Companies are trying to find a way to make money in a world where customers are shrinking and costs continue to rise.
IBM’s purchase of Red Hat shows the company has to focus less on their AI goals and get back to software and services.
As people hold on to their phones and computers longer, Apple is raising prices to ensure the cash flow increases. The laws of supply and demand ring true as phone prices rise, demand has dropped. Is this a chicken and egg situation? Only time will tell.
Acquisitions
- IBM to Acquire Red Hat for About $33 Billion
IBM plans to pay $190 a share for Red Hat in what IBM said would be its largest acquisition ever. IBM plans to use cash and debt to make the acquisition. At the end of the third quarter, it held $14.7 billion in cash.
IBM is paying an unusually large premium in the deal, at 63% above Red Hat’s closing stock price of $116.68 on Friday. IBM said that the deal, including debt, is worth $34 billion. Using Red Hat’s most recently disclosed number for shares outstanding, the equity value of the deal is just under that.
https://www.wsj.com/articles/ibm-in-advanced-talks-to-buy-red-hat-1540751279?ns=prod/accounts-wsj
Cloud
- Microsoft’s Cloud Strategy Pays Off
The cloud-computing business, called Azure, grew 76%–still healthy but the slowest pace of growth since Microsoft began regularly disclosing the percentage gains about three years ago. Microsoft doesn’t disclose revenue figures for the business, but Stifel Nicolaus & Co. analyst Brad Reback estimated Azure revenue totaled $2.69 billion for the quarter.
Microsoft’s Intelligent Cloud segment, which includes Azure and server products, grew 24% to $8.57 billion, about $300 million above analysts’ expectations. “This absolutely shows Microsoft’s hybrid-cloud strength,” Mr. Reback said.
Overall, revenue rose 19% to $29.08 billion.
Security
- Private messages from 81,000 hacked Facebook accounts for sale
The perpetrators told the BBC Russian Service that they had details from a total of 120 million accounts, which they were attempting to sell, although there are reasons to be skeptical about that figure.
Facebook said its security had not been compromised.
And the data had probably been obtained through malicious browser extensions.
Facebook added it had taken steps to prevent further accounts being affected.
- Sen. Ron Wyden Introduces Bill That Would Send CEOs to Jail for Violating Consumer Privacy
Wyden’s bill proposes that companies whose revenue exceeds $1 billion per year—or warehouse data on more than 50 million consumers or consumer devices—submit “annual data protection reports” to the government detailing all steps taken to protect the security and privacy of consumers’ personal information.
The proposed legislation would also levy penalties up to 20 years in prison and $5 million in fines for executives who knowingly mislead the FTC in these reports. The FTC’s authority over such matters is currently limited—one of the reasons telecom giants have been eager to move oversight of their industry from the Federal Communications Commission to the FTC.
Software/SaaS
- IBM is betting the farm on Red Hat, and it better not mess up
As Jon Shieber pointed out yesterday, it was a tacit acknowledgement that company was not going to get the results it was hoping for with emerging technologies like Watson artificial intelligence. It needed something that translated more directly into sales.
Red Hat can be that enterprise sales engine. It already is a company on a $3 billion revenue run rate, and it has a goal of hitting $5 billion. While that’s somewhat small potatoes for a company like IBM that generates $19 billion a quarter, it represents a crucial addition.
https://techcrunch.com/2018/10/29/ibm-is-betting-the-farm-on-red-hat-and-it-better-not-mess-up/
- Box takes on OpenText, Microsoft as enterprise content hub
“The next five years in content management will be completely different from the last 20,” said Jeetu Patel, chief product officer at Box. Gone are the days of self-contained repositories that simply store, produce and archive business documents. The key to success entails knowing where your content resides, how to best access it and weaving the content into high-value experiences that solve business problems. The enterprise content hub is where that all begins, and Box is positioning itself to become that focus.
- Linus Torvalds is back at Linux while GNU’s Stallman unveils a “kindness” policy
Torvalds’s apparent speedy return and Stallman’s not-explicitly-pro-diversity not-quite-a-code-of-conduct seem to show the open source and free software movements are intent on taking their own approaches to diversity and gender relations. There’s no doubt this side of computing, which has historically been male and white and somewhat insular, is feeling the impact of external critiques. But so far, the projects have made relatively bland moves toward change that may not be enough to satisfy their critics or make would-be contributors who’ve felt excluded see themselves as welcome.
Datacenter/Hardware
- Apple Raises Prices, and Profits Keep Booming
Apple said Thursday that it sold about as many iPhones in the latest quarter as it did a year earlier but that iPhone revenue rose 29 percent. That was because customers paid nearly 29 percent more for the devices. (The average selling price is now $793.)
The price increase helped propel Apple’s profits 32 percent higher, to $14.13 billion.
But after those figures were reported, Luca Maestri, Apple’s chief financial officer, said in a conference call that the company would no longer disclose how many iPhones, iPads or Mac computers it sold. As a result, journalists and analysts will no longer be able to track how Apple’s swelling prices are improving its profits.
https://www.nytimes.com/2018/11/01/technology/apple-quarterly-results.html
Other
- Google Walkout: Employees Stage Protest Over Handling of Sexual Harassment
But employees’ discontent continued to simmer. Many said Google had treated female workers inequitably over time. Others were outraged that Google had paid Andy Rubin, the creator of the Android mobile software, a $90 million exit package even after the company concluded that a harassment claim against him was credible.
That led some Google employees to call for a walkout. The organizers also produced a list of demands for changing how Google handles sexual harassment, including ending its use of private arbitration in such cases. They also asked for the publication of a transparency report on instances of sexual harassment, further disclosures of salaries and compensation, an employee representative on the company board, and a chief diversity officer who could speak directly to the board.
https://www.nytimes.com/2018/11/01/technology/google-walkout-sexual-harassment.html
Photo by Taylor Grote on Unsplash
