It's turning out to be a rough month for IBM, who in recent weeks looked like it was going to acquire Sun Microsystems for $7 billion, but lost out to Oracle once takeover talks between big blue and Sun broke down. Had the deal gone through, IBM and Sun would have accounted for about 65 percent of the market for server computers running Unix and 42 percent of the total server market. And maybe better revenue numbers.
Instead, IBM posted an 11 percent drop in its quarterly revenue at $21.7 billion, which was less than Wall Street was expecting, who had forecast $22.6 billion. Net profit for the quarter also dropped 1 percent to $2.3 billion from $2.32 billion one year ago, however this was viewed more of a postive as Wall Street had been expecting a bigger drop in profits.
"These were decent results in light of the challenging economy. Certainly the top line is being impacted by the weak economy," said Andy Miedler, analyst at Edward Jones.
Despite the drop in revenue, IBM has been holding together well when compared to other technology companies. This can be attributed to putting a greater focus on software and services, resulting in a more profitable revenue mix than it had once been. And according to IBM, the company's full-year profit outlook is ahead of pace.
As for losing out to Oracle on the Sun deal, IBM's Chief Financial Officer Mark Loughridge said, "We've been competing with Sun, we know Oracle inside out. They now have the same address and same mail box, but we're talking about the same team that we've been competing against for some time and winning on the field."
Takeover talks between IBM and Sun appear to have come to an end for good, assuming stockholder approval for a $7.4 billion acquisition deal. But it's Oracle, and not IBM, who made the winning bid, and according to CNet, has entered into a definitive agreement to acquire Sun common stock for $9.50 per share.
"We expect this acquisition to be accretive to Oracle's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing," said Safra Catz, Oracle President. "We estimate that the acquired business will contribute over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year."
IBM had previously entered into negotiations with Sun, offering up a deal worth about $7 billion. But Sun refused the offer, in part because it felt the bid wasn't enough, but mostly the company was concerned IBM would bail if the potential deal resulted in an antitrust review.
The deal between Oracle and Sun is expected to close this summer, pending stockholder and regulatory approvals.
The memory market is in desperate need of some good news, and it just might be getting it. Citing un-named industry sources, DigiTimes says Taiwan's DRAM chip suppliers are eyeing an early recovery as the spot price of DDR2 1Gb eTT chips continues to rise significantly.
DDR2 chips climbed 6 percent to close at $1.2 yesterday, and is up again slightly to $1.21 today. According to DRAMeXchange, estimated DDR2 contract prices will very likely rise anywhere from 15 to 20 percent sequentially in the second quarter of 2009, after having remained flat since February.
That means if you're looking to score one final DDR2 upgrade this year, now might be the best time to do so.
In what amounts to a virtual corporate staring contest, only less exciting, both Sun Microsystems and IBM appear unwilling to blink first and wants the other to make the first move towards an acquisition. For Sun's part, the company is now saying it would be willing to resume takeover talks with IBM, provided IBM makes a stronger show of commitment to seal the deal.
IBM had previously offered close to $7 billion to acquire Sun, but Sun, skittish that IBM would change its mind in the face of an antitrust review or other barriers, as well as feeling that the amount was too low, rejected the bid and said it would no longer negotiate with IBM exclusively.
Since the talks broke down, Sun's shares have fallen, causing the company to lose about 28 percent of its value. IBM's shares have fallen too, but to a much lesser extent.
Both Sun and IBM refused to comment on what progress, if any, is being made.
Rumor has it you can hear chants of 'Le Roi est mort, vive le Roi!' emanating from HP's corporate headquarters in Palo Alto, California. That's because the former No. 2 OEM has dethroned Dell for the No. 1 spot for most PC shipments in both the U.S. and worldwide markets, according to Q1 data released by IDC. And it did so largely on the strength of netbook sales.
"Tight credit and economic concerns have certainly taken a toll on PC shipments in the last couple quarters, but the move to portables, fueled by mininotebooks and falling prices, has mitigated the impact," said Loren Loverde, an analyst with IDC.
Including netbooks and everything else, HP managed to ship 4.1 million units in the U.S., which was enough to edge out Dell, who shipped 3.9 million. Acer was a distant third with 1.5 million, followed by Apple with 1.1 million and Toshiba with just under 1 million.
On the global stage, HP put a bit more distance between itself and Dell, shipping 13 million units compared to Dell's 8.7 million. Acer, meanwhile, closed the gap by shipping 7.3 million.
If you're to take Intel at its word (and earnings report), then forget any talk of the PC industry continuing to decline. According to CEO Paul Otellini, the immediate future looks bright, especially for the No. 1 chip maker.
"We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns," Otellini said in a statement. "Intel has adapted well to the current economic environment and we're benefiting from disciplined execution and agility. We're delivering a product portfolio that meets the needs of the changing market, spanning affordable computing to high-performance, energy-efficient computing."
Backing up his claims, Intel reported a first quarter profit of $647 million, or 11 cents per share, on revenue of $7.1 billion. Wall Street was expecting earnings of 2 cents on revenue of $6.98 billion.
But does Intel's success translate to a recovery in the PC market as a whole? While Intel has been riding high on sales of its Atom processors and managed to beat expectations for Q1, the company wasn't as forthcoming when it came to forecasting Q2.
Most enterprises have resolved to skip Windows Vista altogether. With Vista on its way out, Microsoft would be hoping for enterprises to upgrade to Windows 7 at the first given opportunity. However, Microsoft will have to wait as that is exactly what most enterprises plan on doing. A large majority of enterprises have decided against upgrading next year, according to a survey conducted by market research firm Dimensional Research.
Dimensional Research took the opinion of 1,100 IT professionals. More than 83 percent of those surveyed have no plans of upgrading next year. The ongoing recession and doubts over software compatibility are the main reasons why most businesses want to play the wait-and-watch game.
No one has been more critical of Microsoft's first attempts at responding to Apple's "I'm a Mac" ads than myself, and I still contend that those quirky commercials featuring Jerry Seinfeld missed the mark wider than Brett Favre in a critical game (you Jets fans still steaming over a 3-interception, 24-17 loss to the Miami Dolphins know what I'm talking about). Judging by the comments in those earlier blogs (see here and here), either expectations were disparingly low, or other PC users really did find a certain charm in talking about chewy computers or watching Bill Gates do a geriatric robot.
This time around I'm more than willing to give credit where credit is due, and it belongs to Microsoft for its latest offensive against Apple. Microsoft has finally zeroed in on the high price tags that accompany Macs, and it isn't letting up. The first ad featured a woman named Lauren on the hunt for a 17-inch laptop under $1,000, and not surprisingly, she wasn't able to find one in an Apple store. "I'm just not cool enough to be a Mac person," she concluded. Not long after, a second ad emerged, this time upping the ante to $1,500 and featuring a member of the opposite sex who surmised that "Macs, to me, are about the aesthetics more than they are the computing power. I don't want to pay for the rent, I want to pay for the computer."
See what happens when a mother-and-son duo take on Microsoft's "Laptop Hunters" challenge after the jump.
If you spot a good deal on an LCD monitor, you may consider pouncing. Putting off that purchase could be rolling the dice at higher prices, according to data by iSuppli. The market research company notes that an increase in demand from China, driven by the impact of China's rural consumer stimulus program, has led to rising prices for LCD monitor panels. Also to blame are an increase of orders from brands and retailers, iSuppli says.
"These brand and retail orders mostly stem from demand for inventory replenishment because channels have kept their stockpiles at lower-than-normal levels since the end of 2008," iSupply noted. "With many panel prices for monitors having been drastically slashed to less than cash-cost levels, panel buyers in February started purchasing in droves in order to build a supply of cheap panels."
Increases thus far haven't been anything to warrant hitting the panic button. According to iSuppli, average pricing for most LCDs and small-sized TV panels increased anywhere from $2 to $3 in March compared to February. And while prices are expected to rise some more in the short-term, iSuppli warns that it's too early to say that a recovery is taking place in the LCD industry, as the influx of orders are not expected to be sustained.
The formation of the consolidated Taiwan Memory Company (TMC) faces a major setback today, as both Micron Technology and Nanya Technology, along with their joint venture Inotera memories, have pulled out of discussions to be part of the new group, DigiTimes reports.
For Micron's part, the company wasn't comfortable with the risk of its tecnology IP potentially leaking out if multiple patent holders began working under TMC. Micron stressed that its IP portfolio for specialty DRAM is more advanced than Elpida's, who is one of the participants.
Facing the worst DRAM market in 15 years, the Taiwanese government earlier this year announced the formation of the new DRAM company, TMC. The point of the new company was to consolidate memory companies and rescue its ailing DRAM makers. The government-led project is still in talks with various memory makers, including Winbond, who just yesterday confirmed it met with decision makers for TMC.
Micron, Nanya, and Inotera said they will continue to develop and improve their own partnership in preparation for competition from the new memory company.