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.

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!)

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.”

Bull Run

The 2019 bull run continues.

The Dow Jones Industrial Average closed 211.22 points higher at 25,928.68 today, and CNBC reports that the S&P 500 has notched its best start to a year since 1998. 

What happened to that inverted bond yield???

Perhaps that’s all just more goodness for the soon-to-be rampant unicorns, including Lyft, whose IPO float today send the stock trading up 8.7 percent to $78.29, with more than 70 million shares trading on its first day as a public company. 

That lifted Lyft’s market valuation to $22.2 billion.

Other unicorns likely to be unleashed into the wild soon? Uber, Slack, Pinterest, among others.

Just remember, Lyft is currently #2 in the ride-hailing pecking order and lost $900 million in 2018.

While we’re on the subject of moolah, let’s talk about TechCrunch’s story about consumer spending on apps.

Sarah Perez’s headline suggests that spending will reach $156 billion across iOS and Google Play by 2023. Yes, you read that right.

That research estimate came from app store intelligence firm Sensor Tower, and suggests that both stores will more than double their revenues over the next five years. That’s +16.8 percent CAGR, if you’re counting along.

Getting further down into the numbers, that’s an estimated $96 billion for Apple and $60 billion for Google, with Apple taking nearly 62 percent of all revenue generated by the two platforms.

To put that in perspective, the global film industry was worth an estimated $136 billion as of 2018.

Time to hone those developer skills, because the bull run appears to continue across the board.

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.”

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.

Apple Earnings

Apple announced its fiscal 2018 first quarter earnings this afternoon, posting quarterly revenue of $88.3 billion, a 13 percent YOY increase and all-time record. International sales accounted for 65 percent of its quarter’s revenue, according to a press release put out by Apple.

We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup. iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November,” said Tim Cook, Apple’s CEO. “We’ve also achieved a significant milestone with our active installed base of devices reaching 1.3 billion in January. That’s an increase of 30 percent in just two years, which is a testament to the popularity of our products and the loyalty and satisfaction of our customers.

9to5 Mac helped break Apple’s unit sales down by product line:

• 77.3 million iPhones
• 13.2 million iPads
• 5.1 million Macs

The company earned $20.1 billion in profit.

But Engadget notes that this was “the first time iPhone sales have declined during a holiday quarter since the phone launched, best as we can tell,” suggesting an iPhone market saturation.

Yet even if Apple overshot its forecast for iPhone X sales and is ramping down production, “Apple says the iPhone X has been the top-selling iPhone every week since it shipped in early November.”

One other bright spot: The “other products” category, which includes the Apple Watch, AirPods, Beats hardware, and other products, where revenue increased 70 percent YOY up to $5.5 billion.

Perhaps AirPods have finally hit their stride, with supply now starting to finally match demand (they appeared 6-week backlogged for the better part of a year!).

Live From IBM Pulse 2013: Chris Gardner And His Pursuit of Happyness

Author, entrepreneur, and philanthropist Chris Gardner speaks to the gathered Tivoli Business Partner Summit audience in Las Vegas about his trials and tribulations as a single father who, despite finding he and his infant son homeless on the streets of San Francisco, overcame his great adversity and inspired millions around the world, and in the process raised the world’s consciousness about the perils of homelessness and the importance of parenting.

You may not know Chris Gardner by name or by face. But if he told you that one of the world’s most bankable movie stars, one who travels with a four bodyguard security entourage, made a movie about his story, he might just get your attention, as he got mine when he kicked off this afternoon’s session at the Tivoli Business Partner Summit here at the MGM Grand in Las Vegas.

And that’s when Mr. Gardner explained that Will Smith was not going to be joining us, and also the first moment Chris Gardner had the audience in the palm of his hands, which he never let go for the ensuing 45 minutes.

If you don’t know the story behind the story behind “The Pursuit of Happyness,” then you’re missing out. But the irony wasn’t lost on Mr. Gardner, who joked that the people in “Hollyweird” spent $70 million to recreate a story he endured “for nothing.”

But as it turns out, it wasn’t for nothing, as it’s a story that has inspired people around the world, in the form of both a movie and a book, one which has been translated into six dialects of the Chinese language.

And it all started with an interview that Mr. Gardner almost didn’t  do with Barbara Walters for “20/20.”

But he did do the interview, which ran on a Friday, and on Monday the floodgates opened with calls wanting to exploit his story. Juxtapose that with another Friday he found himself in a Bay Area jail, a much longer weekend where he had to wait to get released so he could go and find his infant son.

Because ultimately, Gardner explained, that was his life’s work, a promise to himself: To break the cycle of failed fatherhood among black males, a promise he made when he was only five himself and didn’t have his own father around.

Soon, there was one call from the entertainment realm that interested him, one from Steve Tisch, a co-producer on “Forrest Gump” and part of a firm called “Escape Artists,” who convinced Gardner he wanted to help him share his story with the world through the form of a major motion picture.

Though Gardner was at first hesitant to okay Will Smith as the star — “This story is about inner space, not outer space” Gardner explained —  his daughter ultimately convinced him when she said “Papa, don’t worry.  If he can play Muhammad Ali he can play you.”

The key question everyone wanted to know, Gardner then continued, was “how do you become homeless?”

And his answer was, “life happens.”

He had worked his way into a great job at a local university, was soon married and an expectant father, and he was all about seizing opportunity.  After enduring for a period a cushy if modest lab equipment sales job, he one day saw a guy driving a Ferrari, which he offered to help find a parking spot for.  But he first wanted an answer to two questions:

“What do you do, and how do you do that?”

The answer was the guy was a stockbroker, cleared about $80,000 a month, and because Gardner was “pretty good with numbers,” decided that’s what he wanted to do with his life.

But as he again explained, “life happens,” and before he knew it he was destitute due to some accumulated parking tickets and some domestic woes at home.  Before he knew it, he was without a job, health care, and soon, even his wife and son.

It was a single policeman who, during his ten day jail stay, cut him some slack and allowed him to make a phone call so he could postpone the all-important stock trader assistant job position he was applying for.

Shortly thereafter, he was successful in getting the job, but he lost his wife and now had an infant son to take care of.  The boarding house he was staying in didn’t allow children, so he quickly found himself and his son on the streets of Oakland with no place to go.

It was at this point that Gardner explained that an estimated 23% of homeless people “have jobs and go to work everyday,” and that this problem has only grown through the economic downturn.

But through a series of ingenious, if challenging, moves, he found a way to take care of his son and endure the hard-nosed requirements of the new job, staying at times on the streets, at others in dime hotels, and yes, acceding to the kindness of strangers.

Including a reverend at a local homeless food distributor, Mo’s Kitchen, the proprietor of which saw Gardner standing in line with his infant son, an anomaly considering most of the kitchen’s visitors were homeless women with children.

“What are you doing with that baby?” the reverend asked one day.  “I’m gonna keep it,” Gardner explained.

And so every day for a year, that’s precisely what Gardner did.  “You would see me, my son, a stroller, one suit on my back and another in a hanging bag, and we hit the street, every day for a year.”

They slept outside, at airports (this was pre 9/11), a Union Station bathroom…wherever they could.  And Gardner observed the one thing his son remembers from this period was this: “Every time I looked up, my father was there.”

Gardner remembers, “He didn’t know we were homeless.”

And despite all else, Gardner stayed homeless, until such time that he could save enough money to find his own place, a small apartment not two blocks from the train station they once frequented for shelter.

Gardner went to explain that his son didn’t know that some of the times he ate, Gardner went hungry, or that sometimes he was able to get a hotel room only after first giving blood.  He didn’t know that, Gardner explained, “because that’s what fathers do.”

After spending their first night in their new home, Gardner’s son saw him leaving the apartment without carrying everything he owned, which he’d been forced to do for the better part of that year.

Gardner explained to him, “You know what son, we got a key now…we’re home.  We don’t have to carry stuff anymore.”

“That was the start of turning our lives around,” Gardner related, although it hadn’t come easy.  “After a year of struggle, I didn’t know how much more I could take when one day, my son, stood up in the bathtub, and said, ‘Papa, you know what?  You a good papa.’”

We know the rest of the story from the movie, and from Gardner’s retelling.  He went on to enjoy great success as a stock broker, ultimately arriving at Bear Sterns’ San Francisco office and making millions.

“Sometimes it’s okay to laugh all the way to the bank,” Gardner joked.

But through it all, Gardner never lost his perspective.

Much later, the great American poet Maya Angelou explained to Gardner that “This story ain’t even about you. This is about every mother who ever also had to be a father, and every father who ever also had to be a mother.”

This was about breaking the cycle of men who have not been there for their children.

And though you might not recognize Chris Gardner walking down the street if you ran right into him, he was there for his son.

And in the end, that’s all he really wanted any of us to know.