International Business Machines (IBM) Q3 2016 Earnings Call

International Business Machines (IBM) CFO Martin Schroeder said currency fluctuations helped reported results for the first time in awhile

“Cloud delivered as-a-service is part of a solid recurring revenue base across software and services, and our annuity revenue continued to grow. Of course, the acquisitions we made in the last 12 months contributed to growth about the same amount as last quarter and for the first time in quite a while currency was a modest tailwind to revenue growth.”

Continuing to forge partnerships with other technology companies

“We are building the industry’s broadest and deepest cognitive solutions and cloud platform portfolio and we are extending our capabilities. For example, this quarter we continued the global expansion of our cloud footprint and we now have 49 cloud centers. We formed a partnership with Workday, where IBM cloud will become the foundation for Workday’s development and testing environment. And we extended our partnership with VMware to enable easy hybrid cloud adoption.”

Brazil surprisingly showed strong growth

“Latin America was up 5% led by Brazil. While the environment remains uncertain, double-digit growth of Brazil this quarter reflects the importance of our z Systems platform to the banking sector.”

They are devoting a large number of resources to their Watson Healthcare platform

“Turning to our vertical plays, we are focussed on scaling our Watson Health business. We have over 7000 employees and target four major areas, life sciences, oncology, imaging and value based care. We launched new offerings, such as Watson for drug discovery which is a cloud based scalable platform that helps life science researchers discover new disease pathways, new drug targets and additional drug indications. We had several major client wins, including UPMC and Best Doctors.”

Company is still specializing in making sure their clients data is 100% secure

“And moving to the cloud, our clients need to be sure that data is secure. Those in regulated industries need to know where their data is and many need to keep it in country. Our cloud infrastructure allows clients automatically to provision virtual with bare metal service while meeting their data sovereignty and regulatory requirements.”

International Business Machines (IBM) CFO Martin Schroeder explained how he sees the company’s 2017 performance unfolding

“Now, as we go into 2017, with our big transactional quarter coming up obviously and 90 days we’ll talk about what we saw in the environment and what that position us for 2017, but I do think we know, we know a few things as we head into next year already today, so we know for instance we’ve got good momentum in our strategic imperatives and we continue to see with our investments and our view of the market, how that resonates with clients and I think we would expect to continue to see good strategic imperatives performance which also by the way will drive some investments but keep in mind that with everything we got done this year, the bulk of the spending, the bulk of the investment dollars we freed up next year, that’s a much bigger number next year, so we have a freedom and an ability to invest more heavily given what we’ve got and done so far this year.”


Accenture (ACN) Q4 2016 Earnings Call

Accenture (ACN) CEO Pierre Nanterme said revenue growth in North America & Europe was strong 

“In North America, we delivered 11% growth in local currency, driven by the United States where we have now delivered double-digit growth of five of the last six years. In Europe, we grew even 11% in local currency, with double-digit growth in the UK, Italy, Switzerland, Spain and Germany, as well as high single-digit growth in France.”

Seeing lots of opportunities to help European banking clients drive technology initiatives in their business

“I would say the three demand drivers continue to be significant investment in digitizing the customer channels, so what we refer to, the sector refers to as distribution and marketing. There are significant investments to digitize the channel as a way to drive growth in the bank.  There’s significant focus on cost rationalization and increasing to a much higher level the cost efficiency of the bank, both to deal with, let’s say, the structural pressures of a lower interest rate environment, regulatory pressures.  We think we’re well positioned and we think that banks, in spite of these disruptive forces, continue to have the need to invest in transforming for profitability and investing for growth. And we are well positioned to help them with that.”

Cognizant Technology Solutions (CTSH) Q2 2016 Earnings Call

Cognizant Technology Solutions (CTSH) CEO Francisco D’Souza said clients are slowing their spending on discretionary IT services 

“As we enter the second half of the year, we see certain macroeconomic factors as well as some softness in clients’ discretionary spending that’ll affect our revenue growth primarily from financial services and healthcare clients. Additionally, we anticipate a further negative revenue impact of approximately $40 million for the second half of the year due to the weakening of the pound sterling following the Brexit vote.”

Low interest rates are hurting the willingness of financial services firms to spend on IT initiatives 

“First, as we indicated on our last two earnings calls, discretionary spending in the banking sector remained soft, weighed down by macroeconomic concerns and a prolonged low interest rate environment. While we did see a return to healthy sequential growth in the second quarter, we expect banking discretionary spending during the second half of 2016 to be slower than we anticipated three months ago.  We see the banking sector being more cautious in spending over the near-term.”

Every business is becoming a technology business

“The key I think factor to look at is that the world is becoming more technology-intensive not less technology-intensive. Across the industries we serve and also industries where we are less present, more energy and attention is being focused on technology than ever before. Technology has become not just a way of driving efficiency and operational effectiveness for businesses, but it’s become a core to most clients’ ability to differentiate, to grow revenue and to survive in the marketplace.”

IBM CEO Ginni Rometty Interview

IBM CEO Ginni Rometty on what it was like when she joined IBM 35 years ago

“What struck me was the seriousness of the kind of things we did. We were building complex back-office banking systems. We were rolling out ATMs. That, to me, is true to this day about IBM. It lives at this intersection of inventing great technology but, more importantly, applying it.”

IBM CEO Ginni Rometty on why IBM almost went bankrupt in the 1990’s

“We stayed too long in one era and had to reinvent ourselves, which, by the way, wasn’t the first time. We’re the only tech company that is 105 years old, the only one that has transformed multiple times. IBM existed a good 50 years before mainframes—we started with scales. To this day, mainframes are still here. They’ve been reinvented, and they’re still 10 percent of our business. They run airline systems. They settle currency exchanges.”

On the company’s current transition

“Typically, when there’s been a transition time in our industry, it’s been driven by one big change. This time there were multiple changes—data, cloud, mobility—all happening at once, and that accelerated the change both for us and our customers.  On my first official day, at 7 a.m., I went to our primary research lab in Yorktown Heights New York and broadcast to all of IBM from there. We are still the largest commercial research organization in the world. There are 12 labs around the world, more than 3,000 researchers. Last I checked, we take 10 percent of the world’s Ph.D.s in math. I said there will be a new way of computing, and it’s going to be driven by this huge amount of data. It’s going to transform industries, and it will change the way the IBMer works.”


Source: Bloomberg Interview

Gartner (IT) Q2 2016 Earnings Call

Gartner (IT) CEO Eugene Hall said corporations are emphasizing specific areas of their IT budgets for growth

“Technology is critical for every enterprise around the world. Every enterprise has cybersecurity risks. Every enterprise is worried about technology disruption. And technology is the key to fueling cost reduction, whether enterprise is funding new growth initiatives or improving margins. Enterprises know they need help. And Gartner is the best and most cost-effective source for that help. Our clients rely on us for independent, objective, fact-based insights for making critical technology decisions. Our services deliver tremendous value, and in most cases pay back many times over.”

He’s hearing from his clients that they remain challenged in an environment starved for growth

“There’re a number of factors in the global economy today that impact our clients. Economic growth has slowed in countries around the world. Oil and other commodity prices have fallen dramatically. Exchange rates are at levels that challenge U.S. exporters and challenge non-U.S. importers. And most recently, there’s Brexit. As a result of these factors, we see a higher proportion of our clients with financial challenges compared to the past few years. In the U.S., the S&P 500 is having its fourth consecutive quarter of negative earnings growth. In Europe, the S&P 350 is expected to have negative earnings growth this year.”

Hewlett Packard Enterprise (HPE) CEO Meg Whitman Interview

Hewlett Packard Enterprise (HPE) CEO Meg Whitman sees consolidation accelerating in the information technology outsourcing business

“This transaction unlocks value for both companies.  The new post-merger enterprise company will be a pure play industry leader which is important because I think the industry is going to consolidate and it’s important to get on the front of consolidation rather than the back end of consolidation.”

Hewlett Packard Enterprise (HPE) CEO Meg Whitman thinks her stock is undervalued

“There’s incredible value in our stock price.  As you know, Hewlett Packard Enterprise trades at a lower multiple than our competitors.  We are beating the competition now which was not true 4 years ago.  If you look at this most recent quarter, our networking business grew 18% while Cisco’s shrunk 3%.  We have gained share in external disk storage for 2 straight years while IBM, Dell, & EMC have all lost share.  We’ve gained market share in servers overall especially in density optimized and rack.  I feel very good about our core business.  We use a returns based capital allocation strategy so we look at all different ways to deploy our capital and right now we think our shares are a good buy and that we ought to continue to buy shares.”



May 25, 2016