The partnerships are important because it makes rolling out PayPal’s in-store payments technology to retailers much easier.

PayPal is hosting an event at its San Jose headquarters later this morning to announce the next batch of retailers that are adopting the company’s in-store payments solution. AllThingsD’s Liz Gannes will be there to cover the announcements live, starting at 10 am PT.

To date, PayPal has deployed its service to all 2,000 Home Depots, but it has a long way to go in meeting its goal of having 20 major retailers by the end of the year.

One reason why PayPal is able to deploy its services to retailers so quickly is because it only requires sending out a software update to the retailers’ terminals — in other words, retailers won’t have to purchase all new hardware. This morning, PayPal confirmed it has signed up VeriFone and Equinox Payments, the largest and third-largest providers, respectively, which will handle those software updates. PayPal already had a relationship with Ingenico, the second-largest provider.

The relationships inked today are focused on solving back-end integration problems for merchants. But the front-end experience is all about the consumer.

At participating stores, consumers will be able to pay with PayPal by either using a PayPal-issued credit card or by entering a mobile phone number and PIN code into the terminal. Down the road, PayPal could also support near field communication technology.

All told, the three terminal providers manage about roughly 40 million terminals worldwide, representing a large majority of the terminals in existence.

The world’s third-biggest PC maker gave a forecast for gain in sales of 2 percent to 4 percent in the current quarter, which would top out at $15 billion, fully $400 million short of what Wall Street analysts had expected.

That outlook came on top of sales in the quarter just ended that declined 4 percent to $14.4 billion, amounting to a miss of a half billion from the Street consensus. Per-share earnings were 43 cents, also short of expectations by three cents. It was the second miss in a row for Dell.

Naturally, Dell shares are getting spanked. As of 3 pm PT, they’re down almost 12 percent, at $13.33 a share. And the damage isn’t limited to Dell. Hewlett-Packard, which reports earnings tomorrow, is down in after-hours trading by 56 cents, or nearly 3 percent, to $21.22 a share.

Google, a Silicon Valley giant that built its business on Web services, startled the tech industry last August by saying it would buy the company, a much older, Illinois-based maker of mobile devices and other hardware.

Read the rest of this post on the original site »

They’re not quite as juicy — Oracle has always had the better flair for the dramatic in this case — but in releasing them, HP clearly intends to paint Oracle, the new owner of Sun Microsystems, as out to hurt HP by kicking it straight in the teeth by damaging its Business Critical Server operation.

The first of the batch is an instant message exchange between some Oracle sales guys, who happen to use salty language in relation to HP. (Sorry about that.)

The second appears to show that Mark Hurd, while still CEO of HP, was informed about Intel being both aggressive and excited about a forthcoming version of the Itanium chip, which would seem to run contrary to the argument Oracle has made that Intel was prepping for the Itanium line’s end of life, while allowing HP to lie about it to its server customers. In the message, Martin Fink, who figured so prominently in Oracle’s document dump today, writes to Hurd: “I’m not sure what exactly this means, but I have rarely seen Intel so agressive on anything to do with Itanium EVER, and they are working very hard to get this moving forward.”

Another, from February 2011, appears to show Oracle unwilling to release a security software patch for a version of one of its applications that runs on HP-UX and therefore on an Itanium-based server. Another from the same day is an email from Oracle CEO Larry Ellison to Thomas Kurian, senior vice president of Oracle’s server technologies, asking if support documents had been updated to specify “no more one-off patches for Itanium.” The date is key because Oracle first announced that it would no longer support Itanium systems on March 23 of that year. It should surprise no one that the top echelons of Oracle management knew this announcement was coming.

The next is an email showing HP getting ready for a big strategy launch. “Kinetic” was HP’s internal name for a strategy that leveraged all of HP’s IP that enabled mission-critical products into a cohesive whole. Plans for Kinetic included extending HP-UX and Integrity, HP’s line of Itanium-based servers, indefinitely, as well as bringing up X86 chips, like Intel’s more mainstream Xeon, under the “mission critical” umbrella. As HP sees it, this was the plan all along.
 
Finally the last one is another IM exchange between Oracle sales execs. Toward the end, one of them complains about being forced to sell Sun hardware that is described as a “pig with lipstick at best.” Again as HP sees it, once Oracle owned Sun it had every motivation to do whatever it could to hurt HP, including ducking out of previously contracted commitments.

As I did with the Oracle dump this morning, I collated everything into a single PDF. I think I got everything in chronological order this time. Read for yourselves!

HP-Itanium-docs.pdf

The results beat the consensus view of analysts who had expected Intel to report per-share earnings of 50 cents on sales of $12.84 billion.

The company also said it expects to see sales in the range of $13.1 billion and $13.7 billion and gross margin of about 62 percent in the quarter ended June. This compares with a street consensus of 55 cents a share at $13.43 billion in sales.

Intel’s statement is below. The company will hold a conference call shortly to discuss the results with analysts.

SANTA CLARA, Calif.–(BUSINESS WIRE)–

Intel Corporation today reported quarterly revenue of $12.9 billion, operating income of $3.8 billion, net income of $2.7 billion and EPS of $0.53. The company generated approximately $3.0 billion in cash from operations, paid dividends of $1.0 billion and used $1.5 billion to repurchase stock.

“The first quarter was a solid start to what’s expected to be another growth year for Intel,” said Paul Otellini, Intel president and CEO. “In the second quarter we’ll see the first Intel-based smartphones in the market, ship products based on 22nm tri-gate technology in high volume, and accelerate the ramp of our best server product ever, providing a tremendous foundation for growth in 2012 and beyond.”

Business Outlook

Intel’s Business Outlook does not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after April 17.

Q2 2012 (GAAP, unless otherwise stated)

Revenue: $13.6 billion, plus or minus $500 million.
Gross margin percentage: 62 percent and 63 percent Non-GAAP (excluding amortization of acquisition-related intangibles), both plus or minus a couple of percentage points.
R&D plus MG&A spending: approximately $4.6 billion.
Amortization of acquisition-related intangibles: approximately $80 million.
Impact of equity investments and interest and other: loss of approximately $20 million.
Depreciation: approximately $1.6 billion.

Full-Year 2012 (GAAP, unless otherwise stated)

Gross margin percentage: 64 percent and 65 percent Non-GAAP (excluding amortization of acquisition-related intangibles), both plus or minus a few percentage points, unchanged.
Spending (R&D plus MG&A): $18.3 billion, plus or minus $200 million, unchanged.
Amortization of acquisition-related intangibles: approximately $300 million, unchanged.
Depreciation: $6.4 billion, plus or minus $100 million, down $100 million from prior expectations.
Tax Rate: approximately 28 percent down from prior expectations of 29 percent.
Full-year capital spending: $12.5 billion, plus or minus $400 million, unchanged.

For additional information regarding Intel’s results and Business Outlook, please see the CFO commentary at: www.intc.com/results.cfm.

Oracle CEO Larry Ellison will take the witness stand today in his company’s lawsuit against the search giant Google. In what has been described as the World Series of intellectual property lawsuits, Ellison will be examined by Oracle lawyers in the case, in which Oracle has accused Google of infringing both patents and copyrights on Java while it was working to create the Android mobile operating system.

Ellison’s testimony will come after Oracle lawyers make their opening arguments. You can get a pretty good idea of what they’re going to say from this 91-page PDF posted overnight to the Oracle Web site.

Oracle sued Google in 2010, alleging that the Android mobile operating system violated seven different Java patents. Five of those patents have since been tossed out since they were reexamined, leaving two. That reduces the potential amount of damages Oracle might be entitled to should it prevail. Google offered Oracle a share of Android revenue and $2.8 million in damages in the event that it prevails; Oracle declined. Oracle has also accused Google of infringing copyrights on Java APIs.

Google has denied the infringement claims, and is expected to argue that Java APIs can’t be protected by copyright because they’re more akin to programming languages. Software developers everywhere are paying close attention to this part of the trial.

It’s not so much about any shifts in sentiment or intention for spending among large companies, it’s just that the dollar is currently strong against other currencies, so U.S.-domiciled companies are in a weaker position when selling to customers in other countries. When accounting for that discrepancy, Gartner says it expects overall growth in spending of 2.5 percent, but on a constant currency basis, the digits would be transposed for a healthier 5.2 percent.

Spending by governments will likely contract, thanks in no small part to the austerity measures being put in place in the euro zone.

The highest rate of growth will be in the telecommunications equipment sector, which will grow by nearly 7 percent, Gartner says. A lot of that is thanks to mobile going to mobile, but also to speeding up networks. See the rest of the segments and their expected rates of growth in the table I screengrabbed from the press release, below:

Earlier this week, Gartner singled out IT spending in emerging economies, which it said will amount to an impressive trillion and change by itself. And last week we got a glance at the sentiment from 100 CIOs at large enterprises, courtesy of J.P. Morgan, indicating that growth is likely to tick upward this year. Up is good.

The thermostat, which works with an app on the iPhone, Android phone or desktop PC, now comes with an updated 10-day view of users’ energy consumption, called Energy History. On the thermostat itself, Nest users get a quick glimpse of their energy usage, but Energy History on mobile and the Web shows the exact times at which an HVAC system turned on and off, and how that compares to usage from previous weeks.

Nest also says it could save users money on air-conditioning bills this summer with something called Airwave, which shuts off a home’s air-conditioning system before the house hits its target temperature, then uses the remaining cool air in the system to finish cooling down the place. Nest says this will conserve up to 30 percent of air-conditioning energy.

The company shared some how-great-is-Nest stats: Nest thermostats are now installed in all 50 U.S. states; 99 percent of Nest users are running the thermostat on a setback schedule; and 75 percent of Nest buyers say they installed their thermostats themselves, in less than 30 minutes — pretty much all of those say they would do it themselves again.

Nest has also made minor adjustments to the backplate of the thermostat, after some customers complained the wall anchors weren’t working well. The connectors on the plate have been redesigned, and in the interest of even easier installation, the company has manufactured its own screws, which will be shipped with the thermostat.

Maxime Veron, Nest’s head of product marketing, said neither the hardware nor the software updates are related to a recent patent-infringement lawsuit filed against the start-up.

Nest, of course, is currently the target of a lawsuit filed by Honeywell, maker of aerospace systems, consumer products and technology solutions — and the creator of the now-iconic round thermostat. Honeywell has alleged that Nest’s digital thermostat, which came to market last fall for $249 (for a full review of how it works, check out my colleague Katie Boehret’s review here), infringes on seven patents Honeywell holds in home-thermostat technology.

Nest issued a quick statement to the suit a few days after the complaint was originally filed back in February, but got an extension to file a more detailed response, which is now due April 13.

All this over a thermostat? While some of Honeywell’s suit is focused on the design of the Nest thermostat, other parts of the complaint target the “smart” thermostat’s functionality. Part of Nest’s appeal is its promise to save users up to 30 percent off their utility bills, and many other Internet-connected, data-delivering home appliances are making similar claims.

For example, Honeywell’s complaint says that controlling a thermostat remotely through the Internet is not a Nest Labs innovation. The Nest thermometer comes with a patented “question system” — “What are the lowest and highest temperatures you’d like when you are away?” — but Honeywell says its Prestige thermostat, introduced in late 2008, also incorporates an “interview-based interface.” However, General Electric also markets a home-energy management system that includes the ability to remotely control a GE “smart” thermostat from a smartphone or home computer.

As more consumers warm to the idea of the connected home, it’s hard to imagine claims being made about the ability to control an appliance through the smartphone as a patented, innovative technology. But for now, we’ll have to wait until next week to see what Nest has to say about that.

It comes in the form of a survey of 100 CIOs by the investment bank J.P. Morgan. The firm finds that, on average, CIOs say they’re going to boost their IT spending by 2.7 percent this year, up from 2.4 percent in 2011. That may not seem like a big change, but here’s why its important: It’s the first time in a few years that the same survey has detected a directional change in sentiment. CIOs are at long last saying they intend to boost their spending on IT, rather than trimming it back and back and back as they have for the last several years. “In our prior CIO survey in September 2011, the directional movement indicated a reduction in planned spending growth, as at that time CIOs were starting to pare back on spending during more uncertain macroeconomic conditions,” the firm says in its report, which was shared exclusively with AllThingsD.

The optimism is a bit more pronounced when you see it expressed in the graphic below, which I grabbed from raw survey results. More than two-thirds of the CIOs surveyed said they planned to boost their overall IT spend this year, most of them by a modest 1-5 percent, but some by more than 10 percent. Last year, the figure was 58 percent, but it usually swings up by only 3 or 4 percentage points, analyst Mark Moskowitz told me.

“The overall tone we got in our conversations with these CIOs was more optimistic than it has been in a while,” Moskowitz said. “They have the green light to start projects that are going to take several quarters to get done. Most aren’t willing to do that when they’re worried their overall business is going to roll over.” A lot of that has to do with more confidence in the overall macroeconomic environment.

And where will that growth be? And, perhaps more importantly, where won’t it be? Software, storage and security are looking like big spending priorities among the CIOs surveyed. Business intelligence tools and getting mobile devices integrated are also high on the list — there’s that ongoing trend toward “bring your own device” (BYOD), rearing its persistent head once again.

Employee-purchased iPhones, iPads and Android devices are supplanting company-assigned BlackBerrys. “BYOD is real,” Moskowitz says. “And you have to assume that Apple is going to be the one that benefits the most from it.”

Other winners include EMC and NetApp, as they play strongly in networked storage. Server virtualization — making one physical server act like dozens of servers, using software to subdivide its resources — also has a lot of room to grow, the survey finds. That’s good news for VMware.

Losers? There are few. Intel’s new Romley chip isn’t going to be as big a deal in spurring spending on new servers: In fact,91 percent of CIOs surveyed said they don’t expect Intel’s new chip to drive new spending in the data center. Intel’s last big upgrade, Nehalem, did change the game, Moskowitz says. The trouble is, most of the companies using Nehalem-generation chips in their servers are happy with them, and are unlikely to bother with the expense of an upgrade, for now.

Nor is Windows 8 going to cause a new round of PC buying, as both Hewlett-Packard and Dell are hoping. “A new version of Windows hasn’t caused a PC upgrade cycle since 1995,” Moskowitz told me. Asked directly if Windows 8 was expected to drive a major PC upgrade cycle, 78 percent of the CIOs in the survey said no. In fact, at least 30 of the CIOs in the survey said they were still working on deploying Windows 7. Ouch. Perhaps it’s too much to ask for things to be looking up for everyone all at once.

(Image is a movie poster for the 1935 British film starring Cicely Courtneidge, but the title song in this case is, well, awful. What I really wanted was an image of Fred Astaire dancing with Joan Fontaine to the underappreciated George and Ira Gershwin tune of the same name, from the 1937 film “A Damsel in Distress,” but I could find nothing suitable. So — loving Gershwin tunes as I do — just for fun, I’ve embedded both Astaire and Billie Holiday singing the tune, below, courtesy of Grooveshark. Yes, I’ll admit, sometimes I have a little too much fun in this job.)

It’s certainly not easy — the road to disruption can be paved with premature launches, faulty products, tepid or negative consumer reaction and lawsuits — and that’s usually after years of research and development and dollars spent.

The minds behind Jawbone, the Nest thermostat and the new Lytro camera came together on Monday to discuss this exact topic on a SXSW Interactive panel.

All agreed on two points: Good design is critical, and even if you’re a hardware company, you’re not just a hardware company anymore.

“The way we see it, it’s hardware and software services,” said Matt Rogers, co-founder of Nest, which late last year launched a new “smart” thermostat. “You have to think of how these pieces tie together: When you pair it with your iPhone, how’s it going to work? And that’s incredibly difficult, some of the most difficult engineering we’ve done.”

For Ren Ng, founder and chief executive of Lytro, introducing a new type of camera meant not only designing a new light-capturing sensor, but also creating an entirely new form factor. “You can’t just build software, because it’s connecting an entirely new kind of data inside. So, for us, it was clear that we had to build new hardware, too.”

Jawbone, which is known for products pairing audio technology with hardware devices, said technology companies have to deliver a complete experience that’s cohesive to consumers.

“The barrier to entry for hardware has come down, but the barrier to great hardware has not actually gone down, and I think that’s given a false sense of hope to some people,” said Travis Bogard, Jawbone’s vice president of product management.

Jawbone, which uses expensive medical-grade plastic in its best-selling Jambox speaker, recently faced its first major setback with hardware — and complementary software — when it was forced to pause production on its UP wristband and fix its companion iPhone app.

“It means putting cost and good design into products,” Bogard said. “These are not easy decisions to make.”

And while many tech entrepreneurs hold Apple products up as the pinnacle of design, these “disruptors” said that reaching almost-perfection means killing your design darlings — often many times over.

Bogard said that with the UP wristband, Jawbone was actually set to launch the product six months earlier than it did, but the company decided the band needed to be 30 percent smaller. Nest’s Rogers said the company threw away many designs before settling on “the one.”

“To take something you think is beautiful, and say it’s not good enough yet, and throw it away, it takes a lot of effort,” Rogers said. “It’s emotionally intensive, and it’s also cost-intensive. It’s impossible to get to perfection, but as entrepreneurs and designers, that’s what we strive for.”

RELATED POSTS:

• The Homeless Defend Becoming Hotspots
• Pinterest CEO Ben Silbermann’s Lesson for Start-Ups: Go Your Own Way
• The Best and Weirdest Requests and Errands at SXSW From Zaarly, TaskRabbit and Others
• Al Gore and Sean Parker Blame TV and Money for Ruining Politics, and Say Social Media Ought to Fix It
• Letters From SXSW: How to Be “Disruptive”
• SXSW News: Jerry Levin’s StartUp Health Academy for Entrepreneurs Announces First Class
• The Best (And Worst) Marketing Gimmick in Austin
• Forget Cleantech — It’s Cleanweb at SXSW
• Houston Comes to Austin as Kara Swisher Talks Lessons Learned with Dropbox CEO
• After Nearly Doubling Its Userbase in Three Months, Instagram Will Finally Come to Android
• The Power of Power at South By Southwest
• How Jimmy Fallon Uses the Nike FuelBand (It’s Naughty, Of Course)
• Gawker Will Deputize Commenters, Says Sheriff Nick Denton
• Microsoft’s Danah Boyd: Social Media Makes the World More Fearful
• Etsy CEO on Building a Lean Start-Up: Deploy, Deploy, Deploy
• South By Southwest Parties On, Despite the Rain
• At SXSW, Joi Ito Invites Tech Entrepreneurs Into the MIT Media Lab
• Texas Gov. Rick Perry Drops In on South By Southwest
• Can Playing More Games Make Your Life “SuperBetter”? Jane McGonigal Thinks So.
• Google’s Vic Gundotra on Why Plus Isn’t a Minus
• Rain Douses Austin as Crowds Flood Into SXSW
• Checking In and Checking Out South by Southwest
• SXSW Serendipity Gets Yet Another Helper: Kismet
• The Essential SXSW Tech Tool Kit
• Geek in the Heart of Texas: AllThingsD at SXSW 2012

And the highlight of that letter was an update on Big Blue’s progress toward meeting its growth targets for the year 2015. IBM has long promised to add $20 in per-share earnings and $20 billion in incremental revenue growth by that year. The crux of Rometty’s letter: “We’re on it.”

“The next decade holds enormous promise for IBM, most importantly because of what it holds for business and society at large. We are uniquely positioned to deliver the benefits of a vast new natural resource — a gusher of data from both man-made and natural systems that can now be tapped to help businesses and institutions succeed in an increasingly complex and dynamic global economy.”

So how will it get there? By doing more of what it’s been doing the last several years. In broad brushstrokes, that means pursuing lines of business that have a lot of value — and which carry a higher margin — and focusing less on hardware. Generally speaking, that has meant a big shift into services that bear a long-term revenue stream with them.

But it also means a shift to software. One key piece of the strategy has IBM generating about half of its segment profits from software by 2015. As of 2011, it was already at 44 percent.

It also means going global in a big way and reaching into smaller markets that are breaking out. About 22 percent of IBM’s revenue came from these so-called “growth markets” in 2011, and the plan is to push that to 30 percent by 2015. And it’s not coming from the BRIC countries you always hear about (Brazil, Russia, India, China) but others in Africa and Asia: Some 60 percent of revenue from growth countries comes from non-BRIC countries.

There’s a lot more of these interesting facts from IBM’s annual report in an infographic here.

Tomorrow, as part of the commitment that AllThingsD has to providing its readers with ever more high-quality content, this site will be launching a new reviews section, All Things Reviewed.

Simply put, we’re building on the consumer-tech reviews by Walt Mossberg and Katie Boehret that we’ve always run, with a fresh team of ATD reviewers, the first of whom is the talented Lauren Goode.

Lauren will be joined in the coming months by additional strong reviewers, who we will be adding soon, and each of whom will likely do one meaty review a week.

Katie, who will continue as a columnist at The Wall Street Journal, will also take on the added task of editing the new All Things Reviewed section, which we designed to be bright and graphical and easy to navigate.

We’ll also have plenty of timely, interesting consumer product news in addition to the in-depth reviews. It will all be integrated into the main ATD site, too, because we consider it a key part of providing a range of news, information, analysis and context to those who come to us for trustworthy, fair and accurate journalism.

Make no mistake: We think it is critical that reviews adhere to the same strict tenets of reporting we have for everything we post here. The reviews of the products we will feature take time, rigorous testing and deep critical analysis.

And, like Walt’s and Katie’s current reviews, these new ATD reviews will be based on thorough testing and aimed at smart consumers — and not just techies and enthusiasts.

That’s why we will pick carefully which products are significant or might be interesting to a broader range of readers. In other words, we won’t be reviewing every single slightly changed phone or laptop, or every me-too location app, and we won’t bore you with chip speeds and technobabble.

Thus, as hard as it is to say to the geeks who follow us, we will shun the rigid spec lists and templates used elsewhere, and instead present you with holistic, experience-based reviews that tell the story of the product — hardware, software, apps, games, Web sites and services.

Most importantly, we won’t be afraid to point out negatives, even if the manufacturer is an advertiser. Our aim is to earn your trust and be on your side, even if you disagree at times with our conclusions.

Like all new endeavors, we hope to get the entire section up to cruising speed as soon as possible, but we’ll be doing it in the careful, considered and high-quality manner we strive for in everything we do. (And, like all new stuff, we also had a party introducing the section to a packed crowd at the SXSW Interactive festival last night.)

We hope you’ll like the result and welcome your feedback as we begin our latest expansion. And, as usual, there will be much more to come.

Despite some industry gains from January to February, overall sales totaled $1.06 million last month, down from $1.33 billion year over year; software sales fell 23 percent to $464 million, and hardware sales dropped 18 percent to $381.4 million.

February’s best-selling software title was Call of Duty: Modern Warfare 3, from Activision Blizzard.

While most hardware platforms posted declines year over year, “all current-generation platforms improved sales over January 2012 by more than 50 percent,” NPD said in a note.

A consistent bright spot has been the Microsoft Xbox, which was the best-selling hardware platform for the seventh month in a row. Some 426,000 Xbox units were sold in February, marking the 12th consecutive month Xbox has held more than 40 percent of the current-generation console market share.

And all eyes were on the Sony PlayStation Vita handheld gaming device, which came to market in late February. Only four days of retail sales for the PS Vita were included in this reporting period, but the device gave overall hardware unit sales a month-over-month boost. Not including the PS Vita, hardware unit sales increased by 62 percent over January, NPD said; with PS Vita sales included, the increase was 87 percent.

“More than 1.2 million PS Vita units have been sold globally since launch,” Patrick Seybold, senior director of communications at Sony Computer Entertainment America, said in a statement. “Customer satisfaction rates are very high and momentum will continue as gamers get their hands on a deep lineup of blockbuster titles that take advantage of PS Vita’s unique features, including cross-platform play with the PlayStation 3.”

In January, the videogame industry saw a double-digit decline in physical software sales, as my colleague Tricia Duryee reports, following a number of noteworthy game launches ahead of the holiday season.

Is Whitmore just seeing the world through some rose-tinted shades? After all, consider the state of the industry — PC sales are suffering generally from a prolonged case of iPad envy among the consumer set, the ongoing shortage of hard drives brought on by the flooding in Thailand, and a global economy that has Europe flat on its back, the U.S. recovering but wobbly, and every other region tenuous. Meanwhile, HP and Dell aren’t exactly their old selves.

And yet here’s Whitmore explaining his positive expectations from both, in a note to clients today: “Investors appear to be positioned for solid results from both HP and Dell as recent data suggests enterprise IT spending finished 2011 well. We expect IT spending to gain momentum through 2012 due to an improving US macro backdrop and forthcoming product cycles.”

Pretty good, relatively speaking. Whitmore goes on at length on each company. About HP, he says its recently lowered expectations — CEO Meg Whitman has designated 2012 as a rebuilding year — will be easy to beat. Revenue might even come in below expectations of $30.1 billion, but per-share earnings will probably beat the consensus of 87 cents. The reason? Corporate demand for IT hardware, specifically PCs and servers, remains healthy in the face of weaker demand for PCs among consumers — the iPad is sapping demand — and a weakness in sales of printers. Recent cost-cutting, favorable prices on commodity components, and other changes made in recent restructurings will combine to give HP a slight edge on the EPS front, Whitmore says.

That’s not to say there isn’t still some messy business yet to finish at HP. While its official guidance forecasting a per-share profit of $4 in 2012 still stands, there’s still the ongoing strategic question of addressing its weakness in the consumer PC business with a tablet that can take on Apple’s iPad. Also, results from Lexmark and Canon, Whitmore says, show continued weakness in the printer business, which will hit HP right where it hurts.

Then there’s the longer-term questions, like Whitman’s ultimate plan to save HP, and how the $10.6 billion acquisition of Autonomy is going to further that goal. “We believe investors will continue to focus on Meg Whitman’s long-term vision for HP and her efforts to revitalize HP’s growth strategy,” Whitmore wrote. “Specifically, an update on the integration of Autonomy, plans to reposition Services, growth plans for printing and its PC strategy are all important topics that need to be addressed.”

Then there’s Dell: As with HP, Whitmore says to expect soft results on the revenue side, but healthy profit margins and a decent upside to per-share earnings. Healthy demand from big companies should be offset by weaker demand from government clients and consumers. The consensus estimate has Dell reporting $15.9 billion in sales and 50 cents a share in earnings. Dell’s server sales finished strong in 2011, Whitmore says, and its customers tended to shift toward higher-priced, more profitable machines. He expects Dell’s gross margin to be 22.5 percent, up slightly from the 21.5 percent seen in the year-ago quarter.

He expects Dell to have a pretty good year, too: Modest growth in revenue should be accompanied by ever-better gross margins. Dell made some big investments in 2011 that added to operating expenses, and Whitmore expects the company to put those investments to work in 2012. As such, the $2.04 per-share profit that Dell has forecast for the year could prove conservative. He sees Dell reporting a profit of $2.20 for the year.

Correction: I initially got the days that Dell and HP are reporting their results wrong and have since fixed it. Sorry about that.

(Larry David image is on this T-shirt.)

As a result, the industry saw a double-digit decline in physical software sales at retail, according to NPD, which tracks the industry.

It said last year new launches represented 13 percent of videogame sales in January, but that last month, the performance of new launches dropped by 99 percent, said NPD analyst Liam Callahan.

Videogame sales for console and handheld game units from retail totaled $356 million in January, falling 38 percent compared to the same period a year earlier. Overall sales, including hardware, accessories and software, dropped 34 percent.

But the drop can’t be blamed entirely on the lack of new launches. Sales of titles launched in the fourth quarter also performed poorly, falling 31 percent in units compared to the year-ago period.

“As shoppers were not drawn to stores due to new launch activity, this potentially impacted additional software purchases made on impulse,” Callahan said in a release.

NPD also estimated sales from used games, downloadable content and social and mobile games. It says those channels accounted for an additional $350 million to $400 million in sales.

Microsoft’s Xbox 360 continues to be the best-selling console, and Activision’s first-person shooter Call of Duty: Modern Warfare 3 continues to be the top-selling game title. Sony is banking on a spike in sales from the launch of the PlayStation Vita portable unit, which is expected to hit the market Feb. 22, along with 25 new titles.

The effort marks the Internet company’s first full-fledged effort to design and market consumer electronics devices under the Google brand, and represents a sharp shift in strategy. Google has up to now mainly focused on developing the Android software that powers devices such as smartphones and tablets and allowing other companies to build and brand the hardware that uses it.

Read the rest of this post on the original site »

Shares are down more than $4, or about 13 percent. The freakout appears to be coming from gross margins that shrank to 51 percent from almost 59 percent in the prior quarter, and despite the fact that sales more than doubled sequentially to $84 million from $31 million before.

CEO David Flynn called me up a little while ago to talk about the results, and he reminded me that Fusion launched its new IO Drive 2. It’s a transition to a new product line that’s proving tricky. New products built on new technologies are always a little more costly to build up front, and that’s compounded by the fact that early adopters, when they buy the new stuff, take the lower-end version and not the more expensive and more profitable one.

Also, enterprise customers who buy the new stuff are always conservative and take longer to decide whether they want to buy it or not, he says. Even so, the company has sold 10,000 of the new drives.

But? There’s a new customer of record: Salesforce.com is now a Fusion-io customer, and has joined the likes of Apple and Facebook, which is using the flash-based chips in the servers running in its data centers around the world.

And Salesforce isn’t buying it directly from Fusion, but rather through one its OEM partners, which include Hewlett-Packard, IBM and Dell, though Flynn wouldn’t tell me which one it is.

Salesforce is one of six customers who bought more than a million dollars worth of Fusion’s stuff this quarter and of those, four were repeat customers, Flynn told me.

The Salesforce win is also important, Flynn says, because some have wondered whether Fusion’s technology, while popular with high-end enterprises like banks and Facebook, would make sense for applications that tend to be used in mid-tier businesses, which Salesforce’s mainline CRM application often is. The lower end of the enterprise software market is moving toward cloud-based software, which is often referred to as Software as a Service, or SAAS. “By helping those companies, we are indirectly driving business in the mid-range of the market. Apple and Facebook are in the SAAS business too, it’s just that their customers are consumers.”

One interesting fact that Flynn shared with me: His first job out of college was working for Oracle. His boss at the time? One-time Oracle exec and now Salesforce CEO Marc Benioff. A small world it is, indeed.

The spot depicts a batch of assembly-line robots busily building cars, as an instrumental version of the 1979 Gary Numan hit “Cars” plays happily. All is well until one of the robots experiences trouble and complains to the others, “I’m broken.” No problem, one of the others says, fixes his stricken comrade, and all is again well. Cue the voice-over, saying something about assembly lines that repair themselves. Then cue the corporate logo, aaaand … out.

The spot — which has exactly 100 percent less Ellen Page than the last series of Cisco TV ads — is part of a significant new advertising offensive that Cisco is launching today on television, in print and online. The TV spots will appear during the NCAA basketball games, the National Hockey League’s All-Star Skills Competition, and on CNBC and other business-oriented programming. However, it notably won’t appear during the Super Bowl.

Those robots will be seen again, disassembling and reassembling sections of certain Web sites as part of a series of “site takeovers,” including CNBC and The Street, among others.

The print portion is a six-page “manifesto” that explains ways that Cisco’s “Human Network” plays important and unexpected roles at banking companies and companies that sell chutney, and helps the National Basketball Association push its video around the world. The manifesto will appear in The Wall Street Journal (which, like this Web site, is owned by News Corp.), the Economist and the New York Times.

There will also be a social campaign via LinkedIn that goes after 140,000 C-level executives registered on that network. It will be the first time that embedded video will be used in a LinkedIn campaign. More TV ads will come later this year, as will localized versions of the campaign for international markets.

Last week, I talked with Blair Christie, Cisco’s chief marketing officer, who said that the manifesto in particular is about using the voice of its customers to show how Cisco’s technology can help companies do things they couldn’t do before. Of course, the point they’re supposed to get is that a Cisco intelligent network is what’s enabling them to do that.

Christie says it’s all part of Cisco’s effort to simplify how it communicates about itself. There’s no more muddling of the message. There’s no more consumer division to eat into the perception that Cisco is anything but an enterprise- and service-provider-focused networking company, so no more need for cute ads that overdo awkward jokes about teleconferencing, or showing a giggly twentysomething woman in a virtual fitting room. Cisco is now about transforming how companies do what they do, either by doing it better, or seeing new opportunities. It’s a big message, and a tricky one to get across in 30 seconds during a football game.

I asked Christie about the state of Cisco’s brand before this campaign, and whether or not there were any perceived weaknesses, given its recent troubles, that this ad effort is meant to shore up. “There was actually a lot that was right with our brand,” she told me. “The opportunity we had was clear and simple. Our customer voice is our talent, and that’s what we’re showing, and it’s consistent with our strategy. We use our customers as a test bed, so why not use them as a reflection of our brand? It wasn’t rocket science. But it was the customer voice that was missing.”

Simplifying and streamlining are themes that Cisco is certainly acquainted with of late. It has been doing a lot of those, and indeed, even shrinking itself as part of a broad-based restructuring. The results of that effort are starting to show up in Cisco’s results.

Time will tell if this new advertising campaign will help Cisco effectively reintroduce itself to its core customers; fight off strong competitive thrusts from the likes of Hewlett-Packard, whose networking division marketed itself aggressively against Cisco in 2010; and perhaps press a perceived advantage against Juniper Networks, which has been having its own problems.

What I find notable, or maybe missing from the campaign, are recognizable names of customers doing innovative things. Yes, there’s the NBA, but in the print manifesto, who’s the bank that’s using Cisco’s video TelePresence to interact with customers? Who’s the small chutney company that turned “browsers into buyers”? And who’s the car company with such smart assembly-line robots? It’s a good message that, to my mind, could be made a lot more effective with more specific examples.

And while I grant it’s often difficult to get customers to agree to be named in ads like this — you could almost hear CEO John Chambers’s frustration about not being allowed to name a certain banking customer, about which he was obviously proud, on a recent conference call — the biggest networking company in the world shouldn’t have such a problem. It should be able to brag that this or that household-name bank is an enthusiastic Cisco customer, and that Cisco networks powered the manufacturing of that popular car everyone is talking about right now. That would add some real oomph, and really serve to remind potential customers that Cisco is still, despite its recent missteps, the networking world’s alpha dog.

Anyhow, my critique aside, here’s the robots spot. Enjoy:

Cisco Robots from Arik Hesseldahl on Vimeo.

In 2011, it crossed the threshold of $50 billion in annual sales for the first time, having hit the $40 billion mark only last year. This came after a tough year — 2009 — during which sales declined a bit to $35 billion, down from $37 billion in 2008. But the larger point is clear: Intel continues to be a significant growth machine in a tech ecosystem that is supposed to be on the decline.

Who says so? “The experts.” Earlier this month, Gartner and IDC both reported what they described as the second-worst year for PC sales growth in recorded history, second only to the doldrums of 2001, when the world was beset by the dotcom crash, the onset of the global war on terror and general recession, all in one. This came after the same two outfits made similarly depressing predictions for worldwide IT spending.

Intel’s results tell a different story. Consider its strengths: Sales in its data-center group — chips being sold to companies building servers that will be used to power data and applications running on the Internet — grew 17 percent year on year to north of $10 billion. And the lowly PC? The machine that is said to be on the decline by so many people who claim to know what’s going on? Sales in Intel’s PC client group grew by more than $5 billion year on year to north of $35 billion.

How can that be possible? It’s an argument that Intel has been making for some time now, and is now becoming familiar: Persistent strength in emerging markets. As Intel CEO Paul Otellini said on a conference call with analysts today, emerging markets, where household incomes are improving to the point that consumers are able to buy their first PCs, are accounting for two out of every three units of incremental microprocessor demand. Which means that for every three chips of new growth sold in a year, two are sold in an emerging market.

PC sales in China, by Intel’s reckoning, grew 15 percent, and as yet have only achieved a household penetration rate of 35 percent, which says there’s lots of room still to grow. By comparison, the U.S. market is 90 percent penetrated, meaning nearly everyone who wants a PC has one. India grew 22 percent; Indonesia, 37 percent.

Here’s another really interesting metric that should give you some food for thought: In 2012, Intel will spend $12.5 billion on capital expenditures. That’s more than twice what it spent last year. What is it spending so lavishly on? Four new chip factories — in Oregon, Arizona, China and Israel — which, when completed, will turn out chips built on the very latest, edge-of-reality technology, where chips have transistors and other elements on them that are at the 14-nanometer scale.

How small is 14 nanometers? About one-fifth the size of a typical virus cell, and only slightly bigger than the thickness of the cell wall of a typical germ. Next year, there will be four factories, employing thousands of people, turning out thousands — and later millions — of these miniscule fragments of silicon that arguably constitute some of the most complex implements mankind has ever built.

And Intel does this profitably, which is so difficult and requires such financial scale that most companies that make other kinds of chips long ago gave up running their own factories and farmed the work of actually building them to other companies. Intel is so good at it that its gross margins in 2011 were 62.5 percent. Its full profit for the year was nearly $13 billion on $54 billion in sales.

Yes, we beat on Intel for not having conquered the smartphone industry or the tablet industry as readily as it spent the 1990s bending the PC industry to its will. There is a school of thought that says Intel is less relevant today than it was, say, five years ago, and that its anemic presence in the future of personal computing — smartphones and tablets — is all the evidence one needs to render that judgement. In fairness, smartphones and tablets are still on the rise, and Intel is starting to show some promising progress, though its competition and an industry-wide preference for chips based on the ARM architecture will be difficult to dislodge.

Still, it’s a little hard to find much fault with Intel, when the numbers so clearly demonstrate that, despite the conventional wisdom, it is clearly at the height of its powers.

Deutsche Bank analyst Chris Whitmore expects some difficulties for Big Blue stemming mainly from the company’s exposure to the troubled economies of the euro zone and related currency weaknesses there. He expects the company to report sales of $29.8 billion and per-share earnings of $4.62, with his sales forecast slightly more optimistic than that of the consensus of Wall Street analysts.

Even so, he expects the strength of the U.S. dollar relative to the euro in recent months will create a headwind effect worth about 2 percentage points compared to IBM’s prior forecast in October. “Although the stronger dollar is likely to impact reported revenue, IBM remains one of the most defensive names in our universe due to its high exposure to recurring profit streams, past backlog growth and wide geographic and business diversification,” he wrote in a note to clients yesterday.

Hardware sales should be in line with forecasts as IBM has continued to gain market share away from Hewlett-Packard and Oracle. Services should continue to be a sign of IBM’s strength as its backlog of prior contracts should continue to deliver a stable stream of revenue.

One problem may come from service bookings. Whitmore thinks the consensus estimates on this closely watched number are, at $21.5 billion, a little high and thus could disappoint. IBM announced only five deals in the fourth quarter compared to seven in the same quarter of 2010. And though information about the size of the deals was limited generally, two of them combined to amount to about $740 million. “IBM’s services bookings figure is always a wildcard and the lack of many announced deals clouds visibility,” Whitmore wrote. He rates IBM a buy with a price target of $210.

The earnings report will also be the first with Ginni Rometty as IBM’s new CEO. Having already had a busy first few days on the job, it will be interesting to see if she uses the occasion of an earnings conference call to announce anything new, though that’s unlikely.

Library of Congress

While research houses like Gartner and IDC can’t seem to slash their 2012 spending forecasts fast enough to keep up with the ever-gloomier outlook, it’s a different scene in the area of servers used to build cloud services.

IHS iSuppli is out with some new research saying that the number of cloud servers sold this year will be 875,000 — or nearly double the 460,000 sold in 2010 — amounting to a surge of 35 percent over 2011, when 647,000 were sold.

And it gets better: The rate of growth is expected to continue over the next three years, in the 20 percent to 30 percent range. Cloud server sales will grow at a rate that’s five times faster than the rate of growth for general-purpose servers, iSuppli says.

And while cloud servers amount to only a 5 percent sliver of the overall server market now, by 2015, that will reach 15 percent. Apple, Google, Amazon and IBM will be pushing more cloud services to companies and to consumers; cloud-services companies like Salesforce.com, Workday and NetSuite, to name just a few, will be adding more services and more capacity as their businesses grow.

It’s good news for companies turning out servers, like Hewlett-Packard, Dell, IBM and even Cisco Systems, which is an increasingly important player in the server market, along with chipmaker Intel.

There is one wrinkle, iSuppli says. The market for server vendors is starting to widen away from the traditional vendors. When companies can’t get the customized products they want from traditional players like HP and Dell, they’re increasingly turning to Taiwanese ODM companies like Quanta and Wistron to build hardware just the way they want it.

Zynga was up 42 cents, or almost 5 percent today, to close at $8.87 a share.

That’s a huge reversal from earlier this week when the stock nosedived to an all-time low. Meanwhile, none of the traditional game makers were having such a good day.

Electronic Arts closed down $1.47, or 7.5 percent, to $18.04 a share; THQ fell 7 percent to 66 cents a share; Take-Two Interactive fell .5 percent to $14.50 a share; and industry-leading Activision Blizzard slipped 2.5 percent $12.24 a share. GameStop also traded lower, finishing off the day down 2.8 percent to $23.51 a share.

The game makers were universally feeling the impact of an NPD Group report that revealed yesterday that videogame software sales fell 8 percent in December compared to the same month in 2010. When including hardware and accessories, like game cards, the entire industry contracted by 21 percent year over year.

Potentially, investors were betting that if the traditional game-makers weren’t fairing well, then Zynga was a good bet. The leading Facebook game-maker operates purely online and on mobile, so it potentially would be more isolated from the retail and packaged goods sectors.

The old guard vs. new guard battle also played out on the front lines yesterday.

EA was dealt an additional blow when Zynga announced it had hired away Barry Cottle, head of Electronic Arts’ Interactive division. Cottle, who was in charge of the company’s digital strategy, including social and mobile games, was EA’s biggest weapon in fighting Zynga’s dominance on Facebook and had led EA’s rise on mobile.

But EA’s loss was Zynga’s gain.

The social games leader appointed Cottle to the position of EVP of business and corporate development in charge of new global partnerships, acquisitions and other development roles.

The new forecast calls for companies and governments to spend a combined $3.8 trillion on information technology, which would amount to growth of 3.7 percent from 2011. The previous forecast had called for growth of 4.6 percent.

For perspective, the difference on a dollar basis is about $100 billion, which is certainly real money, but when you consider the various puts and takes affecting the projected spend, it makes a certain amount of sense.

Gartner says that all four of the major technology sectors it tracks — computing hardware, enterprise software, IT services, and telecom equipment and services — will see their growth rates slow this year.

You can probably guess why: The uncertain global economy, the euro zone sovereign debt crisis and the disruptions on the hardware supply chain from last year’s flooding in Thailand on hard-drive production have all teamed up to perform a triple whammy on the tech sector. The Thailand problem will probably last until well into 2013, Gartner’s Richard Gordon says in a statement, echoing what Seagate CEO Steve Luczo told AllThingsD in an interview in November.

Telecom equipment spending will probably suffer the least, Gartner says. Sales in that sector will grow by nearly 7 percent to $475 billion, followed by the enterprise software market, which will grow by 6.4 percent to $285 billion. The chart at the right, which I screengrabbed from Gartner’s handout, breaks down the revised outlook by each sector versus what the previous growth outlook had been.

Gartner also trimmed its average annual growth projection for IT spending through 2015. It now expects spending to grow by about 5 percent on average, down only slightly from 5.4 percent, but in the wider scope of a few trillion dollars, a fractional change still amounts to hundreds of billions of dollars.

When you consider the fact that Lexmark is a printer company — and not even an especially large one by comparison to others in the business — you might intuitively conclude that it’s a company on the defensive.

“People don’t print anymore,” goes the refrain of conventional wisdom, “not even at the office.” It’s easier and more efficient now, when you need to refer to a digital document and have it close at hand, to send it to a tablet like an iPad, or even to a smartphone.

And yet, Lexmark is anything but on the defensive. It has been expanding in recent years, primarily by acquisition. In October, it spent $50 million to acquire Pallas Athena, a Dutch software firm specializing in managing and automating business processes — the flow of information through a company. Lexmark combined Pallas Athena with its previous acquisition, Perceptive Software, for which it paid $280 million in 2010; Kansas-based Perceptive specializes in managing unstructured data. Lexmark CEO Paul Rooke says that the two companies combined give Lexmark a position that is unique among companies in the printer business: The ability to help a customer manage and access information in whatever format makes the most sense.

While Lexmark is significantly smaller by revenue than its biggest rival — Hewlett-Packard’s printing division booked $26 billion in fiscal 2011, while Lexmark is on track to report about $4.2 billion in revenue, according to the consensus view of analysts — it is still able to win business away from its larger rivals, and keep those customers. I asked Rooke about this in a recent conversation:

AllThingsD: Paul, the conventional wisdom has held for a long time that printing was a dying business, and that paper was going to go away because everything would be digital. I think that’s been the general criticism of Lexmark since it first spun out of IBM 20 years ago. What do you think of that?

Paul Rooke: We’ve always seen ourselves not so much as a hardware company. When we started, back in 1991, we were evolving from printers to multifunction printers to fleet management. You can see that in our actions. We also want customers for life. We create industry-specific solutions in a responsible way. It’s not just the blocking and tackling of managing a company’s fleet of printers, but it’s about getting intimate with their business processes and managing the paper and ink and so on. And as we’ve evolved, we’ve become more of a solutions company. We like to say “print less, save more.” When we say that, we’re all about helping with smart devices and managing that fleet. But it also refers to capturing, managing and accessing content within the context of a business process.

Well, let’s talk about that a little. When you say “capturing and managing content and information,” what does that mean?

As we found ourselves managing these multifunction devices that have scanners built into them, we found ourselves capturing content off of paper and into digital infrastructure, and we’re looking to do more of that than we have been. You’ll see us do more interpretation of content and automatically routing documents according to what’s on them. But it doesn’t stop there. We found ourselves scanning documents and putting them somewhere and managing them. Our acquisition of Perceptive Software last year has really strengthened that as a value-add for us. A lot of the content that comes in is this messy unstructured content, and with Perceptive, we’re able to help customers manage this unstructured content and finally access it in the context of their business process. And that’s where our Pallas Athena acquisition comes in. When you put it all together, it puts us in a unique position in the industry. We’re not just a printer maker, but we link into the business processes and provide added value for our customers.

“Unstructured data” is a phrase I hear a lot. What does it mean, specifically, to Lexmark?

It’s anything that doesn’t fit in massive databases that are arranged in traditional rows and columns, like financial information and shipping information. In contrast, you might take something like an admission system at a university. It might have some core intake information that’s structured, like a name and birthdate, but then there’s a lot of other information around it, like transcripts and reference letters, that goes into making a decision. Another example is in hospitals, where you have a doctor or nurse looking into a patient file. All hospitals have information systems that keep track of the basic information on a patient. But then there’s other information — like blood tests and X-rays — that’s unstructured, which the doctor will want to look at in order to make a better-informed decision. As you go around in all industries, there are a lot of examples of this sort of data. It really appears in all business environments.

And yet, the core business is still printers and printing. And for myself, I find myself printing a lot less, sending things I need to refer to to my iPhone or iPad and skipping the printer. Do people like me represent a long-term danger to you, or is that really just an issue of perception?

When you look at information generally, the amount of information and content that’s being generated just continues to grow. The ability to access it in an organized fashion is a key challenge for customers, whether they print it or not. But with that growth in information, even if a smaller percentage is printed, there’s still an opportunity for growth in absolute terms. But having said that, as our strategy has evolved, if a customer chooses to print it or store it, we’re going to be there for them. We’re trying to put the tools and technology in place for whichever way the customer goes. There’s a number of industries — government is one, social services is another — where there are customer-facing industries, where you need to fill out a form or a document that requires a signature; many still prefer paper, because it’s inexpensive and easy. Some choose to do that digitally, some choose paper. And when we talk to customers, they’re asking for help in bridging those two worlds. That’s where we jump in and help.

What is the most important thing that customers are saying to you, in terms of their needs? Is it all cost control, which is top of mind so often these days? Or is it something more?

Cost control is certainly there, as is lower-cost devices. These are certainly propositions that play well with customers who want to reduce the cost of their imaging infrastructure. When we engage customers in the managed-service relationship, they often don’t even know how many printers, copiers, fax machines and scanners they have, until we help them assess it and optimize it and hook their devices into a system that helps them control it all. And our managed print services are helping them keep those costs under control. The other thing we’re hearing about is process improvement. With Perceptive, and now Pallas Athena, we help them understand better what their processes are. We have a lot of technologies that map these processes out — not what you think they are, but what they really are. So many times, when you do process improvement, you spend months in a conference room, drawing out what you think the process is on a white board. We can eliminate that step by plugging in the tools and doing a quick digital assessment of what the process actually is, and map it for you digitally. So if you think your process is made up of steps A, B and C, we can come and show you that there’s also D, E, F and G that you didn’t think of. We’ll show you why they’re there, and where the bottlenecks are, with factual data you can work with. Which is a lot better than speculation.

Where do you think your competitors — and name whomever you want — are vulnerable? Where are you winning business away from competitors?

We turned 20 years old this year. Many thought we wouldn’t survive. I think, while the technologies have certainly evolved, the thing that has differentiated us from our competitors is our depth. We go deep with our customers, and get very intimate with them in their industry and their environment and their processes. That’s why customers buy Lexmark. When we’re up against people like HP or Xerox or others, we’re able to get closer to the customer than they are, and do things in a more customized fashion. I think we’ll be doing more of that as we fill out our technology set.

So what kinds of things should we expect from Lexmark in 2012? Are you done doing acquisitions?

You’ll see us enhance our capabilities. Some people think we’re moving away from printing, and that’s not it at all. But we’re adding to it. In addition to that, we’ll continue to integrate Perceptive and Pallas Athena into a more integrated suite of solutions. That will put us in a unique position. The acquisitions are part of the strategy. When we identify gaps or holes in our offerings, we look to fill them either organically or inorganically with acquisitions. We’ll continue to look at those as part of the strategy. We’re not looking for a big one. The ones we have done have been smaller, but of companies with technologies that have high potential for synergies. But we’re still looking.