent, beating expectations, according to a report from Reuters.

The group also raised its full year forecast, and announced its 33 percent stake in Ant Financial. 

As Reuters reports, Alibaba is looking for new areas such as cloud computing, payments, and offline retail to maintain its rapid growth rates that make it one of the world’s most valuable companies, with a current market cap of $523 billion.

Alibaba’s cloud business was reported to have crossed 1 million customers globally in the quarter ended last September.

In other words, Alibaba is huuugggeee, and getting huger all the time.

Big Dell Deal?

The Wall Street Journal is reporting that Dell is considering a range of strategic alternatives that could transform the maker of PCs and data-storage devices.

According to the story, the review, which is in a preliminary stage, Dell is expected to explore options including an IPO and a purchase of the rest of VMware, a publicly-traded cloud infrastructure company

Currently, VMware has a market value north of $50 billion.

If Dell pursued a public listing, writes the Journal, it would be one of the biggest IPOs in recent years, and could also provide the company with cash to invest in the business and pay down debt.

The backstory: Dell went private in a roughly $25 billion leveraged buyout in 2013 by Its founder, Michael Dell, and investment firm Silver Lake. In 2016, Dell bought EMC for $67 billion in the largest technology takeover ever.

Bloomberg is also now reporting this story, and indicated that the board is meeting later this month to discuss strategic options, including the IPO.

Raising cash could help the company further expand or pay off some of its debt, Bloomberg continues, noting that Dell currently has about $46 billion in debt.

Dell is also considering a public share sale for its Pivotal Software Inc. cloud-computing venture. Dell met with bankers last year to discuss that possibility and was told the company could fetch a valuation of $5 billion to $7 billion, said one of the people. Still, any Pivotal offering may wait until the company has converted more of its business into wider-margin software and subscriptions and away from less-profitable services businesses, the person said.
– via Bloomberg.com

 

 

IBM 4Q17 Earnings: Growth is Back

IBM today announced fourth-quarter and full-year 2017 earnings results. Highlights:
 
• Fourth-quarter GAAP EPS from continuing operations of $(1.14)
    — Includes a one-time charge of $5.5 billion associated with the enactment of U.S. tax reform
•    Fourth-quarter operating (non-GAAP) EPS of $5.18
    — Excludes the one-time charge of $5.5 billion associated with the enactment of U.S. tax reform
    — Consistent with the basis of previously-provided 2017 expectations
•    Fourth-quarter revenue of $22.5 billion, up 4 percent (up 1 percent adjusting for currency)
•    Full-year strategic imperatives revenue of $36.5 billion, up 11 percent; represents 46 percent of IBM revenue
    — Fourth-quarter strategic imperatives revenue up 17 percent (up 14 percent adjusting for currency)
•    Full-year cloud revenue of $17.0 billion, up 24 percent year to year
    — As-a-service annual exit run rate of $10.3 billion in the quarter, up 20 percent year to year (up 18 percent adjusting for currency)

“Our strategic imperatives revenue again grew at a double-digit rate and now represents 46 percent of our total revenue, and we are pleased with our overall revenue growth in the quarter,” said Ginni Rometty, IBM chairman, president and chief executive officer.  “During 2017, we strengthened our position as the leading enterprise cloud provider and established IBM as the blockchain leader for business.  Looking ahead, we are uniquely positioned to help clients use data and AI to build smarter businesses.”

You can see the full details here.

Another New News Feed?

Facebook has announced it is once again fundamentally changing the nature of its underlying News Feed algorithm.

The New York Times is reporting that it would prioritize what peoples’ friends and family share and comment on while de-emphasizing content from publishers and brands.

As of 10:00 A.M. EST this morning, Facebook stock is down nearly 4%.

The Times reports that over the next few weeks, Facebook users will start seeing fewer viral videos and news articles shared by media companies, and instead will highlight posts that friends have interacted with.

The changes are intended to maximize the amount of content with “meaningful interaction” that people consume on Facebook, Mark Zuckerberg, the company’s chief executive, said in an interview. Facebook, he said, had closely studied what kinds of posts had stressed or harmed users. The social network wants to reduce what Mr. Zuckerberg called “passive content” — videos and articles that ask little more of the viewer than to sit back and watch or read — so that users’ time on the site was well spent.
– via www.nytimes.com

The goal of the overhaul, ultimately, is for something less quantifiable that may be difficult to achieve: Facebook wants people to feel positive, rather than negative, after visiting.
– via www.nytimes.com

Wall Street obviously doesn’t take kindly to this move, and so what about Facebook’s 2 billion users. That I guess we’ll have to wait and see.

But here’s a novel concept: Give Facebook users themselves more control over what they see in their feed.

Give me access to Facebook’s new machine learning models and AI algorithms so I can “tune” the engine and get just the right mix of skateboarding bulldogs, fake news, and pictures from the high school reunion I didn’t bother showing up for.

In other words, start treating us like adults and put a stop to the social network nanny state.

IBM 3Q 2017 Earnings

IBM announced its third quarter 2017 earnings this afternoon.

Highlights

• Diluted EPS from continuing operations: GAAP of $2.92; Operating (non-GAAP) of $3.30
• Revenue of $19.2 billion
• Strategic imperatives revenue of $34.9 billion over the trailing 12 months, up 10 percent; represents 45 percent of IBM revenue
  • Third-quarter revenue up 11 percent (up 10 percent adjusting for currency)
• Cloud revenue of $15.8 billion over the trailing 12 months, up 25 percent year to year (up 26 percent adjusting for currency)
  • As-a-service annual exit run rate of $9.4 billion in the quarter, up 25 percent year to year (up 24 percent adjusting for currency)
• Maintains full-year EPS and free cash flow expectations

“In the third quarter we achieved double-digit growth in our strategic imperatives, extended our enterprise cloud leadership, and expanded our cognitive solutions business,” said Ginni Rometty, IBM chairman, president and chief executive officer.  “There was enthusiastic adoption of IBM’s new z Systems mainframe, which delivers breakthrough security capabilities to our clients.”

IBM 3Q 2017 Earnings

IBM announced its third quarter 2017 earnings this afternoon.

Highlights

• Diluted EPS from continuing operations: GAAP of $2.92; Operating (non-GAAP) of $3.30
• Revenue of $19.2 billion
• Strategic imperatives revenue of $34.9 billion over the trailing 12 months, up 10 percent; represents 45 percent of IBM revenue
  • Third-quarter revenue up 11 percent (up 10 percent adjusting for currency)
• Cloud revenue of $15.8 billion over the trailing 12 months, up 25 percent year to year (up 26 percent adjusting for currency)
  • As-a-service annual exit run rate of $9.4 billion in the quarter, up 25 percent year to year (up 24 percent adjusting for currency)
• Maintains full-year EPS and free cash flow expectations

“In the third quarter we achieved double-digit growth in our strategic imperatives, extended our enterprise cloud leadership, and expanded our cognitive solutions business,” said Ginni Rometty, IBM chairman, president and chief executive officer.  “There was enthusiastic adoption of IBM’s new z Systems mainframe, which delivers breakthrough security capabilities to our clients.”