Google wins their big fight against all-seeing Sauron…err… Oracle. On the heels of defeat, Oracle vows to appeal. While there is a party among developers, HPE is apparently celebrating yet ANOTHER split of their company…
This week HPE announced they are splitting their consulting services (formerly HP Enterprise Services, formerly Electronic Data Systems) and then merging that portion of the company with rivals CSC to form a new company. That move is called a “spin merger” if you were wondering.
Rumor has it that SaleForce is being woo’ed by Amazon and IBM is still eliminating domestic jobs.
IBM
- ‘No-one is safe’ as fresh round of job cuts hits Big Blue
According to the Wall Street Journal, the latest cuts started as IBM quietly laid off staff from US offices in North Carolina, New York City and Colorado. Meanwhile, in the UK, staff from the firm’s Global Technology Services (GTS) have been informed that the corporate axe is expected to swing throughout the month of June, which will be the second round of redundancies to hit UK shores within three months. Additionally, in Australia, reports indicate nearly a dozen jobs were recently slashed from a Sales and Distribution (S&D) department.
Additionally:
The problem now faced by IBM, our source added, is that potential staff members in the targeted countries likely “don’t have the skills” equivalent to their US-UK counterparts. The source added: “Almost everyone believes they are on the next RA list. People are so busy looking for other jobs I would assume productivity has dropped overall by 10%. Its just crazy right now.”
http://www.ibtimes.co.uk/inside-ibm-no-one-safe-fresh-round-job-cuts-hits-big-blue-1561781
- IBM’s Big Problem: It’s Too Busy To Listen To Its Customers
IBM has lost major contracts due to its inability to deliver what customers want. I’ve previously referenced the embarrassing CIA contract loss to Amazon, and besides the fact that IBM’s technology was woefully inadequate, one of the other factors that caused the company to lose was that it didn’t properly follow the bidding process.
http://seekingalpha.com/article/3977286-ibms-big-problem-busy-listen-customers
Also:
Amazon Again Beats IBM For CIA Cloud ContractDuring the case, IBM lawyers had strongly objected to the representation that it had manipulated the bidding process to create a protest issue. But the court “does not see any other explanation for IBM’s final pricing strategy,” the ruling said.
- What IBM Bought With $155 Billion
Had IBM forgone its buybacks, one thing it might still have would be the aforementioned massive $155 billion pile of cash. If IBM had used its cash to pay down debt rather than repurchase shares, what might the company’s balance sheet look like? IBM’s debt is comprised mainly of Global Financing and Non-Global Financing debt. The Global Financing segment provides funding for IBM’s external customers, and charges customers a higher interest rate than the interest rates on its own borrowings. This borrowing is done knowing that it will be eventually repaid with interest. The non-Global Financing debt, “core debt,” makes up a much smaller portion of IBM’s total debt.
http://seekingalpha.com/article/3977909-ibm-bought-155-billion
- IBM May Never Catch Amazon in the Cloud, and That’s OK
SoftLayer, IBM’s IaaS business, is dwarfed by AWS. The company has a goal of reaching $1 billion in IaaS revenue this year, but that would still make Amazon’s cloud-computing business about 10 times larger. Deutsche Bank analyst Ross Sandler, who rates IBM stock a hold due to growth concerns, believes that IBM will never catch up with Amazon, or even Microsoft, in the cloud. In the public IaaS market, Sandler believes that IBM doesn’t have a chance.
Additionally:
While Amazon focuses on being the low-cost provider of IaaS services, IBM is going after the highest-value portions of the cloud computing market. The company’s cloud strategy is summed up well by what CEO Virginia Rometty said during a conference last year:
“What’s important is that we grow in the right areas. Tech is littered with areas that you can have high growth and make no money. That’s not us.”
Microsoft
- Why Microsoft Corporation Sold Its Feature Phone Business
Microsoft recently announced that it will sell its feature phone business for $350 million to Foxconn subsidiary FIH Mobile and a newly founded company called HMD Global. Microsoft originally obtained the unit through its $9.5 billion acquisition of Nokia’s handset unit in 2014.
Additionally:
Nonetheless, customers in certain markets still buy Nokia’s feature phones, which require monthly data fees and can last for weeks on a single charge. Research firm eMarketer estimates that only about 30% of mobile users in India use smartphones. Pew Research Center estimates that almost two-thirds of people across seven sub-Saharan African nations still use feature phones.
Oracle
- Google and Oracle’s Android copyright fight is up to a jury now
The federal jury in San Francisco is now deciding whether Google’s use of copyrighted Java code constitutes fair use, an exemption that would free the company from having to pay Oracle damages.
At issue is “declaring code” that’s part of 37 Java APIs Google used. Google says it simply used selected parts of Java to create something new in the form of Android.
http://www.cio.com/article/3074413/google-and-oracles-android-copyright-fight-is-up-to-a-jury-now.html
Update: Google Won!“Overall, this is a win for software development,” said Mitch Stoltz, a senior staff attorney at the Electronic Frontier Foundation who focuses on copyright issues. “I think it’ll give software developers a bit more confidence that reimplementing APIs is not something that’s going to get them sued.” However, Stoltz pointed out that the appellate ruling still stands, and small developers could still face copyright lawsuits from tech behemoths.
http://techcrunch.com/2016/05/26/jury-finds-googles-implementation-of-java-in-android-was-fair-use/
Also:
Tech World Hails Google’s Copyright Victory – As It ShouldThe cause for celebration is the fair use finding, which does a lot to undo the damage from an appeals court ruling in 2014. That ruling, which overturned a judge’s finding that APIs cannot be copyrighted in the first place, triggered shock and disbelief among many in the tech community. They feared that giving Oracle rights to control the APIs would create a chilling effect as developers would be unsure about what they could and could not do to write code.
Note: Oracle is expected to appeal this decision (again). So this isn’t over.
Hewlett Packard Enterprise | HP Inc
- HP Enterprise to Spin Off, Merge Services Business (the whole thing is being called a “spin merger”)
The deal is expected to deliver $8.5 billion to HP Enterprise shareholders, which includes a 50% stake in the new company, a dividend of $1.5 billion, and the assumption of $2.5 billion in debt and other liabilities.
Additionally:
HP Enterprise said its enterprise services revenue was $4.7 billion in the quarter ended April 30, down 2% from a year ago. The enterprise services segment represented about 37% of HP Enterprise’s total revenue for the quarter.
Ms. Whitman said on a conference call that the Computer Sciences deal would remove about two-thirds of its workforce, or about 100,000 employees. HP Enterprise’s services businesses include the former Electronic Data Systems businesses that Hewlett-Packard bought in 2008 for $13.9 billion.
http://www.wsj.com/articles/hp-enterprise-to-spin-off-merge-services-business-1464121433
Additionally:Completion of the merger is anticipated by the end of March 2017, subject to shareholder and regulatory reviews and approvals. Following the transaction, CSC and HPE shareholders each will own approximately 50% of the new company’s shares. The transaction between CSC and HPE is anticipated to provide close to $8.5 billion to HPE’s shareholders on an after-tax basis. This includes an equity stake in the newly combined company valued at more than $4.5 billion, a cash dividend of $1.5 billion, and the assumption of $2.5 billion of debt and other liabilities related to the HPE Enterprise Services segment.
http://www.appstechnews.com/news/2016/may/26/hpe-enterprise-services-segment-merge-csc/
- But didn’t CSC just spin off a government IT focused business? (Yes)
What to expect when the CSC-SRA International spinoff debuts on the New York Stock ExchangeA combination of Falls Church-based Computer Sciences Corp.’s (NYSE: CSC) $4.06 billion North American Public Sector business spun off from the parent and the $1.39 billion Fairfax-based SRA International Inc., CSRA will be a next-generation, purely federal IT company devoted to migrating government agencies to cloud-based data center infrastructure and building advanced applications for its federal clients.
http://www.bizjournals.com/washington/blog/fedbiz_daily/2015/11/what-to-expect-when-the-csc-sra-international.html
But doesn’t HPE/EDS do government contracts? (Yes)“HP Enterprise Services has a very strong business in the federal government and what I’d say is post-close all options — and I underscore the word ‘all options’ — would be on the table,” Lawrie told analysts. “But that decision will be approached and looked at after we close the transaction.”
BUT…
Add to that the fact that CSC is legally prohibited from competing against CSRA for federal business over the next two years as a part of the split and it becomes hard to believe that CSC is going to hold on to this public sector asset. Public sector work would only make up about 11 percent of the total $26 billion new combined entity.
- HPE employees were ‘shocked’ but ‘glad to be rid of that boat anchor’
HP ES was formed when HP bought EDS in 2008 for $13.9 billion. Many HP employees we talked to said the two companies, HP and EDS were never a good culture fit.
As the person we talked to described it, “In my own experience, they were difficult to work with and never were fully integrated into HP.”
Other
- Is Amazon buying SalesForce?
Follow-up to last week’s blog and podcast:Now if you put on your investment banker hat and look at strategic M&A options for Amazon to keep its AWS market share, there are not that many. It’s unlikely that Microsoft would slow down its efforts and of course merging with Amazon would be almost impossible. IBM has its own cloud ambitions, as does Google, and neither of them would be viable for M&A. So who is left? Yes, only one cloud play – Salesforce.com, which also happens to have the same deferred revenue model as Amazon.
https://www.linkedin.com/pulse/amazon-buying-salesforce-jiri-kram?trk=hp-feed-article-title
Additionally:
Marc Benioff responds to questions about a Microsoft takeover bidThis is an incredible moment in history and as you can see Salesforce’s growth continues to accelerate and grow. I’ve now been working on this company for almost 18 years and I think that we’ve delivered fantastic results. As part of that, of course, I’m also making personal decisions as that goes and that’s what’s happening there.
Sounds like they are willing to sell to SOMEONE – like a company they just signed an international hosting deal with perhaps?
http://www.businessinsider.com/salesforce-ceo-marc-benioff-responds-to-questions-about-a-microsoft-takeover-bid-2016-5 - No, Apple isn’t the next BlackBerry — it’s the next Microsoft
Last week they called Apple the next IBM, now it is the next MicrosoftThe lesson for Apple, and Apple shareholders, is that it’s not enough to have a ton of money and just throw around cash to solve every problem. It takes real vision, strategy, and execution, and a first-mover advantage is nice, too.
http://www.businessinsider.com/apple-is-the-next-microsoft-2016-5
- Foxconn replaces ‘60,000 factory workers with robots’
One factory has “reduced employee strength from 110,000 to 50,000 thanks to the introduction of robots”, a government official told the South China Morning Post.
Since September 2014, 505 factories across Dongguan, in the Guangdong province, have invested 4.2bn yuan (£430m) in robots, aiming to replace thousands of workers.
- Verizon workers declare end to 44-day strike, claim “big gains”
While there were about 165 Verizon Wireless employees involved in the strike, the vast majority of the union members are in Verizon’s wireline division. Verizon today said that the company “look[s] forward to having all of our employees soon back at work in their regular positions and doing what they do best—serving our customers.” Verizon also said it was able to obtain “meaningful changes and enhancements to the contracts that will better enable our wireline business unit to compete and succeed in the digital world.”
Photo: Jesse Orrico