IBM on Thursday provided more details of its robust fourth-quarter and 2007 financial performance, following an early preview of the figures on Monday.
IBM expects its overall growth to continue significantly in 2008, with earnings per share rising to between $8.20 and $8.30 this year, and between $10 and $11 by 2010. That would compare to $7.18 per share reported for 2007.
"I realize this is a challenging environment, with economic uncertainty, but I think there are still opportunities for growth," Mark Loughridge, IBM's chief financial officer, said during a conference call.
IBM is in good position even in the event of a downturn, Loughridge argued, because of its global reach, its status as a "proven infrastructure provider," and the capital it has for investments. The company ended 2007 with $16.1 billion in cash on hand.
IBM's pending acquisitions of Telelogic and Cognos will add further to the bottom line in 2008, he said. "We expect to provide synergies not only in software but [also in] services, servers and storage," Loughridge said of the Cognos deal.
IBM's fourth-quarter growth was especially strong in emerging markets and in its services and software groups, Loughridge said, though the company's System z mainframe business didn't perform as well.
As reported on Monday, IBM's fourth-quarter revenue, aided by exchange rates and sales outside the U.S., stood at $28.9 billion, an increase of 10 percent over the same period in 2006. The figure beat the forecast of $27.82 billion from analysts polled by Thomson First Call, and was aided by the ongoing weakness in the dollar.
Earnings per share for the quarter was $2.80, topping the analysts' forecast of $2.60 per share. The results represent a 24 percent increase over the same period in 2006, when IBM earned $2.26 per share.
IBM's services and software divisions showed particular strength in the quarter. Revenue from Global Technology Services grew 16 percent to $10 billion, reflecting strength around the globe and in various industries, IBM said. Global Business Services rose 17 percent to $4.9 billion, the company said.
IBM's Software Group had fourth-quarter revenue of $6.3 billion, an increase of 12 percent compared to 2006. WebSphere revenue climbed by 23 percent; Information Management sales, 11 percent; Tivoli software, 19 percent; Lotus, 7 percent; and Rational, 22 percent, compared with the same quarter in 2006.
Revenue from the Systems and Technology segment totaled $6.8 billion for the quarter, down 4 percent. System p UNIX server products grew by 9 percent from a year earlier, and System x server revenue increased 6 percent. But System z revenue fell by 15 percent.
The drop in System z sales will be mitigated by the upcoming launch in February of IBM's next-generation mainframe, according to Loughridge. "We expect the first quarter to be a period of product transition, with growth coming in the second quarter."
The Americas generated $11.7 billion in revenue, up 5 percent over 2006. Revenue from Europe/Middle East/Africa was $10.8 billion, up 16 percent. Asia-Pacific revenue increased 15 percent to $5.5 billion. OEM revenues were $894 million, a drop of 13 percent compared to the same period in 2006.
In some developing countries, including Malaysia and Ecuador, IBM is seeing "insatiable demand" due to strong economies powered by a growing middle class, Loughridge said.
"To me, this is a virtual gold rush in these rapidly emerging economies," he said. "In the past, IBM built much of the infrastructure for the developed world. We see a new area of growth in these emerging markets."
For the full year, total 2007 revenue was $98.8 billion, an 8 percent increase from 2006. The overall earnings for 2007, at $7.18 per share, marked an increase of 18 percent over 2006, IBM said. Net income for the year stood at $10.4 billion, up from $9.5 billion in 2006.
IBM's stock was up $5.60 in after-hours trading to $106.50.
Friday, January 18, 2008
Mozilla interfaces to get 'humanized,' developer says
Mozilla should soon be experimenting with some novel user-interface technologies for its browser and other products, according to a UI developer that joined Mozilla this week from startup company Humanized.
Aza Raskin, who until Wednesday was president of Humanized, a five-person startup in Chicago, is now user experience lead for the Mozilla Labs team, he said Thursday. He will be working on technology to let people "do anything you want to do, anywhere, anytime on your computer," he said.
Mozilla announced Wednesday that it had hired three of the principals from Humanized, which is known for its innovative work with the Enso project to create more intuitive user interfaces. Mozilla did not identify the people it hired, and Raskin was hesitant at first to say which of his colleagues had joined him at Mozilla. Eventually he acknowledged that Humanized's Jono DiCarlo and Atul Varma also have joined the company known for its Firefox browser.
Enso user-interface software was designed to make it easier to perform daily tasks that require the use of multiple applications or functions. The software runs in the background and allows users to type in simple commands to access applications, instead of leaving the window or application they are in to use another one.
For example, if a user wants to open Firefox from the current screen, instead of having to find the Firefox icon or go to the Start menu in Windows, Firefox can be opened by pressing the Caps Lock key and typing "open firefox." Performing calculations and acquiring word definitions can be executed in a similar way from whichever window the user is in at the time.
"Those ideas need to be explored at Mozilla," Raskin said, though "it's unclear yet what form that will take."
He and his Humanized colleagues were attracted to Mozilla because the company "has a lot of vision" to extend the Web beyond the browser, he said. The Firefox browser remains the company's primary product for now, however, although it also offers the Thunderbird open-source e-mail client.
Raskin said that many advances on the Web, in terms of online services and mashups, have been designed with the developer in mind, and because of that they run the risk of making the browser a mere delivery vehicle for streaming applications -- much like what the desktop has become. He aims to use technology and ideas from the Enso project to add more human interaction not just to the browser, but to anything people do on the Web itself.
"I want the power of mashups not in the hands of the developer but in the hands of end-users -- in the hands of your grandmothers and your teen-aged son," he said. "So you really can be writing an e-mail and say, 'Now I want a map in there.' Things like that -- a place where you can actually start having a conversation with your computer."
Raskin said that most people, whether they know it or not, are captive to their computer -- they do their work on it or use it only in the way the computer allows, and have very little control over that interaction. The idea behind Humanized, and now the work Raskin and his colleagues will do at Mozilla, is to change that for everyone, not just people who know their way around a computer.
Mozilla did not actually acquire Humanized, and Raskin said its Web site will be up for some time, but the company is effectively now part of Mozilla. He and his colleagues are working out which pieces of the Enso project will be relevant to their work at Mozilla, he said. Raskin posted on his blog about his new position.
Of the remaining Humanized employees -- systems architect Scott Robbin and Treasurer Andrew Wilson -- only Robbin's next move is clear for now. Raskin said Robbin is running the company's music-search-engine project, Songza.
Aza Raskin, who until Wednesday was president of Humanized, a five-person startup in Chicago, is now user experience lead for the Mozilla Labs team, he said Thursday. He will be working on technology to let people "do anything you want to do, anywhere, anytime on your computer," he said.
Mozilla announced Wednesday that it had hired three of the principals from Humanized, which is known for its innovative work with the Enso project to create more intuitive user interfaces. Mozilla did not identify the people it hired, and Raskin was hesitant at first to say which of his colleagues had joined him at Mozilla. Eventually he acknowledged that Humanized's Jono DiCarlo and Atul Varma also have joined the company known for its Firefox browser.
Enso user-interface software was designed to make it easier to perform daily tasks that require the use of multiple applications or functions. The software runs in the background and allows users to type in simple commands to access applications, instead of leaving the window or application they are in to use another one.
For example, if a user wants to open Firefox from the current screen, instead of having to find the Firefox icon or go to the Start menu in Windows, Firefox can be opened by pressing the Caps Lock key and typing "open firefox." Performing calculations and acquiring word definitions can be executed in a similar way from whichever window the user is in at the time.
"Those ideas need to be explored at Mozilla," Raskin said, though "it's unclear yet what form that will take."
He and his Humanized colleagues were attracted to Mozilla because the company "has a lot of vision" to extend the Web beyond the browser, he said. The Firefox browser remains the company's primary product for now, however, although it also offers the Thunderbird open-source e-mail client.
Raskin said that many advances on the Web, in terms of online services and mashups, have been designed with the developer in mind, and because of that they run the risk of making the browser a mere delivery vehicle for streaming applications -- much like what the desktop has become. He aims to use technology and ideas from the Enso project to add more human interaction not just to the browser, but to anything people do on the Web itself.
"I want the power of mashups not in the hands of the developer but in the hands of end-users -- in the hands of your grandmothers and your teen-aged son," he said. "So you really can be writing an e-mail and say, 'Now I want a map in there.' Things like that -- a place where you can actually start having a conversation with your computer."
Raskin said that most people, whether they know it or not, are captive to their computer -- they do their work on it or use it only in the way the computer allows, and have very little control over that interaction. The idea behind Humanized, and now the work Raskin and his colleagues will do at Mozilla, is to change that for everyone, not just people who know their way around a computer.
Mozilla did not actually acquire Humanized, and Raskin said its Web site will be up for some time, but the company is effectively now part of Mozilla. He and his colleagues are working out which pieces of the Enso project will be relevant to their work at Mozilla, he said. Raskin posted on his blog about his new position.
Of the remaining Humanized employees -- systems architect Scott Robbin and Treasurer Andrew Wilson -- only Robbin's next move is clear for now. Raskin said Robbin is running the company's music-search-engine project, Songza.
Time Warner to try tiered cable pricing
Time Warner Cable will try selling consumers broadband service based on how much bandwidth they use, a move that could turn the home broadband pricing model in the U.S. on its head.
In a trial planned for later this year in Beaumont, Texas, the service provider will offer four tiers of service at different prices. Customers who used more bandwidth would pay more.
The details of the tiered pricing plan haven't yet been set, according to Time Warner spokesman Alex Dudley. The offer will only go out to new customers, he said.
Some service providers charge different rates based on the speed of a service, but in the U.S. they typically allow each customer to send and download as many bits as they like in a month. Under that model, some subscribers who exchanged large files through peer-to-peer services reportedly have been cut off. Comcast, the biggest U.S. cable operator, has said it sometimes slows peer-to-peer traffic during peak demand periods.
In some other countries, Internet users have long endured bandwidth caps. And Web hosting companies typically charge site owners based on how much data they exchange with visitors.
Tiered pricing could help settle the ongoing argument over the fairness of certain subscribers and online content providers using up more network capacity than others, according to Ovum analyst Mark Seery. In fact, he thinks the whole industry will go down this path eventually.
"It's difficult to charge, appropriately, different customers if they have such widely divergent uses of bandwidth," Seery said. And trying to target one type of application, such as illegal peer-to-peer file sharing, raises political issues, he added.
"There's no justification for blocking legitimate uses of peer-to-peer," Seery said. "The right focus is on who's using what (bandwidth) and what they should be charged for it."
Many other transport industries, such as shipping, rail and courier services, charge different rates based on how much the customer uses, Seery said. Some have shifted to that system over time. For example, toll bridge operators once charged trucks based on the value of what they wanted to carry over, and U.S. railroads could arbitrarily carry goods from one customer and not from another, according to Seery. Neither model lasted.
Time Warner operates in 33 states but is a relative underdog in the U.S. broadband industry, with 7.4 million high-speed data customers. Comcast has 12.9 million.
In a trial planned for later this year in Beaumont, Texas, the service provider will offer four tiers of service at different prices. Customers who used more bandwidth would pay more.
The details of the tiered pricing plan haven't yet been set, according to Time Warner spokesman Alex Dudley. The offer will only go out to new customers, he said.
Some service providers charge different rates based on the speed of a service, but in the U.S. they typically allow each customer to send and download as many bits as they like in a month. Under that model, some subscribers who exchanged large files through peer-to-peer services reportedly have been cut off. Comcast, the biggest U.S. cable operator, has said it sometimes slows peer-to-peer traffic during peak demand periods.
In some other countries, Internet users have long endured bandwidth caps. And Web hosting companies typically charge site owners based on how much data they exchange with visitors.
Tiered pricing could help settle the ongoing argument over the fairness of certain subscribers and online content providers using up more network capacity than others, according to Ovum analyst Mark Seery. In fact, he thinks the whole industry will go down this path eventually.
"It's difficult to charge, appropriately, different customers if they have such widely divergent uses of bandwidth," Seery said. And trying to target one type of application, such as illegal peer-to-peer file sharing, raises political issues, he added.
"There's no justification for blocking legitimate uses of peer-to-peer," Seery said. "The right focus is on who's using what (bandwidth) and what they should be charged for it."
Many other transport industries, such as shipping, rail and courier services, charge different rates based on how much the customer uses, Seery said. Some have shifted to that system over time. For example, toll bridge operators once charged trucks based on the value of what they wanted to carry over, and U.S. railroads could arbitrarily carry goods from one customer and not from another, according to Seery. Neither model lasted.
Time Warner operates in 33 states but is a relative underdog in the U.S. broadband industry, with 7.4 million high-speed data customers. Comcast has 12.9 million.
AMD reports fifth-straight quarterly loss
Advanced Micro Devices on Thursday reported a heavy loss for its fourth quarter, due mostly to charges connected to its acquisition of graphics chip maker ATI.
AMD reported a net loss of $1.772 billion -- greater than its revenue for the quarter, which was $1.770 billion. The figures compare to a loss in the fourth quarter last year of $576 million on revenue of $1.773 million.
The net loss included charges of $1.675 billion, mostly related to AMD's acquisition of ATI in 2006. Excluding the charges, AMD said its loss would have been $97 million, greater than the $25 million it lost in the fourth quarter a year earlier.
This is the fifth-straight quarterly loss for AMD, which has been struggling to get its newest processors to market on time.
AMD delayed volume shipments of its quad-core Opteron processors, code-named Barcelona, in early December when it said it found a bug in the chip's Level 3 cache memory. Earlier this month, AMD said it was pushing back the release of its quad-core Phenom 9700 and 9900 processors.
The company has replaced some Opteron chips that it sold, although it was under no obligation to do so, said Dirk Meyer, AMD's president and chief operating officer, on a conference call to discuss the results. AMD has patched the bug in its quad-core chips and fixed the problem in updated processors, Meyer said. AMD issued a BIOS fix for the bug in December and offered users a workaround.
The company still managed to ship a record number of microprocessors in the quarter, it said Thursday, including nearly 400,000 of its quad-core chips.
AMD hopes to double its Opteron shipments in the first quarter of 2008 compared to the fourth quarter, said Bob Rivet, executive vice president and chief financial officer at AMD.
It will ship sample Barcelona processors in larger volume to OEMs (original equipment manufacturers) in the next month to put in systems, said Hector Ruiz, AMD's chairman and CEO.
Intel reported lower-than-expected earnings this week, in part because of weak prices for memory chips, but it has been selling more quad-core chips than AMD. It is also ahead of AMD in chip production, rolling out more than 30 Penryn-based chips based on the 45-nanometer process, with AMD still producing chips using the older 65-nm process.
AMD is putting samples of 45-nm processors through the paces and hopes to ship the chips later this year, Meyer said.
Brushing off a question about price pressure from Intel, Ruiz said AMD's first priority was to return to profitability. AMD executives speculated that it had gained processor market share, but said the company wasn't going after market share in unit shipments, instead focusing on meeting customer needs.
AMD hopes to return to profitability by the second quarter of 2008, Rivet said.
The ongoing chip demand will be a growth driver, Ruiz said. Though there is trepidation in the global economy, microprocessors will remain under demand. Emerging markets such as India, China and Brazil need chips to establish an infrastructure even if the economies slows down, Ruiz said.
AMD reported a net loss of $1.772 billion -- greater than its revenue for the quarter, which was $1.770 billion. The figures compare to a loss in the fourth quarter last year of $576 million on revenue of $1.773 million.
The net loss included charges of $1.675 billion, mostly related to AMD's acquisition of ATI in 2006. Excluding the charges, AMD said its loss would have been $97 million, greater than the $25 million it lost in the fourth quarter a year earlier.
This is the fifth-straight quarterly loss for AMD, which has been struggling to get its newest processors to market on time.
AMD delayed volume shipments of its quad-core Opteron processors, code-named Barcelona, in early December when it said it found a bug in the chip's Level 3 cache memory. Earlier this month, AMD said it was pushing back the release of its quad-core Phenom 9700 and 9900 processors.
The company has replaced some Opteron chips that it sold, although it was under no obligation to do so, said Dirk Meyer, AMD's president and chief operating officer, on a conference call to discuss the results. AMD has patched the bug in its quad-core chips and fixed the problem in updated processors, Meyer said. AMD issued a BIOS fix for the bug in December and offered users a workaround.
The company still managed to ship a record number of microprocessors in the quarter, it said Thursday, including nearly 400,000 of its quad-core chips.
AMD hopes to double its Opteron shipments in the first quarter of 2008 compared to the fourth quarter, said Bob Rivet, executive vice president and chief financial officer at AMD.
It will ship sample Barcelona processors in larger volume to OEMs (original equipment manufacturers) in the next month to put in systems, said Hector Ruiz, AMD's chairman and CEO.
Intel reported lower-than-expected earnings this week, in part because of weak prices for memory chips, but it has been selling more quad-core chips than AMD. It is also ahead of AMD in chip production, rolling out more than 30 Penryn-based chips based on the 45-nanometer process, with AMD still producing chips using the older 65-nm process.
AMD is putting samples of 45-nm processors through the paces and hopes to ship the chips later this year, Meyer said.
Brushing off a question about price pressure from Intel, Ruiz said AMD's first priority was to return to profitability. AMD executives speculated that it had gained processor market share, but said the company wasn't going after market share in unit shipments, instead focusing on meeting customer needs.
AMD hopes to return to profitability by the second quarter of 2008, Rivet said.
The ongoing chip demand will be a growth driver, Ruiz said. Though there is trepidation in the global economy, microprocessors will remain under demand. Emerging markets such as India, China and Brazil need chips to establish an infrastructure even if the economies slows down, Ruiz said.
Attack code released for critical Windows flaw
In what may be the first step toward a major security problem, security researchers have released attack code that will crash Windows machines that are susceptible to a recently patched bug in the operating system.
The code is not available to the general public. It was released Thursday to security professionals who use Immunity's Canvas computer security testing software. It causes the Windows system to crash but does not let the attacker run malicious software on the victim's system.
"It reliably crashes Windows machines," said Dave Aitel, Immunity's chief technology officer, in an e-mail interview. "In fact, it blue-screened our print server by accident -- this is a broadcast attack, after all."
That's the biggest concern for security experts who worry that a more dangerous attack may soon follow as researchers dig further into the vulnerability. The bug is particularly troublesome for two reasons. First, it affects a widely used Windows component that is turned on by default. Worse, no user interaction is required to trigger the flaw, meaning that it could be exploited in a self-copying worm attack.
Microsoft patched the flaw in its MS08-001 update, released last week, but it takes time for enterprise users to test and install Microsoft's patches.
The flaw lies in the way Windows processes networking traffic that uses IGMP (Internet Group Management Protocol) and the MLD (Multicast Listener Discovery) protocol, which are used to send data to many systems at the same time. The protocols are used by a range of applications including messaging, Web conferencing and software distribution products.
For a worm attack to work, the attacker would have to send specially crafted packets to a victim's machine, which could then allow the attacker to run unauthorized code on the PC. The worm could then spread from computer to computer within a LAN, but would generally be stopped from travelling to another network by a firewall.
A reliable exploit could be combined with malicious botnet software, giving attackers a way to widen the size of their networks of infected computers. The flaw is rated critical for Windows XP and Vista systems, according to Microsoft.
After patching the flaw, Microsoft published some technical research indicating that it would be hard for an attacker to exploit this vulnerability.
But Aitel believes that Microsoft may have overestimated how difficult it would be to create reliable attack code. Because it could spread so quickly through a network, a reliable exploit "is going to be worth the effort," Aitel said. "You can be assured lots of smart people are working on it."
Part of the problem is that IT staff may not be aware of how widely these multicasting protocols are used within their companies, said Russ Cooper, a senior network consultant with Verizon Business. "I am extremely worried that this becomes a problem simply because people are unaware of what they're already allowing," he said.
If one machine were infected within a network subnet, its attempt to attack other machines might not even be noticeable, he added. "It may look like a large file transfer."
The code is not available to the general public. It was released Thursday to security professionals who use Immunity's Canvas computer security testing software. It causes the Windows system to crash but does not let the attacker run malicious software on the victim's system.
"It reliably crashes Windows machines," said Dave Aitel, Immunity's chief technology officer, in an e-mail interview. "In fact, it blue-screened our print server by accident -- this is a broadcast attack, after all."
That's the biggest concern for security experts who worry that a more dangerous attack may soon follow as researchers dig further into the vulnerability. The bug is particularly troublesome for two reasons. First, it affects a widely used Windows component that is turned on by default. Worse, no user interaction is required to trigger the flaw, meaning that it could be exploited in a self-copying worm attack.
Microsoft patched the flaw in its MS08-001 update, released last week, but it takes time for enterprise users to test and install Microsoft's patches.
The flaw lies in the way Windows processes networking traffic that uses IGMP (Internet Group Management Protocol) and the MLD (Multicast Listener Discovery) protocol, which are used to send data to many systems at the same time. The protocols are used by a range of applications including messaging, Web conferencing and software distribution products.
For a worm attack to work, the attacker would have to send specially crafted packets to a victim's machine, which could then allow the attacker to run unauthorized code on the PC. The worm could then spread from computer to computer within a LAN, but would generally be stopped from travelling to another network by a firewall.
A reliable exploit could be combined with malicious botnet software, giving attackers a way to widen the size of their networks of infected computers. The flaw is rated critical for Windows XP and Vista systems, according to Microsoft.
After patching the flaw, Microsoft published some technical research indicating that it would be hard for an attacker to exploit this vulnerability.
But Aitel believes that Microsoft may have overestimated how difficult it would be to create reliable attack code. Because it could spread so quickly through a network, a reliable exploit "is going to be worth the effort," Aitel said. "You can be assured lots of smart people are working on it."
Part of the problem is that IT staff may not be aware of how widely these multicasting protocols are used within their companies, said Russ Cooper, a senior network consultant with Verizon Business. "I am extremely worried that this becomes a problem simply because people are unaware of what they're already allowing," he said.
If one machine were infected within a network subnet, its attempt to attack other machines might not even be noticeable, he added. "It may look like a large file transfer."
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