IBM shifting to cloud services
IBM Corp plans to invest US$1.2 billion to expand its cloud services, bolstering a business it is counting on for growth after spending US$2 billion last year to acquire SoftLayer Technologies Inc. The company plans to add 15 new data centers worldwide by the end of this year, SoftLayer chief executive officer Lance Crosby said. IBM is winding down its separate SmartCloud Enterprise product as early as the first quarter of this year, except for a premium service that will be offered with SoftLayer’s, he added in an interview. IBM is trying to keep up with customers shifting from buying their own computer servers to relying on the cloud, which delivers data and applications online instead of locally.
Shell warns of profit loss
Royal Dutch Shell warned on Friday that its fourth-quarter figures are expected to be significantly lower than recent levels of profitability because of oil and gas prices and problems with its refining business. The sharp cut in forecasts for earnings on a current cost of supplies basis (CCS), excluding identified items, to US$2.9 billion from market expectations of about US$4 billion, is the first major move by new chief executive Ben van Beurden, who took over at the start of this year. Shell missed analyst forecasts for its third-quarter trading in October last year, and said that weak refining profit margins, higher production costs and output stoppages in Nigeria had weighed on its performance. In the third quarter, CCS earnings excluding identified items came in at US$4.5 billion, down from US$6.6 billion in the same period of 2012.
Japan is ‘recovering’
A Japanese government report yesterday said the economy was “recovering,” its first use of the word since the 2008 global financial crisis, as Japanese Prime Minister Shinzo Abe works to revive years of tepid growth. Tokyo’s monthly checkup on the world’s third-largest economy used some of its most upbeat language in years as it pointed to a pick-up in consumer and capital spending. “Concerning short-term prospects, the economy is expected to be on a recovery trend as household income and business investment increase, while exports move toward picking up,” it said. The latest report is also the most rosy rating on the once-powerhouse economy since its January 2006 paper.
Portugal rating promotion
Portugal’s long-term government bond rating was removed from “creditwatch” by Standard & Poor’s, reducing the risk of a downgrade, as the country sticks to an EU-led bailout program. “The coalition government remains committed” to the program, S&P said in a statement yesterday. The agency will keep a negative outlook on the country’s BB rating, “reflecting what we view as ongoing social and political risks associated with de-leveraging efforts by Portugal’s highly indebted private and public sectors, as well as financing uncertainties related to Portugal’s exit” from the bailout, expected in May, the statement said. S&P had put the country’s ratings on “creditwatch” with a negative outlook on Sept. 18 last year. Portugal’s debt is also rated “junk” by Moody’s Investors Service and Fitch Ratings. The country sold 3.25 billion euros (US$4.43 billion) of five-year notes through banks last week in the first offering of coupon-bearing debt in eight months as signs of economic recovery spur a rally in the region’s higher-yielding fixed-income assets.