Surface Disruption

It’s gonna be a very busy day…in the markets, and in tech.

On the markets front, I would urge you to stop looking at the ticker tape — it’s October, it happens.

On the tech front, Microsoft is making some new announcements in its Surface line, with expectations there will be a new Surface Pro 7, an AMD-powered Surface Laptop 3, and an ARM-powered Surface Pro with all day battery life. You know, so you can watch that ticker tape drive deeper into the bear-filled ditch!

Microsoft is also expected to announce a kind of “Windows Lite,” which is slated to be ready for dual-screen and foldable devices.

Here’s a thought: Can I get one of those foldable devices and use Windows Lite to only see the part of the ticker that has positive news?!

Out west, TechCrunch Disrupt 2019 kicks into high gear at Moscone North in SF later this a.m.

Disrupt positions itself as “the original startup conference,” but with so many unicorns being scared off by their investor expectation’s long shadows — and the ticker headed south — ’twill be very interesting to see what memes and headlines emerge.

Expect a whole lot of AI, blockchain, and pivots! (Hint: If there in person, keep an eye out for the IBM Developer presence and learn more about the Code and Response initiative!)

Quantum Leap

IBM is ramping up its investments in quantum computing.

Today it announced the opening of the IBM Quantum Computation Center in New York state, one which expands the company’s fleet of quantum computing systems for commercial and research activity that exist beyond the confines of experimental lab environments.

To date, the global IBM Quantum user community has run more than 14 million experiments on IBM’s quantum computers through the cloud, and published more than 200 scientific papers. To meet growing demand for quantum hardware access, ten quantum computing systems are now online through IBM’s Quantum Computation Center, composed of five 20-qubit systems, one 14-qubit system, and four 5-qubit systems.

Within a month, IBM’s commercially available quantum fleet will grow to 14 systems, including a new 53-qubit quantum computer, the single largest universal quantum system made available for external access in the industry, to date.

Advances in quantum computing could open the door to future scientific discoveries such as new medicines and materials, vast improvements in the optimization of supply chains, and new ways to model financial data to make better investments.

You can learn more at http://www.ibm.com/ibmq

No Debate

If you didn’t hear about IBM’s Project Debater earlier in the year when it debated a real live (and really smart) human, here’s your chance to learn more about what you missed out on the first time around.

Reader’s D: Project Debater uses machine learning and AI to form arguments and rebuttals in debates with humans. The technology was developed over a 6 1/2-year period, and drew on expertise in fields ranging from philosophy to NLP.

One of my favorite must read emails, “Morning Brew,” has a derivative called “Emerging Tech Brew,” and they just added some more color to the Project Debater palate:

“Six months ago, Debater squared off with a top-ranked human counterpart on the merits of preschool subsidies. Though the AI system lost, it strung together minutes-long speeches, crafted a rebuttal, delivered its points persuasively, and even cracked some jokes.”

What’s next:

“IBM’s not scheduling any rematches soon. Now, it’s “pursuing other directions to commercialize the technology and further the science,” [IBM Researcher Noam] Slonim said. That means converting the advanced research into language-comprehension tech for large companies.

There’s no debate in my mind whatsoever it’s a big step up in the field of AI.

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.”

IBM Earnings: Rising Demand for AI, Cloud

Different chatter coming in from different sources on IBM’s 4Q18 earnings.

One of my favorite email newsletters that I actually try to read most days, the “Morning Download,” from The Wall Street Journal, had this to say:

Good day, CIOs. International Business Machine Corp.’s  fourth-quarter financial results reflect the continuing rise of artificial intelligence and cloud computing as central to corporate technology investment.

The big financial picture. Overall, revenue fell 3.5%, a second consecutive quarterly drop that underscores significant challenges the technology giant faces in recapturing growth, the Journal’s Jay Greene reports. Even so, IBM said it expects adjusted per-share earnings to hit $13.90 in the current fiscal year, compared with $13.81 for 2018. Shares rose more than 6 percent in after hours trading.

Where’s the growth? It’s in the company’s four so-called strategic imperatives. Those businesses—cloud computing and data analytics, among others—grew 5% in the quarter to $11.5 billion, the Journal reports. The cloud business grew 12 percent to $19.2 billion in 2018, according to Reuters. Last fall, IBM announced it would buy Red Hat Inc. to boost its efforts in the cloud. It recently struck new cloud deals with Vodafone Group PLC’s business services division and French bank BNP Paribas.

Cognitive leap. “The company’s cognitive software business, which houses artificial intelligence platform Watson, analytics and cybersecurity services, reported sales of $5.46 billion, compared with analysts’ expectation of $5.25 billion,” Reuters reports.

There was this from CNBC: 

Earnings: $4.87 per share, excluding certain items, vs. $4.82 per share as expected by analysts, according to Refinitiv.
Revenue: $21.76 billion, vs. $21.71 billion as expected by analysts, according to Refinitiv.

IBM’s largest business segment, Technology Services and Cloud Platforms, posted $8.9 billion in revenue. Analysts polled by FactSet were expecting $9.04 billion in revenue from the segment.

The next-largest business segment, Cognitive Solutions, did $5.5 billion in revenue. That exceeded the FactSet consensus estimate, which was $5.27 billion.

IBM’s Global Business Services segment collected $4.3 billion in revenue, exceeding the $4.15 billion estimate, and the Systems segment came in at $2.6 billion, below the $2.77 billion estimate. The Global Financing segment contributed $402 million in revenue, under the $426 million estimate.

In the quarter IBM announced its intent to pay $34 billion to acquire Red Hat, announced a chip manufacturing deal from Samsung and sold software assets to HCL Technologies for $1.8 billion. The Red Hat deal is expected to close in the second half of 2019.

And this from The Street: 

IBM Corp. (IBM – Get Report) shares were indicated sharply higher in pre-market trading Wednesday after the iconic tech firm posted stronger-than-expected fourth quarter earnings and said its recent acquisition of Red Hat Inc. (RHT – Get Report) would help boost cloud computing sales in 2019.

 IBM said adjusted earnings for the three months ending in December came in at $4.87 per share, down 5% from the same period last year but ahead of the Street consensus of $4.82 per share. Group sales were also softer than the prior period, falling 1% to $21.76 billion, but the figure topped estimates and IBM said it sees free cash flow for 2019 of around $12 billion, largely in-line with its tally over the past year.

Cloud computing sales, too, were impressing, rising 12% to $19.2 billion over the whole of 2018, helping build an overall backlog of orders across its businesses to around $116 billion as of the end of last year. Looking ahead, IBM sees 2019 operating earnings of $13.90 per share, but said that figure won’t include the impact of its $34 billion takeover of software group Red Hat last October.

“We see the strong bookings Red Hat recently reported as further evidence of clients’ confidence in the value,” IBM CFO Jim Kavanaugh told investors on a conference call late Tuesday. “Remember, the quarter ended a month after the transaction was announced. From a value perspective, in addition to the growing Red Hat business itself, we see an opportunity to lift all of IBM by selling more of our own IBM Cloud and by selling more of our analytics and AI capabilities on OpenShift across multiple platforms.”

IBM Reports 4Q18 Earnings, Margin Expansion, Return to Full-Year Revenue Growth

IBM announced 4Q18 earnings this afternoon.

The top line:

• GAAP EPS from continuing operations of $2.15
• Includes charge of $1.9 billion related to the U.S. Tax Cuts and Jobs Act of 2017
• Operating (non-GAAP) EPS of $4.87
• Revenue of $21.8 billion, down 3 percent (down 1 percent adjusting for currency)
• Global Business Services and Cognitive Solutions revenue grew year to year
• Gross profit margin up 10 basis points year to year; pre-tax income margin up more than 50 basis points year to year
• Continued strong services gross profit margin expansion year to year
• Full Year:
• GAAP EPS from continuing operations of $9.51
• Includes charge of $2.0 billion related to the U.S. Tax Cuts and Jobs Act of 2017
• Operating (non-GAAP) EPS of $13.81
• Revenue of $79.6 billion, up 1 percent (flat year to year adjusting for currency)
• Strategic imperatives revenue of $39.8 billion, up 9 percent
• Cloud revenue of $19.2 billion, up 12 percent
• As-a-service annual exit run rate for cloud revenue of $12.2 billion in the quarter, up 18 percent year to year (up 21 percent adjusting for currency) IBM)

“In 2018 we returned to full-year revenue growth, reflecting growing demand for our services and leadership solutions in hybrid cloud, AI, analytics and security,” said Ginni Rometty, IBM chairman, president and chief executive officer. “Major clients worldwide, such as BNP Paribas, are turning to the IBM Cloud and our unmatched industry expertise to transform their businesses and drive innovation.”

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.”

IBM 1Q18 Earnings: EPS Beats @ $2.45

IBM’s 1Q18 earnings were just announced, and beat estimates on EPS of $2.42 per share at $2.45, and revenue at $19.1 billion (vs. estimates of $18.84 billion).

CNBC’s report highlights:

Last quarter, IBM announced revenue growth from the year-ago quarter for the first time in more than five years. That streak is now continuing for a second quarter.

But the company reaffirmed its previous guidance of $13.80 in earnings per share, excluding certain items, for the full year of 2018, while analysts polled by FactSet had expected $13.83 per share, according to Thomson Reuters.

Cantor Fitzgerald analysts led by Joseph Foresi said in a Friday note that they expect IBM to report gains from companies upgrading to IBM’s latest mainframe computer, the z14.

IBM continues to seek growth from its strategic imperatives, which include social, mobile, analytics and cloud. In the fourth quarter that group contributed 49 percent of all revenue, and the Cantor analysts expect that balance to be unchanged in the first quarter.

With respect to guidance, for the second quarter analysts expect IBM to forecast $3.05 in earnings per share, excluding certain items, on $19.9 billion in revenue, according to Thomson Reuters.

IBM Acquires Vivant Digital Business in Australia

IBM today announced its intention to acquire Vivant Digital business (Vivant), a boutique digital and innovation agency based here. This acquisition extends the strategy and design expertise of IBM iX, one of the world’s largest digital agencies and global business design partners, with Vivant talent and expertise to accelerate clients’ digital transformations.

The CEO and founder of Vivant, Anthony Farah, will also take the role of Digital Strategy & iX Leader for IBM Australia and New Zealand.

With close to a decade of innovation consultancy experience, Vivant has established a strong reputation for its design philosophy and innovative approach, using insights from behavioral science, data and technology for Australian start-ups and corporates, primarily in the financial services and distribution industries.

Together IBM iX and Vivant, based in Sydney and Melbourne, will address the growing need of clients seeking transformation though innovative digital business models and bold customer experiences.

This adds to IBM acquisitions made during 2016 as it rapidly expands its iX global capabilities in strategic ways to better serve clients. From strategy and design to scalable digital, commerce and mobile, IBM iX’s team of specialists work side-by-side with clients across more than 36 global IBM Studios. Working at the intersection of strategy, creativity and technology, IBM iX helps clients digitally reinvent their businesses.

The acquisition is expected to close in the fourth quarter of 2017, subject to applicable regulatory review and customary closing conditions. Financial details were not disclosed.