It was a rough week for the companies usually covered on this report. IBM missed earnings expectations AGAIN. The press has been brutal predicting the end of days for big blue. Rometty says she will stay the course and focus on cloud and analytics.
HP has not reacted well to the EMC news and has been trolling the acquisition in the press and with their channel customers. While they throw attention to other companies, they officially announced their decision to put the Helion cloud platform out of its misery.
Speaking of cloud, EMC announced they are creating a joint venture with VMware based on their Virtustream technology.
IBM
- IBM in Hot Water as Earnings Continue Downward Spiral
IBM has continued its down ward spiral, with revenues falling by 14 percent in the third quarter, year on year. The company’s revenues has come down to $19.28 billion in the third quarter, much lower than the $22.4 billion it earned in the third quarter last year. This is the 14th continuous quarter loss for IBM, once the doyen of computer hardware makers everywhere. The earnings have even disappointed analysts forecasts, who were expecting the company to earn $19.6 million. As expected, the markets reacted strongly and punished the company by scrapping 5.5 percent of its share price, at the end of the day.
http://www.financialbuzz.com/ibm-in-hot-water-as-earnings-continue-downward-spiral-350193
- 42 percent of IBM’s SoftLayer outbound emails found to be spam
“We believe that SoftLayer, perhaps in an attempt to extend their business in the rapidly growing Brazilian market, deliberately relaxed their customer vetting procedures,” Spamhaus suggested.
Hmmm… I didn’t know that Brazil was a spam hub… but it is (#4):
http://www.bloomberg.com/ss/09/02/0211_spam_countries/18.htm - IBM bags Wipro
Wipro, on its part, said it will train 15,000 of its developers to use Bluemix via an online open course across 58 countries. Wipro is to use over 100 services in IBM’s public Bluemix catalogue but will also use Bluemix Dedicated. That’s a private cloud version for developers to build apps that access sensitive data.
- IBM CEO Pledges to Stay the Course
Ms. Rometty said she didn’t take the decision to reduce IBM’s outlook lightly. The reason was a slowdown in what the company calls “transactional” businesses, which is shorthand for deals that require customers to make sizable upfront commitments—like big contracts for hardware, software or services contracts.
http://www.wsj.com/articles/ibm-ceo-pledges-to-stay-the-course-1445360608
- IBM Raises Eyebrows, Opens Source Code Access To China: Here’s Why
The demos are reportedly done inside a secure room without an Internet connection, where China’s IT experts view the source code on an IBM security application to prevent other people from poaching the company’s IP. Moreover, the demos are done only for a few hours, keeping anyone from thoroughly going through the code to find back doors that may have been implanted to allow the U.S. government to secretly infiltrate the system, suggesting that the demos are highly symbolic more than anything else.
EMC
- EMC and VMware Creating a Jointly Owned Hybrid Cloud Company
EMC and VMware are creating a new jointly owned hybrid cloud company that will be based on the Virtustream business that EMC acquired earlier this year. EMC and VMware officials announced the new company—which will carry the Virtustream brand—Oct. 20 during the releases of their respective quarterly earnings. The new business will be added to the list of companies that make up EMC’s federation. EMC and VMware each will own a 50 percent share of Virtustream.
http://www.eweek.com/video/emc-and-vmware-creating-a-jointly-owned-hybrid-cloud-company.html
- EMC to retain some autonomy after acquisition (this is just VMware, which everybody already knew)
EMC’s virtualization software subsidiary VMware will “remain an independent public company,” Dell said. Many of VMware’s current clients provide servers and related services, putting them in direct competition with Dell’s key operations. Fears that clients could drop VMware after it is transferred to Dell sank the former’s share price around 30% in the wake of the announcement of the acquisition.
http://asia.nikkei.com/Business/Deals/EMC-to-retain-some-autonomy-after-acquisition
HP
- HP Split Could Mean ‘Deal or Die’ for H-P Enterprise
The tax-free split of HP and Hewlett-Packard Enterprise includes an agreement that restricts deals that could undo the financial engineering and require a bill to the Internal Revenue Service. Burgess suggested the provision is effectively a poison pill that could thwart a takeover. An outright buyout of the company or a deal involving more than 50% of the stock in Hewlett-Packard Enterprise, for example, could create problems.
http://www.thestreet.com/story/13334251/1/hp-split-could-mean-deal-or-die-for-h-p-enterprise.html
- Hewlett-Packard spreading FUD over Dell-EMC merger (sharing this because I am glad someone called HP out for their lack of subtlety. If you have to FUD, do it with nuance)
Hewlett-Packard hopes to draw away enterprise data storage customers from Dell and EMC using the classic approach of spreading FUD, business shorthand for “fear, uncertainty and doubt,” about its rivals. Last week, HP CEO Meg Whitman criticized Dell’s planned $67 billion acquisition of EMC. HP later launched an opportunistic marketing campaign warning customers about potential upheaval in the storage business of the combined Dell-EMC.
- HP is giving up on competing with Amazon’s cloud (HPQ)
That’s something HP has found out the hard way, with HP Helion constantly coming under fire for being too small and too unfocused on the market to seriously make a dent. And so, HP is going to shut down HP Helion to stick with what its good at: Helping customers run their own data centers with hardware, software, and services to run at cloud levels of efficiency. The industry term for that concept is “private cloud,” and it plays into HP’s experience in servers and software.
http://www.metrowestdailynews.com/article/ZZ/20151021/BUSINESS/310219918/-1/business
Other
- IBM: Can A Red Knight Save Big Blue?
Two things excite me about Jim. First, the performance of Red Hat under his leadership. Since he became CEO of the company in January, 2008, the shares are up 275%, a market cap of $14.75 billion for a company that doesn’t really sell anything. Red Hat offers support for open source software, stuff you can download for free, yet revenues are growing at nearly 20% per year, and software engineers consider it a great place to work.
The second thing that excites me about Jim is that he has a philosophy, a way of managing his business, one that is proven to work, and one that can scale to a company of IBM’s size. I have read his book, The Open Organization and you should too. It’s a manual for 21st century software management, and software is where IBM needs to be.
http://seekingalpha.com/article/3589406-ibm-can-a-red-knight-save-big-blue
Photo: Pavel Badrtdinov