IBM CEO takes bonus, gets a raise

IBM’s CEO Ginni Rometty is taking a bonus of $3.6 million for 2014, according to SEC documents posted Friday and spotted by Bloomberg News. She will also receive a 6.7 percent salary increase bringing her salary total to $1.6 million for 2015 — her first raise since becoming IBM CEO in 2012.

Here’s the chart posted in the 8K filing.

ibm salaries 2014

News of more money flowing to IBM’s top dogs comes at a dicey time — just days after the company kicked off another round of layoffs last week.

[company]IBM [/company]has taken it on the chin in the past few years for obsessing about attaining $20 earnings per share per year by the end of 2015. That milepost was set in 2012 by former CEO Sam Palmisano (pictured above with Rometty). Critics said IBM was more interested in delivering on that metric that than in building great products people want to buy. Rometty finally jettisoned that $20 EPS goal in October.

IBM share buybacks were also controversial among people who felt IBM should be pouring money back into its businesses, not placating shareholders.

Tough transition

It’s clear that IBM faces big macro issues, most notably the move of many workloads to cloud and Software-as-a-Service (SaaS) infrastructure. That means big companies — IBM’s traditional companies — are buying less on-premise software and hardware. And the big SaaS providers are not necessarily using IBM technology to run their businesses.

Rometty has sold off lower margin businesses, while focusing on cloud, analytics and mobile areas, but many doubt IBM’s claim that it now owns a $7 billion cloud business. In this shift, it faces competition not only from traditional rivals — [company]HP[/company], [company]Dell[/company], [company]Oracle[/company], [company]Microsoft[/company] — but also from made-in-the-cloud giant Amazon Web Services.

Lack of vision?

When I spoke to a former long-time IBM VP last week about other topics, I asked what he thought about his alma mater. He did not want to be quoted by name, but said he has been and remains a fan of Rometty.

However, in his opinion, she was hobbled by IBM’s EPS goal. He likened IBM to a person who is blind in one eye with both hands tied behind his back.

“[IBM] has no sense of what consumers want, that’s the blind in one eye part. The hands-tied part is they’ve been so aggressive in capital allocation, on returning capital to shareholders via dividends and share repurchases, that they’ve not invested in growth,” he said.

An IBM spokesman had no comment, but generally, IBM has disputed the notion that it hasn’t invested in  research and development with an eye to building great products. It typically trots out Watson as an example. It would also likely point to an alliance with [company]Apple[/company] announced in July that focuses on building consumery enterprise applications for iPhones and iPads, as a sign that it “gets” what customers want.

That’s all well and good. The question is whether it’s too late.

This story was updated at 8:15 a.m. PST with IBM’s no-comment

Looks like those IBM layoffs have started

Reports of big layoffs to come this week at IBM were correct, at least with regard to timing. Starting Wednesday, the message board at [email protected]a site manned by former IBM employees, was full of posts from people saying (anonymously) that they had been laid off. More accurately, most said they had been “RA’d,” which is IBM parlance for Resource Action, but which means — you got it — laid off.

On Tuesday the site posted this:

The [email protected] is receiving information from employees that a “resource action” or mass job cut will start Wednesday, January 28 in the US and Canada. A resource action is already taking place in Australia. We do not know how many will be cut in the US but it could be thousands.

And sure enough, Wednesday morning saw the start of a series of posts from people claiming to be affected employees. One example:

14 year IBMer resourced today. Last day Feb 27. Age 58. C&N/Legal group. Outstanding performer downgraded to strong performer (i.e.2)for last PBC. Directly closed over $100M in contracts past QTR. Standard package. Lump sum payment equivalent to one week of pay for each fully completed six months of service based on most recent date of hire, with a minimum of two weeks and up to a maximum of 26 weeks. 6 months transition for medical. -Ex-C&N-IBMer.

IBM, like HP and other traditional IT companies have struggled to adapt to a changing world of IT implementation. In this era, as more companies are putting more applications and data on shared cloud infrastructure there is a whole new sales, more incremental sales model. Gone are the days when thousands of big companies upgraded thousands of servers every few years. The reliance on outside SaaS and cloud providers meant smaller hardware and softwares sales into those shops. Adding insult to injury, most of these big cloud server farms don’t run high-end, name-brand hardware of the type that paid the bills for IBM and the others.

HP has been lopping big numbers of jobs for years now –the last I recall came in May when HP said it would  nix up to 16,000 jobs, bringing total HP layoffs since Meg Whitman took the reins in September 2011 to 50,000. IBM has been making smaller cuts but also relying on attrition and other tactics to slim down. One insider told me late last year, that if the fourth quarter numbers didn’t add up, big “HP style cuts” would come to IBM.

Looks like that may be happening.

In a follow up to his original post predicting a massive 26 percent headcount cut, Robert Cringely (aka Mark Stephens) noted that he never said IBM would “lay off 110,000” people but would do whatever it took to get rid of that number of employees.

Reached for comment, an IBM spokesman repeated what the company has said in the past: That it is…

aggressively positioning itself for continued leadership in cloud, analytics, mobile, security, social and cognitive computing, and… investing in and staffing these priority areas. This is not new news. IBM announced a $600 million workforce rebalancing charge in 4Q, 2014 … and this means realigning our client teams to provide an optimal mix of skills, so that we can continue to improve service levels, enhance productivity and keep our clients well positioned for the future.

There was one high-profile departure from IBM that was likely not part of this culling: Lance Crosby, former CEO of SoftLayer who became the top IBM cloud guy after Big Blue bought SoftLayer in July 2013, has left the company.

Former cloud pariah Oracle claims stronger cloud sales

Oracle, which ramped up its cloud marketing and product rollouts over the past year, touted some encouraging signs for that business in its second quarter, ending November 30.

Revenue from [company]Oracle[/company] cloud products — which fall into what the Wall Street Journal called a “catchall category” — was up 45 percent year over year to $516 million. (Total Oracle revenue was up two percent to about $9.6 billion, from about $9.3 billion last year.)

Revenue from SaaS and PaaS sub-segments of cloud were $361 million, up 41 percent year over year, while IaaS revenue was $155 million, up 62 percent, CEO Safra Catz said on the company’s earnings call Wednesday night. (SeekingAlpha has the transcript.)

And, as usual, you can get a glimpse into what rivals [company]Oracle[/company] is most worried about by the comparisons company execs threw out. Said Catz, for example:

“Overall our cloud results were better than expected as we are clearly growing faster than [company]Salesforce.com [/company]and were more than three times the size of [company]Workday[/company].”

This was Oracle’s first earnings call since company founder Larry Ellison stepped down as CEO in September, ceding that slot to Catz and Mark Hurd.

Oracle 2Q FY 2015 earnings

Ellison, who is now chairman and CTO, sees more good things ahead:

“In Q2 we booked more than $170 million in new SaaS and PaaS annually recurring revenue or ARR. In other words, we sold over $170 million of new SaaS and PaaS annual subscriptions this past quarter.

In Q4 of this fiscal year, we expect to sell more than $250 million of new annual SaaS and PaaS subscriptions. That means, during our next fiscal year we will sell well over $1 billion of new SaaS and PaaS annual subscriptions.”

Later in the call, Ellison said the company expects to see “well in excess of $1 billion in new annual subscriptions … which is about what Salesforce[.com] will be selling in their next fiscal year. I think they are at $1.1 [billion] or something like that, best as we can estimate.”

Nomura Securities analyst Rick Sherlund was cautiously optimistic in a research note, which pointed out that the company still faces “a long transition period to the cloud.”

About 5 percent of total Oracle revenue currently come from those cloud businesses. He wrote:

“We  view this as an encouraging step along the way, but there are still risks of ongoing execution, margins are lower in the cloud, cash flow may be dampened by the need for higher capex to build out data centers as the cloud business scales up, and on-premises license revenues are likely in secular decline. But with stronger growth potential in the cloud, the risk/reward looks favorable to us”

Oracle’s got products, but are they cloud?

A nagging problem for the company, which is the leader by far in on-premises databases and is a giant in enterprise applications, is that many still don’t see Oracle’s cloud products as real cloud products. And here is why:

Oracle DbaaS price chart

Yes, Oracle offers its DbaaS by the hour, if that’s the way you want to purchase it. But, once you hit that “Buy Now” button, you have to make a phone call before you can set up an account. That doesn’t seem very self-service-y.

oracle dbaas slide2

Once the account is set up, presumably things get easier. Maybe this is a distinction without a difference, but I’m betting that people used to buying cloud resources would be shocked to encounter the screen above.

 

This story was updated at 11:49 a.m. PST to correct my assertion that Oracle DbaaS is not available by the hour. It is, as documented by the chart inserted above.

Agricultural-tech startup FarmLogs raises $10M

A good deal of modern farming is being done in the cloud, not just the soil, using data science as well as tractors and combines as tools – at least that’s the way Michigan agricultural technology startup FarmLogs sees it. Since graduating from Y Combinator in 2012, the company claims 15 percent of U.S. row-crop farms have signed up for its cloud-based farming software.

FarmLogs announced on Wednesday that it has closed a $10 million Series B round with contributions from existing investors Drive Capital, Huron River Ventures and Hyde Park Venture Partners as well as new investors SV Angels and Y Combinator President Sam Altman. The round brings its total funding to $15 million.

The company has built a software-as-a-service platform that helps growers can access from their smartphones and use to manage the day-to-day activities of their farms, keeping track of what fields needs to be tilled, planted, watered, fertilized and harvested. It tracks hourly weather patterns, commodity prices and even the maintenance schedules for farming equipment. According to the company, FarmLogs now has more than $12 billion in crops under management in its agricultural cloud.

Ex-Heroku CEO Byron Sebastian joins the board at Codenvy

Byron Sebastian, the former CEO of Heroku who was most recently an executive vice president at Salesforce.com, is joining the board of directors at developer darling Codenvy. The company sells a cloud service, and software, that uses Docker containers to simplify the configuration, deployment and sharing of development environments. Sebastian, who has also held VP and CEO roles at BEA Systems and SourceLabs, respectively, left Salesforce.com in September 2012 to grow olives has yet to return to tech in a full-time capacity.

Box acquires medical-imaging startup MedXT

Cloud storage and collaboration provider Box has acquired MedXT, a startup that has built technology for storing and sharing medical images in the cloud. The acquisition is an early step toward bolstering the Box for Healthcare initiative the company recently launched. Box founder and CEO Aaron Levie announced the acquisition in a blog post, explaining that “the expertise of the MedXT team members and their medical image viewing technology will be incredibly important in our effort to deliver HIPAA-compliant sharing and collaboration for all critical content types.”

medxt-viewer-480x331x64-100ms