IBM Corp’s one-quarter growth streak is already in doubt.
Shares of the company fell on Tuesday in extended trading after it reported narrower profit margins and no revenue growth, excluding help from a weak US dollar. That cast a shadow over an effort to sell more-profitable cloud-based software to revive growth after five years of revenue declines.
Though heading in the right direction, IBM’s rebirth has yet to materialize, Daniel Ives, an analyst with GBH Insights LLC, said in a note to clients, adding: “Patience is wearing thin on the Street around the IBM turnaround story, which continues to be elusive..
First-quarter revenue came in at US$19.1 billion, beating the average analyst estimate of US$18.8 billion. That is 5 percent higher than a year earlier, but flat without currency fluctuations.
Margins slipped 0.6 percentage points to 43.2 percent.
The stock dropped as much as 6.1 percent in extended trading after closing at US$160.91 in New York.
Growth in the cloud business was 14 percent, lower than last year’s average of 24 percent, Bloomberg Intelligence analyst Anurag Rana said, adding that “puts a question mark on IBM’s hybrid cloud strategy.”
During a conference call, Kavanaugh pushed back on questions from analysts about margins and whether revenue can keep expanding.
He pointed to growth across the company’s business lines, and said execution problems in its consulting business and computer-storage unit were partly to blame for the quarter’s challenges.
Kavanaugh described the overall picture as positive and said chief executive Ginni Rometty’s goal of getting about half of sales, or US$40 billion, from newer businesses was ahead of schedule.
“This is a good start to the year,” Kavanaugh said. “We’re well on pace to deliver that US$40 billion earlier than 2018.”
Those new businesses represented 47 percent of revenue over the last 12 months, he said.
Analysts had expected IBM to lift its full-year profit forecast.
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to