SourceCast: Episode 33: Showing the Value
Supplier Alert: Verizon will purchase Yahoo for $4.8B
News on the street is that Verizon may purchase Yahoo’s core internet this Tuesday.
Update: Verizon has officially announced they will purchase Yahoo for $4.83B.
Verizon already bought a company that your grandparents probably use for email… AOL. So what is appealing about Yahoo at this point for Verizon?
Reportedly, the offers that have come in have been between $3 billion and $5 billion for a range of assets that include not only the search and media businesses, but real estate and IP. Yahoo’s “Excalibur” patent portfolio contains 2,600 technical patents and Yahoo optimistically values it at upwards of $1 billion.
But after months of small movements in this saga, and years of steady decline at Yahoo, in a way, it’s not at all a surprise to hear that Verizon may end up getting Yahoo at the end of it.
Speaking of AOL, Verizon didn’t buy them for their still profitable dial-up business. So what was the appeal of AOL last year?
If Verizon intends to keep expanding, new growth won’t come from adding more customers each quarter or through acquiring a competitor. The company will have to make more money off its existing customers through alternative means, because its traditional avenues for increasing revenue—voice, messaging and data—won’t cut it. Verizon already offers unlimited voice and text plans to most of its customers, and while data usage is increasing, competition is gradually driving down the per-gigabyte prices.
Why is owning AOL and Yahoo a viable direction for Verizon? Verizon can’t buy another telecom company and fighting the other wireless providers down to the lowest prices isn’t appealing (and they aren’t winning that game anyway). And how does their cash flow look?
The company made almost $18B last year and they have enough cash to swing a $3-5B purchase. But is it really a wise investment? Is there anything in those Yahoo patents that is such a game changer from what they already own thanks to AOL?
Verizon is following Comcast’s lead with NBC and buying companies that creates content, so they can make money off of ads however:
Of course, even with AOL and Yahoo assets, Verizon has a long way to go (paywall) to catch up with the online advertising leaders. Verizon with AOL currently holds a mere 1.8% of the $69 billion digital ad market in the US. Yahoo has about 3.4%. Google and Facebook together claim about half of it. Looked at another way, though, there’s plenty of market share to steal, which can’t be said of its traditional business.
What becomes of the rest of Yahoo? The Yahoo we know would be over and there will be a chunk left over that manages the valuable Alibaba asset moving forward. Update on what assets are not being sold:
Yahoo’s stakes in Alibaba and Yahoo Japan aren’t part of the acquisition. These stakes are worth tens of billions of dollars alone. As of Friday July 22nd, Yahoo’s 15 percent stake of Alibaba represented $31.2 billion, and its 34 percent of Yahoo Japan was worth $8.3 billion. Yahoo’s patent portfolio, which is worth around $1 billion, isn’t part of the sale either. Yahoo’s Sunnyvale headquarters are part of the acquisition, a source told TechCrunch.
Photo: Adrianna Calvo
Supplier Report: 7/23/2016
IBM had another down quarter but is reporting 30% growth in cloud and their “critical initiatives”, while they are growing the future of Big Blue, are they turning friends into enemies? What does IBM and Microsoft’s deal for their Surface devices means for Apple in the long run?
Salesforce purchased a datacenter analytics company while there are rumors that Oracle might buy cloud computing company Netsuite.
HPE failed to get an Oracle lawsuit dismissed and also seems to be failing to pay their sales teams.
Can Google use AI to cut datacenter energy costs by 40%? (Yes… with a big BUT)
IBM
- IBM grows in cloud and data analytics but overall revenue slides
The Armonk, New York, company said Monday that revenue from its new “strategic imperatives” like cloud, analytics and security increased by 12 percent year-on-year to US$8.3 billion. That increase was, however, lower than the growth the company had reported in these businesses in the first quarter.
Cloud revenue – public, private and hybrid – grew 30 percent in the second quarter, while revenue from analytics grew 4 percent, revenue from mobile increased 43 percent and the security business grew 18 percent.
Additionally:
IBM’s systems revenue, for example, was down 23 percent in the quarter to $2 billion, while its Global Business Services, including consulting, global process services and application management, brought in revenue of $4.3 billion, down 3.0 percent from a year earlier. Revenue for the company’s z Systems mainframes was down 40 percent in the quarter while margins improved, “consistent with where we are in the product cycle.” Schroeter said. IBM acquired EZSource in the quarter to help developers quickly and easily update mainframe applications.
- IBM: A Hodgepodge Going Nowhere
I’m going to pick on Truven here because I’m a bit familiar with the company from the past. Truven basically owns a bunch of data on patients and licenses it out to companies so they can try and analyze it. IBM’s plan is to essentially plug all that data into Watson and hope it can come up with some clever insights to better treat patients. But is it really worth $2.6 billion? While IBM could certainly be onto something with all its healthcare-related acquisitions, since the industry is ripe for reform, chances are probably just as high that the company is acquiring as much as it can in the hopes that something turns into a homerun.
My friends at Seeking Alpha really don’t like IBM (even when there is positive news).
http://seekingalpha.com/article/3989255-ibm-hodgepodge-going-nowhere
Also from SA: IBM May Not Be A Hopeless Disaster After AllIn the past, I’ve stated repeatedly that IBM was too far away from growing its imperatives revenue quickly enough to make up for the losses in its legacy businesses but it seems that is no longer the case. What started as a small proportion of revenue is now a significant piece of the business and at the rate it is growing, IBM could potentially see top line growth in the relatively near future if it can stop the hemorrhaging elsewhere. Can it do that? Maybe; we’ll just have to wait and see. But at least the conversation can happen now whereas that was certainly not the case in the relatively recent past.
http://seekingalpha.com/article/3989381-ibm-may-hopeless-disaster
- CSC and IBM Expand Strategic Alliance with Collaboration Utilizing IBM Cloud for z to Enable Clients’ Move to Cloud
CSC and IBM today announced a collaboration in which IBM will provide its Cloud Managed Services for z Systems — IBM Cloud for z — and associated mainframe hardware, software, monitoring and governance support to CSC clients who are moving to the cloud and want a more secure, scalable, flexible information technology infrastructure at significantly reduced operational costs.
The expanded alliance further advances CSC’s vision of the “Service-Enabled Enterprise” and IBM’s “as-a-service” strategy, both designed to increase client choice and innovation in adopting emerging technologies. The as-a-service strategy provides consumption-based pricing for the IBM z Systems environment to give clients’ greater capital investment flexibility.
So… IBM cuts their consulting force, CSC merges with HPE’s, and now there is this “collaboration”. Interesting.
http://www.prnewswire.com/news-releases/csc-and-ibm-expand-strategic-alliance-with-collaboration-utilizing-ibm-cloud-for-z-to-enable-clients-move-to-cloud-300300377.html - IBM Watson Wants to Be Your New Salesperson at Macy’s
Customers can type in questions, and Macy’s On Call will return the top answer for that question along with location-specific details. For example, a customer could type, “Where are the ladies shoes?” or ask to find a specific brand of a dress, and the assistant will inform the shopper as to where the shoes are located in the store and where the exact dress is located.
Hewlett Packard Enterprise | HP Inc
- Meg Whitman is scrambling to fix a ‘nightmare’ glitch that affected thousands of her salespeople
Thousands of members of the salesforce have not been properly paid since Hewlett Packard split itself apart the previous November, they tell her. That’s six months of wacky pay. It’s gotten so bad that some salespeople couldn’t make their mortgages and were facing foreclosure. Others were behind in their alimony payments.
Oracle
- Oracle could be about to buy NetSuite
Oracle Corporation (NYSE:ORCL) is on the brink of announcing its buyout of cloud computing rival NetSuite Inc (NYSE:N), according to unconfirmed market rumors on Thursday.
Gossips reckoned NetSuite has delayed publication of financial results due this week until next week because the pair want to unveil the deal beforehand.
- Oracle Wins Round in Copyright Suit With HPE
U.S. District Judge Jon Tigar on Friday largely denied HPE’s motion to dismiss the suit, which accuses the company of participating in a scheme to use pilfered intellectual property to win customer-service contracts away. Friday’s decision was filed under seal, but at a Thursday afternoon hearing Tigar outlined his tentative ruling. He indicated he would partially dismiss Oracle’s claim under California’s unfair competition law but allow the core copyright claims to proceed.
Oracle sued HPE in March, accusing its rival of pairing with Terix Computer Co. Inc. to sell hardware and software support services for Oracle’s Sun-branded computers running the Solaris operating system. Oracle’s lawyers, led by Christopher Yates of Latham & Watkins, have alleged that HPE officials knew Terix illegally used Oracle customer credentials to access copyrighted Solaris updates for servers. Oracle claims that only servers covered by valid Oracle support contracts had a license to the updates.
- Exclusive: Oracle to reboot Java EE for the cloud
Rumored to have put the project on the back burner, Oracle has weathered a storm of complaints over its stewardship of enterprise Java, with two separate organizations considering plans to move Java EE forward without Oracle. Rather than let Java EE wither, Oracle is instead looking to reboot the platform to better accommodate where enterprises are headed, particularly to the cloud, said a high-ranking Oracle official in response to recent criticism.
http://www.infoworld.com/article/3098007/java/oracle-to-reboot-java-ee-for-the-cloud.html
Storage (EMC | Dell )
- EMC Exec: No Competition Between Dell-Nutanix Appliance And EMC Hyper-Convergence Portfolio
“If I buy into the [EMC] ‘blocks, racks and rails’ story, it’s not really competitive against Nutanix,” Miller said. The Nutanix-based Dell XC appliance, “is for a smaller play, or someone who hasn’t completely bought into [the hyper-convergence] methodology,” he said.
- EMC, Dell merger approved by shareholders in 98% vote
From Joe Tucci, EMC Chairman and CEO: “Today’s resoundingly favorable shareholder vote clearly supports our view that combining Dell and EMC will create a powerhouse in the technology industry. The Board and I care very deeply about, and have worked diligently to represent, what we believe is the best outcome for all stakeholders. I want to thank our shareholders for their support, as well as our customers and partners. My special thanks to the talented people of EMC for their hard work, dedication and passion.”
http://seekingalpha.com/news/3194069-emc-dell-merger-approved-shareholders-98-percent-vote
Microsoft
- What will it take to turn Microsoft back to growth?
Wall Street analysts on average expect the tech giant to post fiscal fourth-quarter revenue of $22.14 billion on earnings per share of 58 cents, according to a Thomson Reuters survey of 23 analyst estimates. This would mark the smallest year-over-year drop in quarterly revenue since the fourth quarter of last year.
Overall, revenue is expected to decline 2 percent for fiscal 2016, but the company is headed in the right direction: Revenue growth is expected to return next quarter. Analysts project Microsoft to report 2 percent growth in the September quarter and 4 percent growth for fiscal 2017.
http://www.cnbc.com/2016/07/18/what-it-will-take-for-microsoft-to-return-to-growth.html
Other
- Salesforce Takes Measures Against Google Android Fragmentation-Related Issues
Salesforce announced on its official support page that it will only support Google Nexus and Samsung Galaxy devices. The firm released a statement saying that the decision to support a limited number of devices regardless of the many Android devices on the market was so that it can improve its services on the devices supported. This will allow Android users on supported devices to have a better user experience.
- Google unleashes DeepMind on energy-hungry datacenter, cutting cooling bill by 40 percent
We accomplished this by taking the historical data that had already been collected by thousands of sensors within the data centre — data such as temperatures, power, pump speeds, setpoints, etc. — and using it to train an ensemble of deep neural networks. Since our objective was to improve data centre energy efficiency, we trained the neural networks on the average future PUE (Power Usage Effectiveness), which is defined as the ratio of the total building energy usage to the IT energy usage. We then trained two additional ensembles of deep neural networks to predict the future temperature and pressure of the data centre over the next hour. The purpose of these predictions is to simulate the recommended actions from the PUE model, to ensure that we do not go beyond any operating constraints.
- Microsoft, IBM and SAP’s Impressive Cloud Numbers Don’t Tell the Whole Story
Moreover, a shift from on-premise to cloud revenue streams is pressuring the margins of many firms, as hosting cloud apps and services brings with it expenses that don’t exist with regular software sales. While Microsoft’s revenue rose 2% in the June quarter, the company’s cost of revenue rose 7%, with cloud and search ad expense growth more than offsetting the impact of plunging phone sales. Meanwhile, IBM’s gross margin fell 190 basis points in the second quarter to 49%.
- Should Apple worry about Microsoft-IBM deal?
Apple’s role in the enterprise has been and, for the foreseeable future, will be anchored to workers and consumers, not big businesses, says Aaron Gette, CIO of Bay Club, a lifestyle and fitness company. “Microsoft might not be first to market, but they come prepared and well versed,” he says. “Microsoft’s Azure is beginning to win in the enterprise cloud marketplace, so the role of IBM’s ability to deliver apps to the Surface users in the enterprise is a great play.”
http://www.cio.com/article/3098267/it-industry/should-apple-worry-about-microsoft-ibm-deal.html
- Salesforce acquires crowd-sourced data analytics solution Coolan
Coolan is a data analytics platform that monitors the performance of data centers, that helps predict server failure, reduce downtime, and lower the cost of infrastructure. Their cloud analytics platform is aimed at predicting the flaws in a data center and helping the hardware community build a reliable and efficient infrastructure.
http://thetechportal.com/2016/07/22/salesforce-acquires-coolan/
Why Salesforce Is Buying This Little-Known Startup“If you’re a company buying, say 100 Dell servers this year, and another 100 in six months and another 100 next year, you really don’t know what the components in all those servers are,” said a source close to Coolan, who requested anonymity because he is not authorized to speak on the deal. “Some may have Western Digital hard drives, others may have Seagate, some server lots will have memory from this supplier, others from someone else. Coolan goes in and tells you what all those components are, how they all perform over time and what their failure rates are.”
http://fortune.com/2016/07/22/salesforce-coolan-data-centers/
Photo: Nicolas Cool
News You Can Use: 7/20/2016
- How To Use A Mass Exodus At Your Company To Advance Your Career
Taking on new or more challenging work. “If there are projects you would like to pitch in on because it would be rewarding or enhance your skill set, this could be a time to do that,” she says. And now you can make a strong case for why you’re up for the task.
After all, you may have some more leverage than you did beforehand—at least of a certain sort. “If people are leaving,” Crawford says, “they kind of need all hands on deck. That would be one more positive way to get your fingers in more areas you may not have otherwise.”
- How To Stop Checking Email On Vacation
If you’re finding it hard to refrain from email, set “unplugging goals,” suggests Gabby Burlacu, human capital management researcher at the software company SAP SuccessFactors. “Learning to completely unplug from work takes time and focus,” she says. “Finding hobbies or activities while you’re on vacation and making a commitment to solely focus on those while you are engaged in them can go a long way.”
It can also be helpful if you sort email, says Webb. He takes 10 minutes a day, while he’s waiting at the airport or riding in a cab, to filter email into the folders he set up before he left: “Action Required,” “File,” and “Read Later.”
“I don’t respond to messages while on vacation, unless I feel it’s imperative,” he says. “I simply process the emails for action upon my return.”
http://www.fastcompany.com/3061451/how-to-stop-checking-email-on-vacation
- Creative Office Design Won’t Make You Better At Your Job, But This Might
Del Toro found this reassuring. The employee hadn’t asked permission to move the furniture, but the fact that she had done so anyway pointed to a feature of ViaSat’s work environment that no designer can account for directly—its culture, which prizes curiosity and the freedom to find alternative ways of doing things on your own initiative. That couch still sits by the window. It’s already the most popular space for people to meet. But del Toro won’t be surprised or perturbed if somebody six or 12 months from now moves it someplace else.
- Tensions rise over LTE using Wi-Fi channels
Unlicensed LTE is designed to give mobile operators more spectrum to work with as they try to serve subscribers in crowded places. Verizon, T-Mobile USA and other carriers have talked about rolling it out as soon as the end of this year.
But some backers of Wi-Fi, including the Alliance, have said LTE-U could make it hard for wireless LAN users to get a packet in edgewise. Fans of the new technology, including Qualcomm, say it won’t add any more interference than a new Wi-Fi access point would.
http://www.cio.com/article/3088987/tensions-rise-over-lte-using-wi-fi-channels.html
- The Skills It Takes To Get Hired At Google, Facebook, Amazon, And More
Four things: General cognitive ability . . . Not just raw [intelligence] but the ability to absorb information. Emergent leadership: The idea there being that when you see a problem, you step in and try to address it. Then you step out when you’re no longer needed. That willingness to give up power is really important. Cultural fit: We call it Googleyness, but it boils down to intellectual humility. You don’t have to be warm or fuzzy. You just have to be somebody who, when the facts show you’re wrong, can say that. Expertise in the job we’re gonna hire you for.
Photo: Martina Misar-Tummeltshammer
SourceCast: Episode 32: The Cloud Wars
