Sunday, October 20, 2013

Views on Apple, Google and IBM

With a budget disaster averted by the U.S. Congress last week, investors increased their focus on the actions and performance of various companies. The following are selected views from the technology sector.
  • Apple, Inc. announced that Angela Ahrendts, formerly CEO of luxury retailer Burberry, is joining the senior management team to reshape its physical and online stores. Apple’s CEO Tim Cook said, “I have wanted one person to lead both of these teams for some time because I believe it will better serve our customers, but I had never met anyone whom I felt confident could lead both until I met Angela.” Ms. Ahrendts, during a 2010 Wall Street Journal interview said, "If I look to any company as a model, it's Apple…they're a brilliant design company working to create a lifestyle, and that's the way I see us."
  • When Google reported better than expected quarterly results, its stock hit an all-time high of $1015 driven by signs that its efforts in mobile advertising are gaining traction. Google CEO Larry Page said, “We are closing in on our goal of a beautiful, simple, and intuitive experience regardless of your device”. He also said “about two years ago, when I became CEO again, my goal was to make sure Google maintains the passion and soul of a startup as we grow,” and “Great is just never good enough.”
  • IBM Corp. had a sixth consecutive quarter of declining revenue. Software sales increased 1%, services revenue declined 3% and hardware sales fell 17%. As investors sought growth from cloud computing, mobile services, “big data” analytics and data security, CEO Virginia Rometty said, “[we] fell short on revenue”, “'we clearly need to do better” and "ours is a pay for performance culture and we must all be committed to taking action to address our performance gaps."

  • Regarding Apple – While Steve Jobs was inspirational; CEO Cook is a hard-core operations person. Hopefully Ms. Ahrendth can increase the cool factor as the firm seeks to increase its presence in Asia and other regions and compete with Google and others. Investor are focusing on this week’s product announcements.
  • Regarding Google – As a technology leader, momentum begets momentum. Investors will need to track weakening per-click revenue trends.
  • Regarding IBM – This is another firm with a relatively new CEO confronting management transition challenges. It is likely that additional staffing changes will be required to get the firm back on track.

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