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IBM attracts investors with new strategy

Posted in Board Of Intellectual Capital, tagged , , , , , , , , on October 8, 2010| Leave a Comment »

Article from Sf Gate.

Shares of IBM rose to the highest level since it went public in 1915 as investors showed support for Chief Executive Officer Sam Palmisano’s strategy of remaking the 99-year-old company.

IBM gained 88 cents to close at $138.72, topping the $137.88 reached in July 1999. The Dow Jones industrial average lost 19 points to 10,948. Palmisano has focused on services and software, making the company once known for mainframe computers into the world’s biggest computer-services provider.

Since Palmisano became CEO in March 2002, IBM shares have risen by a third as he divested hardware units, including the personal-computer business sold to China’s Lenovo Group Ltd. in 2005. The shares are also benefiting as investors predict corporate customers will invest in information technology, said Lou Miscioscia, an analyst at Collins Stewart.

IBM shares are also probably gaining as investors leave its closest rival, Palo Alto’s Hewlett-Packard Co., amid uncertainty at the company, Miscioscia said. HP’s CEO Mark Hurd stepped down Aug. 6 and the company has hired Leo Apotheker, former CEO of software maker SAP AG, to replace him.

“Given that the new CEO at HP has to prove himself, that does create more of a cloud of uncertainty,” Miscioscia said. HP shares have dropped 12 percent since the announcement of Hurd’s departure.

Read more here.

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H-P Is So Beaten Down, the CEO Choice Hardly Matters

Posted in Board Of Intellectual Capital, tagged , , , , on September 27, 2010| Leave a Comment »

Article from Seeking Alpha.

“It barely matters who Hewlett-Packard (HPQ) finds to replace Marc Hurd as CEO.

This stock is cheap on almost every measure, and should rally along with the rest of tech when his predecessor is named.
Which, by the way, could be very soon.

By now you know the story of Hurd… who left in August amid a sexual scandal.

The stock took a drubbing on his departure, down about 18 percent to the August trough. As a result, the stock is mired in questions, and has completely missed the 9.5 percent tech rally in September.
And it now trades at an ultra-low 8 times forward earnings, versus 9 times for rival Dell (DELL), and about 11 times for IBM (IBM). At this point, H-P can gain 20 percent if it can simply get to the mean PE of its two peers.
And H-P has one of the lowest StarMine intrinsic value multiples of all stocks in North America. Stocks trading at similar intrinsic value discounts in a 10-year backtest had a three-month return of 14 percent.
There’s no denying that Hurd’s exodus was a blow. He spearheaded five years of tough cost cuts at H-P that didn’t happen under his predecessors. But at this point, the fat on this one-time Silicon Valley sow is gone. So whoever takes over should have a fairly easy time making the EPS numbers.
The real challenge for the incoming CEO is growth. H-P took some early steps to address that problem in the past few weeks, with two announced deals that should bring in high-margin revenue in the future.
There’s some griping that H-P paid too much for ArcSight and 3Par. But most of that comes from IBM CEO Sam Palmisano, who is publicly reveling in H-P’s recent misery.
Let’s dispel some of the Street’s other big concerns about H-P. One is that the company is somehow rudderless. That’s hardly the case. H-P has always had some of the best lieutenants in the business, dating back to the Lew Platt regime. Don’t be surprised if an internal CEO is named.
The company will benefit if it now finds an innovation leader to take the helm – one that can help finish off the progress Hurd made in emerging markets.
Another is that H-P could make a bad CEO choice. That’s possible. But no one will know that for at least a year. What’ s more likely is HP shows great EPS numbers for the first few quarters under a new regime.
A broader worry for all of tech hardware is a consumer spending slump. It’s true, anecdotal signs are that back-to-school hasn’t been great. But the comparison period a year ago was a total barnburner. It’s hard to expect anything different.
Instead, the Street should be looking at the strengthening refresh cycle on the corporate side. Companies are replacing aging computers and servers because they no longer have a choice. That should benefit H-P all the players heading into next year.

H-P’s stock chart is not pretty. But there’s strong volume-at-price support around $37.50. At roughly $39.50, that means there’s a 1-to-3 risk reward ratio on a bet this stock closes this gap, and gets to $45.50.”

Read the full article here.

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Intel to acquire McAfee in $7.68 billion deal

Posted in Board Of Intellectual Capital, tagged , , , , , , , , on August 20, 2010| Leave a Comment »

Here is some big news from SF Gate.

“Intel Corp., signaling its ambitions to expand beyond computers and into the booming market for mobile and Internet-connected devices, announced a deal Thursday to buy security software maker McAfee Inc. for $7.68 billion, the chipmaker’s biggest acquisition ever.

The surprise deal represents Intel’s bold move to position its chips, primarily its lower-powered mobile processors, as an attractive choice for the billions of coming Internet-connected devices, what some have termed the Internet of Things.

By integrating McAfee’s anti-virus software, the world’s biggest chipmaker hopes to create a product that addresses the potential security vulnerabilities created by countless wireless devices, appliances, cars, printers and ATM machines.

Paul Otellini, Intel’s president and CEO, said in a conference call that the Santa Clara company is looking to provide added security, which he called a third pillar of computing, after energy efficiency and connectivity. In the process, Intel is transforming from just a PC company to a broader computing company, he said.

“Our view is that everywhere we sell a microprocessor, there is an opportunity to sell security software with it,” he said.

The acquisition values McAfee, a leading security software firm also based in Santa Clara, at $48 a share. That is a 60 percent premium over its Wednesday closing price.

The deal also continues a streak of cash-rich Silicon Valley titans buying neighbors, following Oracle’s purchase of Sun and Hewlett-Packard‘s acquisition of Palm.

Intel said it would run McAfee as a subsidiary with its executive structure in place. David DeWalt, McAfee’s CEO, said he was excited about the prospect of teaming with Intel to tackle larger security challenges ahead.

“By becoming part of Intel Corp., we believe we can continue to create new and innovative security solutions,” said DeWalt.

Analysts’ reactions

Analysts greeted the news with mixed reactions. Some saw the wisdom of securing Internet-connected devices, which could hit an estimated 50 billion units in the next decade.

“If you look at the PC world, we have a stable stack and set of technologies like the operating system, middleware and antivirus software,” said Crawford Del Prete, an analyst with research firm IDC. “But when you think of connected devices, the stack doesn’t exist in the same way, and security will be a big problem for the billions of devices out there.”

The move will also help Intel compete against processors based on designs from ARM Holdings, which are found in virtually all cell phones and many electronic devices. ARM chips are preferred because they offer better power efficiency, but Intel’s move may help differentiate its chips by highlighting their built-in security protection.

Doubts about synergy

Other analysts, however, have questioned the strategy of buying McAfee, saying it is an expensive purchase and one whose synergies may be hard to realize.

Brian Marshall, an analyst with investment bank Gleacher & Co., said its unclear how much help McAfee can provide, with its strengths in selling packaged software for PCs. He said the business model for selling security for smaller and embedded devices is not established and may be challenging to monetize.

Symantec Corp., McAfee’s biggest rival, said in a statement that Intel might be too focused on securing individual devices when it should create a broader solution that addresses the multiple devices consumers will use.”

Read more here.

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Software Vendors: Tech M&A Activity Poised for Rebound

Posted in Board Of Intellectual Capital, tagged , , , , , , , on February 18, 2010| Leave a Comment »

Here is some good news from CIO update.

“After what can only be described as a desolate merger and acquisition landscape throughout most of 2009, a new study conducted by PricewaterhouseCoopers predicts an upswing in both the volume and value of deals this year. And mergers and acquisitions in the high-tech sector will be leading the charge.

According to the US technology M&A insights 2010 study, total closed deals in 2009 fell 53 percent and were valued at just under $36 billion, way down from 2008 when companies completed purchases valued at $77 billion. However, a nice little surge in technology deals in the latter portion of 2009 appears to have given the market some momentum with 85 percent of the value of the $36 billion in mergers and acquisitions last year coming in the final six months.

“Driven by the surge of technology deals completed in the latter half of 2009, PwC expects deal activity to continue apace in 2010, albeit still below the levels seen in 2006-07,” the report said.

Anyone lamenting the moribund state of the technology M&A market can’t blame Oracle (NASDAQ: ORCL). The software giant continues to continues to make purchase after purchase in its ambitious quest to unseat SAP (NYSE: SAP) as the world’s largest business application maker and take on rivals IBM (NYSE: IBM), Microsoft (NASDAQ: MSFT) and HP (NYSE: HPQ) as it looks to become the world’s leading systems provider. Oracle has already made a pair of acquisitions early in 2010 after closing its blockbuster purchase of Sun Microsystems.

IBM also loosened its purse strings in effort to keep pace with Oracle and other cloud-computing providers. It’s a trend that PWC expect will continue throughout 2010. “There is much enthusiasm that the IPO market will make a big comeback in 2010,” the report’s authors wrote. “Add to this the potential return of private equity investors to the negotiating table and the result is improving exit multiples and more satisfied sellers.”

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Clash of the technology titans

Posted in boic, tagged , , , , , , , , , on January 13, 2010| Leave a Comment »

Here is an interresting article from Fortune´s Brainstorm Tech Blog.

“The biggest computing and networking companies in the world are getting bigger – and former partners are now fierce rivals. Is tech’s new strife good for customers?

The largest technology companies in the world are at war.

Sure, the executives who run Cisco, Hewlett-Packard, IBM, Oracle, and others appear to play nice: Cisco touts the “regular dialogue” between its CEO, John Chambers, and IBM’s chief executive, Sam Palmisano. Ann Livermore, an HP executive vice president, spoke at Oracle’s annual customer event in October and extolled the virtues of their partnership. And because large customers buy software, gear, and services from all the tech giants, their staffs must work together to get computers and networks up and running.

Don’t be fooled by the handshakes and air kisses. Increasingly these titans are invading one another’s territories in a bid to grab as much of the $1.5 trillion in projected 2010 worldwide corporate tech spending as they possibly can — and it’s going to get bloody.

Customers have cut their tech purchases, and when they do loosen their purse strings, they are buying software and services that help them run their systems more cheaply. To boost sales and profits in this low-growth environment, technology companies are bulking up by buying companies in entirely new businesses.

The endgame? Each aims to steal business from rivals by promising customers one-stop shopping for most, if not all, of their computing and networking needs.

Battling for each other’s turf

Corporate software maker Oracle (ORCL), under pressure from competitors that rent software and deliver it over the Internet rather than installing it on-site, is pushing into computer hardware with its planned $7.4 billion acquisition of Sun Microsystems (JAVA). When the deal closes (it still faces regulatory hurdles), Oracle will find itself battling partners IBM (IBM), Dell (DELL), and HP (HPQ), all of which also sell servers.

HP, whose legacy personal computer and printer businesses aren’t growing the way they used to, spent $13.9 billion in 2008 to acquire EDS, a specialist in managing and integrating corporate systems. That happens to be IBM’s biggest business. HP also has announced plans to buy 3Com (COMS), a maker of networking gear. (Take that, Cisco!)

Cisco (CSCO), in turn, has announced its own plans to enter the server market. (Take that, HP!) Dell is picking up Perot Systems for $4 billion to take on HP and IBM in services. IBM, meanwhile, has been quietly bulking up in software, hardware, and services: In the past six years it has spent $20 billion on 90 companies.

“It’s the industrialization of IT,” says Pacific Crest Research’s Brent Bracelin. “In the new world that will come about in the next three to five years, you’ll buy the entire stack. Will you buy it from IBM, from Cisco? From HP? That’s what the battle is all about.”

Fighting to dominate a new world order

Tech mergers in the name of world domination aren’t new. (Remember Compaq’s purchase of DEC, or HP’s acquisition of Compaq?) But this wave is also being driven by a coming change in technology. “We’re at an inflection point,” says Forrester Research analyst Andrew Bartels.

He describes a new generation of technology — call it smart computing — in which servers, computers, and networks come together to form a platform on which new applications are built. These new applications aren’t installed on machines in the workplace; instead they live in data centers and are delivered to users’ phones, laptops, and other devices via the Internet.”

Read the full article here.

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