But in a short phone interview with AllThingsD, CEO Meg Whitman and CFO Cathie Lesjak reiterated what they said on a conference call with analysts: Progress has been made, but there’s still a lot of work to be done.

AllThingsD: Meg, let’s talk about the state of the competitive environment. We heard some pretty tough results from Dell last week, and you said on the call that HP was choosing to pass on some deals in order to protect profit margins. Tell me a little more about that.

Whitman: For the long term, profitability remains a focus for us because we can’t afford to let our profitability crater the way Dell did. We have to have the ability to invest in the next generation of PCs and servers and software. It was a tough quarter. We walked away from several deals and lost some share. But it felt like we did the right thing in going after the deals that were the right deals for us. There were also some execution issues. We have to make sure we have the right product for the right customers at the right price point. And particularly at the low end, I think we could do a better job there. But overall I’m reasonably pleased that we made the right decisions in the PC business.

Dell was also making a lot of noise about industry standard servers and how it took some share away from HP. Was it a similar dynamic in servers as it was in PCs?

Whitman: Yeah. We saw what happened to Dell’s earnings. They were down 75 percent. If they were a publicly held company that was trading freely in absence of a buyout number, the stock would be down by 50 percent. It would be ridiculous. We are a publicly held company and we have to invest in the long haul. So we had to choose to walk away from some deals in hyperscale and industry standard servers and PCs that didn’t make sense for the company. I feel like we did the right thing, but there’s always something you can learn from these things.

How do you feel about competing against a privately held Dell versus a publicly held Dell? We saw some indication of how it might behave in the marketplace this quarter. Do you think you’re going to have more of this aggressive pricing behavior and so on?

Whitman: I don’t know exactly how their behavior is going to change. But remember, they’re loading a lot of debt onto the company. And remember how LBOs work. The key is to pay off the debt quickly so you can take the company public again and make a lot of money. We’ll see if they remain as aggressive as they have been. But frankly, this is just a competitive business. We have a lot of competition. We have shown that we can win over time whether it’s against Acer or other manufacturers that we beat out. So if it’s Dell or anyone else, we have to have continuous improvement. We have to invest in the right products. We have to streamline our go-to-market strategy, we have to constantly refine our supply chain and we have to be more agile. And that is just part of being in the business.

Lesjak: And we’ve shown that by being No. 1 in the market for industry standard servers for many, many years now, and we’ve been competing against Dell that entire time.

Cathie, there was a lot of talk on the call about reducing HP’s debt. Give me a look ahead as to what changes when that debt comes down to approaching zero, then what happens?

Lesjak: It frees us up to step back and look at what we want to do with the cash we’re generating, and we want to make sure we’re making the right kind of investments. Those investments may be in buying back shares, or capital expenditures, or research and development to get us on track for the future, or to make small M&A deals. And we want to evaluate these all on a returns basis, both in the near term and in the long term. Because you really need to do both. Some decisions will be based on the near term and with some we’ll be willing to wait a long time for the returns because they’ll be worth it. This is actually one of those moments when we’re going through a lot of product transitions, where the new style of IT products are coming in and the older style products are going away. And what we really want to be able to do, instead of having to manage big transitions, we want to get through them more quickly and that means that you have to invest for the short term and long term.

Whitman: I’ve been saying this a lot lately: You have to plant acorns before you have oak trees. And I think with a lot of the CEO transitions, we didn’t plant enough acorns. And now we’re paying that price.

So part of the impression I got from this quarter and last is that you’re able to beat the Street expectations in part because you’re able to manage your cash flow very tactically. You did well with cash flow for the first half of the year and you said on the call that you don’t expect it to remain as strong in the second half. With the macro environment remaining so weak, I come away thinking that your success is really less about products and lines of business and right now more about managing and taking out costs. Is that fair?

Lesjak: I’d sum it all up to operational excellence. You have to do this all the time. I mean, we’re in a competitive industry. Margins are tight and you have to be maniacally focused on managing your costs every minute, and making sure you’ve got the right product in the right place at the right time. I think this has to be part of the DNA of the company. There’s no moment when you exhale and then you get to spend more. This is about being focused all the time and bringing that discipline to the company. Now in the second half we have some extraordinary cash payments to make around taxes and restructuring payments. As well as some cap-ex that we think will be good investments for the future.

Is there any indication that the macro environment is going to improve? We’re seeing the worst environment for PCs pretty much ever, and IT spending generally isn’t looking so good. Do you sense any improvement in either?

Whitman: From a macroeconomic perspective, which is what drives IT spending across small businesses, medium ones and big enterprises, I think the environment remains about the same. I could be wrong here. We don’t see any improvement coming in Europe and we don’t see an improvement in the U.S. So we’re not counting on those as tailwinds or headwinds, but really more of the same. PCs are a little different. PCs are a subset of personal systems, and as you know that business is growing generally with all the tablets and mobile devices. It’s possible the PC growth rate doesn’t decline as much. It may continue or it may flatten. The objective is that when it starts to flatten out, whose is the company with the best products and the company best-positioned to gain share. We want it to be us.

Lesjak: Taking advantage of the fact that tablets are a growing segment, you really look at HP’s position in tablets, and that will improve significantly in the second half of this year. We’ve got the Slate 7 Android consumer tablet and the Elitepad commercial tablet. Those ramp in the second half, so we’ll have some help on the top line. Not so much in the PC business but personal systems.

Project Moonshot launched during the quarter and there’s a sense that there’s a lot of hope riding on that product. When does it start shipping in earnest for revenue? Is that a 2014 story?

Lesjak: It really ramps in the second half of this year but it’s more of a 2014 story. The real material benefit is 2014 and 2015. IDC has done some projections that the Web and cloud services business will grow about 19 percent in 2016. So that works out to about 8-10 million servers between now and then. So that’s the market that Moonshot is going after.

Whitman: You also have to remember that the ramp is slower with these enterprise products than with the consumer products. Big enterprises need to bring them in and do a proof of concept and see what workloads they want to run on them. And then they have to prove it out. Enterprises move more slowly, but when they move, they move big. But the ramp is slower than the the consumer product.

What’s your biggest priority for the rest of the year now, Meg?

Whitman: We continue with our restructuring program. We said it was going to be a three-year program, and we’re about halfway through that timeline. So there’s more work to do there. And to Cathie’s point, it becomes part of the DNA. This is what we do in the normal course of business. We also have to manage the transition between the new products and the older products. We’d like to accelerate the growth of the new products if we can.

And you said on the call, despite all these market headwinds, you think you can grow next year.

Whitman: We do. We continue to believe that growth is possible next year. You’ve got to remember, we’re doing this amid some of the biggest transitions that have hit the IT industry in a generation. The macro environment is not going to help. The delayed runoff in enterprise services helps this year but hurts next year. But we think we can grow. It depends on a lot of different factors. To be clear, we expect EPS growth in 2014 regardless.

What’s your latest thinking on Autonomy? Is that part of the operation where it should be?

Whitman: I think Robert Youngjohns and his team have done a great job of stabilizing Autonomy. We’ve put in some systems that were lacking and we’ve changed our go-to-market. We’ve invested in R&D jobs there. We had 50 openings for research jobs there recently and I suspect that most of them have been filled by now. So I’m pleased with the progress. That team went through a lot, so I have to give them a shout-out. They had some difficult circumstances. And I’m pleased with what they’re doing. I think you’re going to see Autonomy grow in the next few quarters.

You still having fun, Meg?

It is fun. The senior team feels like they’re making a difference. The turnaround is on schedule. Obviously there are lessons learned every quarter, but we feel good about where we are.

This one doesn’t sound at first quite as interesting, but from the point of view of complex computing tasks, it’s pretty cool. When you think about all the ways that companies have to try to engage with and then make their customers happy and the ways they can do that more effectively, you can probably imagine how a deeply analytical computer might be useful.

IBM calls it the Watson Engagement Advisor; it’s an offshoot its Smarter Commerce initiative. Consider that Watson is smart enough to understand the natural ebb and flow of human language and is designed to answer questions in much the same way humans do, and then quickly sort through a set of known information to determine the best answer, and you’ll realize it’s a fit for customer service.

In that way, Watson can learn over time, and like a good bartender with a lot of regulars, keep track of the unique likes and dislikes of customers and get better at it over time. And that’s important as consumers come to expect to be able to interact with companies pretty much wherever they are and on whatever device they happen to be using at the time: Whether it’s a smart phone, tablet, PC or whatever, they will expect — already are expecting — consistent experiences. Consumers, especially the younger ones, will expect companies to shift with the marketplace as tastes change and evolve.

Watson can be the voice that customers hear when they reach out to the company asking questions. Watson has only gotten smarter since its run on “Jeopardy,” speeding up its performance by 240 percent while slimming down the size of the system required to run it by 75 percent. Already the Nielsen Company and the Royal Bank of Canada are among those kicking the tires in trials.

Yahoo, which had dropped off the important BrandZ Top 100 list several years ago, scratched its way on again this year at No. 92.

The Silicon Valley Internet giant had last been on the key list of brands in 2009, when it had a brand value of $7.9 billion. It now has a brand value of $9.8 billion, which is still down from its $11.4 billion in 2008.

And that’s tiny in comparison to Apple, which remains No. 1 on the list with a brand value of $185.1 billion. Google ranked as No. 2 with a brand value of $113.7 billion.

Apple rival Samsung’s brand value rose by by 51 percent to $21.4 billion, clocking in to the No. 30 spot.

In tech, Amazon’s brand value was $45.7 billion, rising 34 percent to No. 14. IBM is No. 3 with a brand value of $112 billion.

And more: Microsoft (No. 7, $69.8 billion, down nine percent); Facebook (No. 31, $21.3 billion, down 36 percent); and eBay (No. 47, $17.7 billion, up 40 percent).

The eight-year-old BrandZ list, which is much watched by marketers, is commissioned by WPP and conducted by Millward Brown Optimor.

Here’s the full chart of the list and report:

Top100BrandZ2013

BrandZ Top 100 Media Deck 2013 U S

And here is a super-cool infographic too:

2013_BrandZ_Top100_Infographic

After last week’s huge earnings miss by Dell and news last month about the first earnings miss in eight years by IBM, it’s hard to imagine a scenario where HP’s circumstances look any rosier than they did three months ago. Whitman and CFO Lesjak will probably make an effort to remind shareholders and analysts that the turnaround they’ve been promising isn’t expect to become apparent until sometime in 2014.

Analysts are expecting HP to report per-share profits of 81 cents on sales of $28.1 billion and to forecast earnings of 84 cents or better on sales of $27.8 billion for the quarter ending in July.

Here’s the rundown of rough spots hitting other companies that will probably factor in to HP’s results:

• PCs: Sales of personal computers are showing the largest declines since records have been kept. HP remains the world’s largest vendor of PCs, which accounted for more than 28 percent of sales last quarter. Especially aggressive pricing by Dell hasn’t helped.
• Printers: The other category where HP leads the world, its printing business, accounted for $5.8 billion or more than 20 percent of revenue last quarter. Weak results from Lexmark and Xerox don’t augur well for HP generally. A recent product refresh by HP might help a little.
• Enterprise: Server sales are likely to be under pressure along with PCs and printers. Dell executives including CEO Michael Dell have been talking publicly about how Dell the company appeared to gain share in recent reports by IDC and Gartner. On Wednesday we’ll see if they’ve been speaking too soon. If they are, then expect weak results from the Enterprise Group, which accounted for 24 percent of HP’s sales last quarter.
• Enterprise Services: HP has been re-investing in the services group, the group largely made up of the former technology services firm EDS, and those investments aren’t expected to pay off anytime in the near future. As Chris Whitmore of Deutsche Bank Securities wrote in a note to clients today, “Increasing the size and depth of HP’s Services bench will likely take multiple quarters before translating into improving market share performance. As a result, we continue to expect a long, slow turnaround.” The unit accounted for more than 20 percent of sales last quarter.

The move is meant to regain the trust of Bloomberg’s terminal clients, like J.P. Morgan and Goldman Sachs. They’re understandably perturbed by revelations that reporters at Bloomberg News used a function that tracks how recently a client has logged in as a way of generating story leads about personnel changes.

Palmisano, Bloomberg said in a statement, will “immediately undertake a review of the company’s current practices and policies for client data and end user information, including a review of access issues recently raised by the company’s clients.” He’ll report directly to the company’s board of directors. Helping him will be the Hogan Lovells law firm and the Promontory Financial Group.

One wonders if part of the job will be to conduct a full audit of how many reporters used the controversial “Z function” to view client activity, how often it was used and what the result was, specifically if its use led to stories that were published. As I wrote earlier this week, that data probably exists, because Bloomberg has always been a big data company with a knack for keeping track of what its reporters do. And if there is an audit, will its results be publicly disclosed?

The function in question showed two bits of data that have made Bloomberg clients — essentially the who’s who of Wall Street and the financial industry in general — a little queasy. First, it reveals the last time a person logged in to his or her terminal. Reporters would sometimes use that to start asking questions about whether or not someone had left a given firm, and, if they had, write a story about it.

The other thing it was said to show is how often a client used a given function, though not in such granular detail that you could see what stocks or bonds were being researched. But again, it’s the sort of thing that might lead to questions that wouldn’t otherwise be asked, and eventually to stories that wouldn’t otherwise have been written.

Bloomberg also named its editor at large, Clark Hoyt, a former public editor at the New York Times, to review the relationship between Bloomberg’s commercial operations and its news operations.

(Of course, in the interest of full disclosure, I should remind you that for about a year during 2009-2010, I was an employee of Bloomberg News after the company bought BusinessWeek magazine from the McGraw-Hill Companies and relaunched it as Bloomberg Businessweek.)

By 7:30 pm ET, Cisco shares had risen to $23.06, having closed at $21.21 during the regular session. Its results, reported earlier today, were only slightly ahead of the consensus view, but as with so many things today, slightly good is good enough.

The better news is that Cisco has historically been a pretty good barometer on the state of the tech economy generally. What it sees in its results, good or bad, is what other companies usually see within a couple of quarters.

“Slow and steady growth” was the phrase of the day. Sales grew by slightly more than 5 percent, but several segments grew faster. Service revenue grew by more than 7 percent year on year, while sales of products grew 5 percent.

Products sold into data centers, mainly servers in Cisco’s UCS line, grew by a healthy 77 percent, but accounted for only $515 million, or slightly more than 4 percent of sales. Wireless sales grew by 27 percent, but at $523 million weren’t much bigger as a percentage of revenue.

Service provider video grew 30 percent, accounting for nearly $1.3 billion in sales. And at least part of that growth can be attributed to NDS, the Israeli software company for which Cisco paid $5 billion last year.

In switching, Cisco’s biggest business segment, sales were $3.4 billion, down 2 percent year on year, but when you compare that to the results of other networking companies like Juniper, Riverbed and F5 Networks that have been reporting more difficult quarters in recent weeks and months, a drop of 2 percent isn’t so bad.

I just got off the phone with Cisco CEO — and D: All Things Digital speaker — John Chambers. A quick summary of our conversation is below:

AllThingsD: John, it felt like a fairly positive quarter in a tough environment. What’s really going on?

Chambers: I’d break it into four pieces. First, it was our ninth consecutive quarter with record revenue. And it was the sixth where earnings grew faster than revenue. That’s a pretty good indicator that we’re growing well in a tough environment. Secondly, we’ve moved from being the No. 1 communications company to having a shot at being the No. 1 IT company at the moment when those two things will actually combine. … It’s that transition that we now have in front of us that’s kind of exciting. It also says that we’re in the right technologies: Cloud, data center, mobility, video. We’re also the thought leader on the Internet of everything, which will be the next major transition for the enterprise and service providers. The fourth one was the geographic breakdown. I don’t think anyone saw as strong a set of numbers in the U.S. as we did, and it was across all market segments. Public sector grew 5 percent, enterprise grew 10 percent, commercial grew 13 percent, service providers grew 10 percent. It means that our relevance is changing. It also means that, barring a surprise, the U.S. economy is going to continue to recover at this pace. And it has to for the rest of the world to come out of all this.

Let’s talk about IT. If you’re becoming more of a general IT player, if you see yourself shaking up that business, then who do you see yourself taking business away from?

In the data center, it’s clearly the IBMs, the Hewlett-Packards and the Dells of the world. In the wireless space, it’s often the startups or some of the traditional players. It wasn’t so long ago that startups like Aruba were awfully tough on us. In the data center with software and hardware and silicon coming together, there’s the people who think it’s going to be a software-only world [like Big Switch --Ed.]. We think it’s an architectural play that we’re going to win on. So our competitors are different in every category, but that’s what you want. If the customers are going to buy an architecture that solves a business problem and you’re the only major supplier that crosses the service provider and the enterprise and commercial segments, and you go from the cloud and hybrid clouds to the data centers, and reach any device and you’re agnostic about whatever device it is, that is a strong position to be in.

And still one of your biggest segments, switching, was down slightly. What’s going on there?

It has been a tough environment there. As you know, our industry peers have had terrible year-to-date numbers on their stocks. When I look at the F5s and Junipers and Riverbeds of the world, you’re seeing them surprising the market and declines in their share prices. Same thing with the IT players. We’re one of the few players that hit and exceed expectations in that category. So it speaks to our relevance changing. If you’re selling standalone products, the market gets really tough. And speaking of our competitors, a lot of them said they never saw us coming. We’re pretty good at flying under the radar at first and then blowing right by, and then being tough. We’re really tough to beat.

It’s at this point that I pick a song that I think best portrays Cisco’s results. It has become a little tradition that I began when Cisco started to turn around after another sequence of disappointing quarters, and when we talk, Chambers always asks about it.

With the phrase “slow and steady” appearing so much in Chambers’ comments, and with the quarter’s results generally feeling upbeat, I thought the muscular 1971 Aretha Franklin classic “Rock Steady” fit the bill. Here it is.

In that capacity, I learned to use the Bloomberg terminal that sits on some 315,000 desks in the financial industry and that makes the company all its money. And I learned early on that practically every move terminal users make is tracked and recorded. (Also, it goes without saying but I’ll say it anyway, this website is owned by News Corp., which owns Dow Jones, which is a competitor to Bloomberg.)

In a Sunday editorial on Bloomberg View, the company’s equivalent of an Op/Ed page, Editor-in-Chief Matt Winkler wrote, “Our reporters should not have access to any data considered proprietary. I am sorry they did. The error is inexcusable.” He opens the piece by quoting from a section of his book, “The Bloomberg Way”:

“The appearance of impropriety can be as damaging to a reputation as doing something improper. Because we hold others accountable for disclosure, we expect the same of ourselves. While disclosing errors of judgment may be embarrassing, the sooner the lapses are reported, the sooner there is nothing more to say.”

This raises the question: How fully will Bloomberg News disclose what it admits to be an “error of judgment” that is “almost as old as Bloomberg News.” How many reporters used the Z function — a software command that displays whether or not a customer is logged in and which functions he or she has been using the most — over the many years it was available to them? Chances are that Bloomberg has the data on precisely how often it was used and by which reporters. It could with some effort call in a third party to perform a detailed audit on this, and then disclose the findings of that audit to clients and the rest of the world.

I’ve asked Bloomberg about this. Spokeswoman Lauren Meller didn’t have an immediate answer. If I get one I’ll post it here.

If you’re going to properly understand the controversy that has emerged about the company in recent days, you need to understand the basics of the terminal itself. Bloomberg is at its very heart a financial data software company. In executing a “function” on its terminals, which are seen as status symbols of the financial industry, you type a command, usually one to four letters, and hit the Go key, which replaces the Return key on the conventional keyboard. When looking up, say, the price and fundamentals of Apple shares, you type AAPL, hit a key labeled Equity to indicate the first four letters are intended to indicate a stock ticker symbol, and then hit Go.

During the year I worked there I never heard about the so-called “Z function” at the heart of the current controversy, but its existence isn’t surprising. If you haven’t been paying attention, here’s what it’s all about. All 2,000-odd reporters at Bloomberg News have these terminals on their desks and use them to conduct research, report, write and publish their stories, and to communicate within the organization and without.

The Z function, now disabled for newsroom employees, showed when clients were and were not logged in to the system. When someone hadn’t logged in in a while, an attentive reporter might see that as a tip that the person was changing jobs or had left a firm, and then the reporter would start asking questions. Stories about executives moving between firms tend to be popular among terminal clients. It also showed what other Bloomberg functions these clients had been using, but in a non-specific way that wouldn’t show what stock or bond or other matter they might be researching or which news stories they had been reading. Bloomberg reporters are also said to have had access to transcripts of customer service calls clients made seeking help with functions.

Bloomberg is and has always been a “big data” company. The newly fashionable idea that you can learn a great deal and thus improve a software application by analyzing the big mass of data gathered about how it is used and where users run into problems has been been at the core of Bloomberg’s operational philosophy from the beginning.

Employees know from the moment they join the company that the amount of time they spend at their desks is logged. Building security systems are linked to the terminal and an access badge. When you “badge in” at any Bloomberg office around the world, this occurrence is logged. If you’re a Bloomberg employee based in New York and happen to be visiting London or Tokyo, your arrival and departure times are tracked, as is the amount of time your terminal is idle, should you be out gathering news or taking a lunch break.

I never experienced this first hand, but I heard privately shared tales from colleagues about their annual performance reviews, and discussions would at times turn to how well they used the terminal to do their jobs. As I was first joining, a friend who had worked at Bloomberg for a while told me that during one such conversation, he was mildly scolded for using Yahoo Finance to look up some bit of financial data — terminals also have Web browsers — rather than the terminal itself.

I point out this conversation for a reason. In its quest to make its products better — certainly a logical goal — Bloomberg clearly tracks how often its clients use its many functions. If that’s true, then it logically follows that it tracks how its reporters do the same thing. Historical data on the use by reporters of the Z function exists and can be examined.

As an organization, Bloomberg News is journalism as re-imagined by Fredrick Winslow Taylor, the philosophical father of factory automation. Its reporters are routinely gauged on how often they log scoops that appear on the terminal’s news service. Taylor believed that by analyzing work, the “One Best Way” to get it done could be found. As the founding editor of Bloomberg News, Winkler always struck me as an avid student of “Taylorism.” Every bit of data that can be gathered is analyzed to make the news gathering process better and more efficient. Indeed, Winkler’s 360-page book seems almost Taylor-inspired.

Scoops and other distinctive stories are further categorized into a taxonomy using an internal nomenclature, and the best of those are singled out in what’s known as “Matt’s Note,” a weekly memo from Winkler. An MMWin, or a market-moving win, is a story that beats a similar story by a competitor by several minutes and that after publication causes the market to react in some way. A Follow is when a competitor writes a story that follows up on a Bloomberg scoop. And there are many others.

All of these are thought to be tracked and used to evaluate a reporter’s performance every year. That means there’s data on how many reporters used the Z function and about whom, and probably data as well correlating to the published stories that resulted.

With at least two large banks complaining, and now two government entities — the Federal Reserve in the U.S. and the European Central Bank — asking questions about all this, you can expect concerns about the lines between Bloomberg’s business and news operations to persist.

A wide range of companies — from Cisco rival Juniper Networks Inc. to tech juggernaut International Business Machines Corp. — have caught investors off guard in recent weeks as corporate belt-tightening saps their growth.

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On Friday afternoon, Dell gave an interview to the trade publication CRN (which used to be called Computer Reseller News) crowing about his company’s apparent share gains in the market for servers.

What got him excited was preliminary data (as in, not yet published) from the market research firm IDC, which followed similar findings from another research firm, Gartner (again, not yet published), that supposedly shows healthy gains for Dell and big losses at HP.

According to the numbers Dell shared with CRN, IDC found Dell — No. 2 in the worldwide server market — to have grown its share of the server market to nearly 28 percent, while HP’s fell from north of 35 percent a year to slightly below 31 percent. “HP is losing share at a staggering rate, and they are losing it to Dell,” Dell proclaimed.

HP, which had led the segment for the better part of two decades, didn’t respond to Dell’s claims. But it did respond a day earlier, after Dell enterprise chief Marius Haas gave a similar interview — again to CRN — claiming similar data from Gartner. “One quarter does not a trend make. … 17 years is a trend,” retorted Jim Ganthier, a marketing exec in HP’s server group.

Dell hasn’t bothered to wait for either research firm to finalize and publish their data, and I’ve asked both firms to comment on that. I’m no expert in the processes these firms follow, but from what I understand, execs at companies like Dell, HP and IBM see these “preliminary” figures before they get published in order to give the company a chance to dispute them if they vary from what’s really going on. When Gartner and IDC get around to publishing press releases, expect Dell to make a second push on this topic, and maybe give more interviews.

Dell naturally has an urge to pounce on HP and score a few punches. HP has been using the occasion of Dell’s $24.4 billion leveraged-buyout plan to create uncertainty among Dell customers. Way back on Feb. 5, when the buyout plan was first floated, HP issued a statement saying, “Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell’s customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity.”

With IBM said to be in on-again, off-again talks with China’s Lenovo to sell its industry-standard server business, and Dell going private, HP is arguing that it is the one major vendor not engaged in a significant corporate shake-up, and thus able to focus most on its customers’ needs. Indeed, HP’s Dave Donatelli led a major Webcast with HP partners last week, touting that very message.

Neither company’s shares are really responding to any of the trash-talking today. HP shares are up slightly this morning to $20.76 a share, while Dell shares are also up a little to $13.35, or about 30 cents below the $13.65 buyout price that Michael Dell and private-equity firm Silver Lake have offered to take the company private.

In case you missed anything, here’s a quick weekend roundup of the news that powered AllThingsD this week:

1. Sources say that Apple is pulling engineers from the next version of OS X and assigning them to its mobile OS in order to get a preview ready in time for next month’s Worldwide Developers Conference.
2. By 2017, more than half of companies will require their employees to supply their own devices on the job, according to a new Gartner report.
3. A California court has ruled in Facebook’s favor versus “typosquatters” who benefited from registering domain names with misspellings like “gacebook” and “dacebook.”
4. Speaking of Facebook, it’s growing — but that growth rate has seen a slow decline over the past year.
5. As it tries to convince consumers that the iPhone and Android aren’t the only options, Microsoft released a hard-edged, humorous ad for Windows Phone.
6. Buying a laptop is all about timing; if you can, you might want to wait.
7. “This is just like another language, just a different set of life skills than if you learned French or Spanish.” That’s Krishna Vedati, CEO of Tynker, a platform aimed at teaching children to code.
8. Consumer electronics warranty provider SquareTrade says Samsung’s new Galaxy S4 is more breakable than both the S3 and the iPhone 5.
9. In AllThingsD Must-Reads, Bizo CEO Russell Glass writes, “There is a revolution brewing in the enterprise and it’s starting right at the desk of the chief marketing officer.”
10. To show off its ability to precisely move and manipulate individual atoms, IBM released the smallest movie ever made: An animated short called “A Boy And His Atom.”

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It lasts all of 60 seconds, and depicts a boy — made up of individual atoms himself — encountering a single atom that he befriends and throws like a ball. He then bounces up and down on a tiny trampoline made up of atoms, then throws the original atom into the sky, where it erupts into a tiny commercial for the company that produced it: IBM.

What’s going on here is this: Scientists at IBM’s Almaden Research Lab in San Jose, Calif., have figured out a way to precisely move and manipulate individual atoms. To do it they’re using a big piece of equipment called a scanning tunneling microscope that weighs two tons and operates at a temperature of minus 268 degrees Celsius (or 450.5 degrees below zero on the Fahrenheit scale, according to the Unit Convert widget on my Mac). In the world of physics and nanotechnology, this thing is a big deal and led the two IBM inventors to share the Nobel Prize for Physics in 1986. (Here’s a video history about it.)

Using a computer, researchers used a tiny needle that moved along a surface of a postage-stamp sized bit of copper. The needle would draw within one nanometer (a billionth of a meter) of the individual atoms and thus “feel” them so it could then move them into place and shift them around frame by frame in order to make the stop-motion action happen. The film you’re about to see is made up of 242 such frames using not one but two of those scanning tunneling microscopes. The atoms have been magnified about 100 million times from their original size.

Before they tried animation, and in the tradition of humorous art that sometimes appears on the surface of individual computer chips, the folks at IBM experimented with illustrations made of atoms. Among them was a rendering of the Starship Enterprise from “Star Trek” that’s not much more than a single nanometer tall. (Pictured at right; click the image to make it bigger.) Before that, way back in 1989, the big brains at Big Blue were able to spell out the company name using 35 individual atoms of xenon.

So why is IBM using atoms to make crude animations? As has long been the case, everything inside computers is getting smaller all the time. According to Moore’s law — named for Intel co-founder Gordon Moore — individual transistors on chips tend to shrink every 18 to 24 months. So does the amount of space needed to store individual bits of data. Right now, IBM says, it takes about a million atoms to do that, but it can see a trajectory leading to a point in the future to where that number can be reduced to 12 atoms. At that scale, the media to store information will be so compact that every movie ever made, including “A Boy And His Atom,” could be stored on a device the size of your iPhone. That means the ability to move and manipulate individual atoms with great precision will eventually come in handy.

“Steamboat Willie” it’s not, but here for the first time on public display, is IBM’s “A Boy And His Atom.”

And here is the obligatory “Making Of …” video that explains how and why the movie was made, including an interesting detail: What moving individual atoms sounds like.

Image copyright Cartoonresource

However, there is a revolution brewing in the enterprise and it’s starting right at the desk of the chief marketing officer (CMO). The way that products are purchased is being disrupted, and this is forcing the CMO to catch up. Buyers are now in control of the buying process and their behaviors are growing increasingly unpredictable. As such, marketers must strive to be everywhere buyers are; and to do so, marketers are starting to use data-driven automation to reach and address the needs of prospects wherever they may be in the buying process.

The changes that this revolution will bring over the next decade to support new marketing strategies will drive tens of billions of dollars of investment and innovation to the bottom lines of hundreds of thousands of companies around the world. The top marketing technology players — including Salesforce.com, IBM, Oracle, SAP, Microsoft, Google and Adobe — see the impending fight, and the war to own the marketing technology market has begun to play out. Battle lines are being drawn, and they center on the customer relationship management (CRM) system.

CRM as the system of record

Salesforce has been spending much of the last decade building its CRM system. Since more than 75 percent of the companies that use Salesforce are B2B, the company’s CRM platform is arguably the system of record for the B2B marketer. This puts Salesforce, as the fastest-growing scaled vendor in the space, in the driver’s seat to become the platform where marketers keep their treasure trove of prospect and customer information and interaction data. Oracle, NetSuite, IBM, Google, SAP — and arguably even Facebook, LinkedIn and Twitter — don’t want to see Salesforce have the lock on such valuable data. To fend off the Salesforce threat, these companies are developing their own audience data strategies, ranging from aggressive acquisitions to building cookie data exchanges, or even building their own social networks (if they’re not one already). As each realizes, the vendor that controls audience data “wins” because all marketing decisions are keyed off of this information.

With the CRM system as the system of record, seamlessly connecting all of the marketing systems in an enterprise, executing programs and then measuring success becomes possible — once the right data can be plugged in. For example, today’s marketing automation systems sync with CRM systems so that as a salesperson moves prospects from leads to qualified opportunities, the marketing system can automatically send a different messages to each prospect, depending on what stage they are in within the marketing funnel.

However, integration currently ends there and the marketing organization is unable to easily tie the opportunity for unique messaging into any other marketing channel — such as SEM, social media or display advertising. The next step needed is an integration of all of these activities. In the above example, once the salesperson moves a prospect from a lead to a qualified opportunity within the CRM system, the move would trigger display advertising and social media marketing that syncs creative and messages across all channels in real time, and then adds the prospect’s interaction with each mechanism back to the CRM record. Scalable, measurable, one-to-one marketing that requires no additional marketing resource is the result.

What’s next?

The incentives for marketers to realize the holy grail of right message, right place and right time are clearly in place. So what’s getting in the way of all this progress from happening immediately? Two big areas have slowed progress: Integration of data across multiple systems in the enterprise, and privacy. The vendors duking it out for ownership of data — Salesforce, Oracle, et al — have begun work with data platforms to solve the integration issue. Privacy, however, remains a concern. The argument goes: If consumers don’t know what you’re using this information for, you shouldn’t be using it. This is a fair and reasonable argument, and in the CRM world where customer and prospect information is tied to personally identifiable information, it is going to be important that consumers opt in to the information being collected by the marketer. The tradeoff is similar to the one made today in loyalty programs such as grocery store or airline frequent flier programs: You give a company the ability to track your purchases and incentivize you to buy more through discounts and coupons, and they will give you a better experience as a customer.

The future of enterprise marketing is one in which consumers benefit from transparency concerning where and how their data is being used, and through improved, more relevant experiences from vendors, service providers and favorite retailers.

To this end, expect the battle for data to continue as enterprise giants fill their platforms while trying to deliver the CMO increasingly sophisticated and integrated capabilities. Unprecedented efficiency in marketing will result, increasing growth and profits for the enterprise as more dollars become available for investment. The promise of true one-to-one and completely measurable marketing has been a long time in the making. It’s coming fast, and it’s going to transform the enterprise over the next decade.

Russell Glass, CEO of Bizo, is a serial technology entrepreneur, having founded or held senior positions at four venture-backed technology companies. Prior to Bizo, Russ led the marketing and product management teams at ZoomInfo, a business information search engine, where he sharpened his B2B marketing skill set and developed his love for business data.

Factory equipment is reporting operational data to some server somewhere. Utility stations report their operating conditions or send notifications of repairs that might be needed. Weather stations constantly report temperature and wind speed and so on. You get the idea. When you hear the phrase “Internet of Things,” this is part of what it means. But in this case it’s often referred to as “machine-to-machine” communications, or M2M for short.

The flow of all this messaging data is quickly turning into a deluge. Consider that there may be as many as 22 billion devices connected to the Internet by the end of the decade, and that they’ll be generating 2.5 quintillion bytes of data every day, and it’s a pretty sure bet that big tech companies are going to throw a lot of computing power into new efforts to handle it all.

Today IBM announced a new appliance that’s intended to help companies sort through that deluge. It’s called MessageSight, and it’s an appliance that gets installed in a typical server rack. It takes advantage of a new industry standard technology called MQTT or Message Queuing Telemetry Transport.

MQTT is important because it’s a standard that everyone can work with, said Michael Riegel, an IBM VP. “It’s significant because buildings and traffic lights and mobile phones all have different protocols,” he said. “Having a common standard enables a whole lot of innovation.”

The biggest problem is sorting messages quickly, which the MessageSight can do. It has the capability to process 13 million messages every second, and can route them to the proper place. Once they’re sorted and collected, they can be analyzed for patterns. If you’re seeing a certain kind of equipment failing at a regular interval, you can order more preventative maintenance or track down a faulty component. IBM has long been making the case that this kind of analysis — “analytics” is one of Big Blues favorite words these days — can lead to important insights that can help pretty much any business operate more efficiently and save costs.

And the idea isn’t just about industrial gear but pretty much anything that can be measured. Health care data is always considered a target for this kind of measurement and analysis. The automotive industry is also getting hip to it, and indeed Ford took part in IBM’s announcement today. Some cars are basically turning into rolling sensor platforms, generating truckloads of wireless data.

As it happens, IBM isn’t the only one seeing a big opportunity around M2M communications. SAP, the German software giant, put out a survey today of 751 IT decision makers in six countries that concluded companies in China, Brazil, Germany and India appear to be the “most ready” to embrace the possibilities of M2M. (The value of that finding, however, appears to pivot on whether or not those surveyed actually knew what M2M stood for. Respondents in China and Germany scored highest, while more than half of those surveyed in the U.S. got it wrong, thinking it meant “mobile to mobile.”)

My conclusion: Get ready to hear a lot more about this in the next year or two.

The comments came in a five-minute internal video message to the company’s 434,000 employees.

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The move followed a 17 percent drop in first-quarter sales at the Systems and Technology Group, which handles the company’s semiconductor, server, storage and system software businesses and had about $18 billion in sales last year.

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UrbanCode’s play is to speed up the development and delivery of software. Big Blue says it will be integrated into its SmartCloud and MobileFirst offerings. UrbanCode’s technology, IBM said, helps businesses cut down the time between updates to applications.

The deal is IBM’s second of 2013. In a note to clients, ISI analyst Brian Marshall estimated that the company has spent about $12 billion on small tuck-in acquisitions during the last three years. Word of the deal comes a week after IBM reported a disappointing quarterly earnings miss that was interpreted as a bad sign for the rest of the IT industry.

After reporting profits that at least met Wall Street’s expectations for 31 straight quarters dating back through the financial crisis to early 2005, IBM stumbled late Thursday.

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Computing pioneer International Business Machines Corp. on Thursday reported its revenue dropped 5 percent after failing to close big software and hardware deals.

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That’s the conclusion of Chris Whitmore, an analyst with Deutsche Bank Securities, in the wake of yesterday’s earnings report. “IBM hasn’t missed consensus earnings expectations for eight years which raises the specter of increased macro risk and substantially weaker IT hardware spending,” he wrote in a note to clients today.

IBM is better than most at managing sales that turn south in one part of its business, but still able to make its numbers, he writes. That it wasn’t able to do so this quarter “raises a red flag” for other tech companies, especially those that sell a lot of hardware, including Hewlett-Packard, Dell, NetApp and EMC. “The IBM miss is a decidedly negative read through for the entire IT hardware segment and we are incrementally more cautious on the sector,” Whitmore wrote.

Expect a lot of attention on IT spending trends in the coming weeks, as other large IT companies get ready to report their results. The next big indicator will be when EMC reports quarterly results next week. HP, Dell and NetApp all report results in mid-May.

At issue is IBM’s business selling so-called x86 servers, the low-price workhorses of many corporate and cloud-based data centers. An exact sale price isn’t known, but one of the people said the deal could be worth billions of dollars.

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Earnings on a per-share basis were $3.00 on sales of $23.4 billion, well below the consensus view of analysts who had forecast $3.05 on sales of $24.7 billion.

IBM shares fell by nearly 4 percent in after-hours trading. The results will likely weigh on the broader markets tomorrow.

The weakness appears to be similar to something Oracle said about its most recently reported quarter. In the statement below, CEO Ginni Rometty said several deals that would have otherwise closed in the first quarter both in hardware and software slid into the second quarter.

Here’s another reason for the miss: Global Technology Services revenue at $9.6 billion fell by 4 percent year on year, or 2 percent after adjusting for currency fluctuations. Global Business Services, at $4.5 billion, fell 3 percent, or were flat after adjusting for currency effects.

Sales were off in every geographical region: By 7 percent in the Asia Pacific region, and by 4 percent each in the Americas and in Europe-Middle East-Africa.

There were bright spots. Software segment sales were flat at $5.6 billion, or up 1 percent after adjusting for currency versus the year-ago quarter. I guess flat is the new up.

Even so, IBM hasn’t seen fit to adjust its full-year guidance, which calls for per-share earnings of $16.70.

Either way, that’s a pretty substantial miss on both the EPS and revenue lines. It’s rare for IBM to come in with revenue that’s more than a billion dollars off the consensus.

Here’s IBM’s announcement. I’ll have more as I go through it. The company is going to discuss the results on a conference call shortly.

IBM Reports 2013 First-Quarter Results
ARMONK, N.Y.–(BUSINESS WIRE)–
IBM (IBM)
Diluted EPS: GAAP: $2.70, up 3 percent;

Operating (non-GAAP): $3.00, up 8 percent;

Net income: GAAP: $3.0 billion, down 1 percent;

Operating (non-GAAP): $3.4 billion, up 3 percent;

Gross profit margin: GAAP: 45.6 percent, up 0.6 points;

Operating (non-GAAP): 46.7 percent, up 1.0 points;
Revenue: $23.4 billion, down 5 percent, down 3 percent adjusting for currency;

Free cash flow of $1.7 billion, down $0.2 billion;

Software revenue flat, up 1 percent adjusting for currency;

Pre-tax: income up 4 percent; margin up 1.2 points;

Services revenue down 4 percent, down 1 percent adjusting for currency;

Pre-tax: income up 10 percent; margin up 2.0 points;
Services backlog of $141 billion, up 1 percent, up 5 percent adjusting for currency;

Closed 22 deals of more than $100 million in the quarter;

Systems and Technology revenue down 17 percent, down 16 percent adjusting for currency;

Growth markets revenue down 1 percent, up 1 percent adjusting for currency;

Business analytics revenue up 7 percent;

Smarter Planet revenue up more than 25 percent;

Cloud revenue up more than 70 percent;

Reiterating full-year 2013 operating (non-GAAP) EPS expectation of at least $16.70.
IBM (IBM) today announced first-quarter 2013 diluted earnings of $2.70 per share, a year-to-year increase of 3 percent. Operating (non-GAAP) diluted earnings were $3.00 per share, compared with operating diluted earnings of $2.78 per share in the first quarter of 2012, an increase of 8 percent.

First-quarter net income was $3.0 billion, down 1 percent year-to-year. Operating (non-GAAP) net income was $3.4 billion compared with $3.3 billion in the first quarter of 2012, an increase of 3 percent.

Total revenues for the first quarter of 2013 of $23.4 billion were down 5 percent (down 3 percent, adjusting for currency) from the first quarter of 2012.

“In the first quarter, we grew operating net income, earnings per share and expanded operating margins but we did not achieve all of our goals in the period. Despite a solid start and good client demand we did not close a number of software and mainframe transactions that have moved into the second quarter. The services business performed as expected with strong profit growth and significant new business in the quarter,” said Ginni Rometty, IBM chairman, president and chief executive officer.

“Looking ahead, in addition to closing those transactions, we expect to benefit from investments we are making in our growth initiatives and from the actions we are taking to improve under-performing parts of the business. We remain confident in this model of continuous transformation and in our ability to deliver our full-year 2013 operating earnings per share expectation of at least $16.70.”

First-Quarter GAAP – Operating (non-GAAP) Reconciliation

First-quarter operating (non-GAAP) diluted earnings exclude $0.30 per share of charges: $0.12 per share for the amortization of purchased intangible assets and other acquisition-related charges, and $0.18 per share for retirement-related charges.
Full-Year 2013 Expectations

IBM is reiterating its expectation for full-year 2013 GAAP diluted earnings per share of at least $15.53. Operating (non-GAAP) diluted earnings per share expectations remain at least $16.70. The 2013 operating (non-GAAP) earnings expectations exclude $1.17 per share of charges for amortization of purchased intangible assets, other acquisition-related charges, and retirement-related charges.

Geographic Regions

The Americas’ first-quarter revenues were $10.0 billion, a decrease of 4 percent (down 3 percent, adjusting for currency) from the 2012 period. Revenues from Europe/Middle East/Africa were $7.3 billion, down 4 percent (down 4 percent, adjusting for currency). Asia-Pacific revenues decreased 7 percent (down 1 percent, adjusting for currency) to $5.7 billion.

OEM revenues were $426 million, down 16 percent compared with the 2012 first quarter.
Growth Markets

Revenues from the company’s growth markets decreased 1 percent (up 1 percent, adjusting for currency). Revenues in the BRIC countries — Brazil, Russia, India and China — decreased 1 percent (up 3 percent, adjusting for currency).

Services

Global Technology Services segment revenues decreased 4 percent (down 2 percent, adjusting for currency) to $9.6 billion. Global Business Services segment revenues were down 3 percent (flat, adjusting for currency) to $4.5 billion.

Pre-tax income from Global Technology Services was up 7 percent and pre-tax margin increased to 16.1 percent. Global Business Services pre-tax income increased 17 percent and pre-tax margin increased to 15.1 percent.

The estimated services backlog at March 31 was $141 billion, up 1 percent year over year at actual rates (up 5 percent, adjusting for currency). The company closed 22 service agreements of more than $100 million in the quarter.

Software

Revenues from the Software segment were flat at $5.6 billion (up 1 percent, adjusting for currency) compared with the first quarter of 2012. Software pre-tax income increased 4 percent and pre-tax margin increased to 31.5 percent.

Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Social Workforce Solutions (formerly Lotus) and Rational products, were $3.5 billion, up 1 percent (up 2 percent, adjusting for currency) versus the first quarter of 2012. Operating systems revenues of $578 million were down 2 percent (down 1 percent, adjusting for currency) compared with the prior-year quarter.

Revenues from the WebSphere family of software products increased 6 percent year over year. Information Management software revenues decreased 2 percent. Revenues from Tivoli software increased 1 percent. Revenues from Social Workforce Solutions (formerly Lotus) software increased 8 percent, and Rational software decreased 2 percent.

Hardware

Revenues from the Systems and Technology segment totaled $3.1 billion for the quarter, down 17 percent (down 16 percent, adjusting for currency) from the first quarter of 2012. Excluding Retail Store Solutions (RSS), revenues were down 14 percent (down 13 percent, adjusting for currency). Systems and Technology pre-tax loss increased $0.3 billion.

Total systems revenues, excluding RSS, decreased 13 percent (down 13 percent, adjusting for currency). Revenues from System z mainframe server products increased 7 percent compared with the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), increased 27 percent. Revenues from Power Systems were down 32 percent compared with the 2012 period. Revenues from System x were down 9 percent. Revenues from System Storage decreased 11 percent. Revenues from Microelectronics OEM decreased 16 percent.

Financing

Global Financing segment revenues were up 2 percent (up 4 percent, adjusting for currency) in the first quarter at $499 million. Pre-tax income for the segment increased 5 percent to $538 million.

Gross Profit

The company’s total gross profit margin was 45.6 percent in the 2013 first quarter compared with 45.1 percent in the 2012 first-quarter period. Total operating (non-GAAP) gross profit margin was 46.7 percent in the 2013 first quarter compared with 45.7 percent in the 2012 first-quarter period, with increases in Global Technology Services and Global Business Services.

Expense

Total expense and other income decreased 3 percent to $7.1 billion, compared to the prior-year period. S,G&A expense of $5.6 billion decreased 5 percent year over year. R,D&E expense of $1.6 billion increased 3 percent, compared with the year-ago period. Intellectual property and custom development income decreased to $183 million compared with $255 million a year ago. Other (income) and expense was income of $60 million compared with prior-year income of $58 million. Interest expense decreased to $94 million compared with $110 million in the prior year.

Total operating (non-GAAP) expense and other income decreased 4 percent to $6.9 billion compared with the prior-year period. Operating (non-GAAP) S,G&A expense of $5.4 billion decreased 7 percent compared with prior-year expense. Operating (non-GAAP) R,D&E expense of $1.6 billion increased 1 percent compared with the year-ago period.
* * *
Pre-tax income decreased 6 percent to $3.6 billion. Pre-tax margin decreased 0.1 points to 15.4 percent. Operating (non-GAAP) pre-tax income decreased 1 percent to $4.1 billion and pre-tax margin was 17.4 percent, up 0.8 points.

IBM’s tax rate was 15.9 percent, down 4.1 points year over year; operating (non-GAAP) tax rate was 17.3 percent, down 3.2 points compared to the year-ago period. The lower tax rate is primarily due to benefits recorded to reflect changes in tax laws enacted during the quarter, including the reinstatement of the U.S. Research and Development Tax Credit.

Net income margin increased 0.5 points to 13.0 percent. Total operating (non-GAAP) net income margin increased 1.2 points to 14.4 percent.

The weighted-average number of diluted common shares outstanding in the first-quarter 2013 was 1.12 billion compared with 1.17 billion shares in the same period of 2012. As of March 31, 2013, there were 1.11 billion basic common shares outstanding.

Debt, including Global Financing, totaled $33.4 billion, compared with $33.3 billion at year-end 2012. From a management segment view, Global Financing debt totaled $25.2 billion versus $24.5 billion at year-end 2012, resulting in a debt-to-equity ratio of 7.2 to 1. Non-global financing debt totaled $8.2 billion, a decrease of $0.6 billion since year-end 2012, resulting in a debt-to-capitalization ratio of 34.3 percent from 36.1 percent.

IBM ended the first-quarter 2013 with $12.0 billion of cash on hand and generated free cash flow of $1.7 billion, excluding Global Financing receivables, down approximately $0.2 billion year over year. The company returned $3.5 billion to shareholders through $0.9 billion in dividends and $2.6 billion of gross share repurchases. The balance sheet remains strong, and the company is well positioned to support the business over the long term.
Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: a downturn in economic environment and corporate IT spending budgets; the company’s failure to meet growth and productivity objectives, a failure of the company’s innovation initiatives; risks from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; cybersecurity and data privacy considerations; fluctuations in financial results and purchases, impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and the company’s pension plans; ineffective internal controls; the company’s use of accounting estimates; the company’s ability to attract and retain key personnel and its reliance on critical skills; impacts of relationships with critical suppliers and business with government clients; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels; the company’s ability to successfully manage acquisitions and alliances; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company’s Form 10-Q, Form 10-K and in the company’s other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements.

Presentation of Information in this Press Release

In an effort to provide investors with additional information regarding the company’s results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information which management believes provides useful information to investors:
IBM results and expectations –
-presenting operating (non-GAAP) earnings per share amounts and related income statement items;

-presenting non-global financing debt-to-capitalization ratio;

-adjusting for free cash flow;

-adjusting for currency (i.e., at constant currency);

-adjusting for the divestiture of RSS.

The rationale for management’s use of non-GAAP measures is included as part of the supplemental materials presented within the first-quarter earnings materials. These materials are available via a link on the IBM investor relations Web site at www.ibm.com/investor and are being included in Attachment II (“Non-GAAP Supplemental Materials”) to the Form 8-K that includes this press release and is being submitted today to the SEC.

Conference Call and Webcast

IBM’s regular quarterly earnings conference call is scheduled to begin at 4:30 p.m. EDT, today. The Webcast may be accessed via a link at http://www.ibm.com/investor/events/1q13.phtml. Presentation charts will be available shortly before the Webcast.

The consensus view of analysts says that Big Blue will report earnings per share of $3.05 on sales of $24.7 billion, and guide to profits of $3.95 a share on $26.2 billion in the quarter ending in June.

Chris Whitmore, an analyst with Deutsche Bank Securities, said in a note to clients earlier this week that he expects IBM’s sales to come in a little short of that consensus, but with a slightly higher EPS, driven in part by currency-hedging moves intended to take the sting off the effects from the contraction of credit and government austerity measures in Europe.

Whitmore says to expect solid results in IT hardware on the heels of a recent refresh cycle in IBM’s mainframe business. But with only two significant deals announced during the quarter, services results could be light. Ongoing cost-cutting measures, plus a shift toward selling more high-margin software, could boost gross margins to as high as 46.8 percent, up from 45.7 percent in the year-ago quarter. “In aggregate, we believe IBM’s high degree of recurring revs (about 60 percent of profits) and continued cost reduction and operational efficiency initiatives should support healthy margins and solid EPS going forward,” Whitmore wrote. He thinks it’s possible that IBM’s forecast that it will earn $16.70 a share in 2013 may prove a little conservative, and could go as high as $17.

On the hardware front, Whitmore says to pay attention to what IBM executives say about Unix servers in the conference call later today. While Oracle has recently announced a new line of servers based on its SPARC line of chips, and has made some bold claims about their performance, he says the industry contacts he talks to aren’t terribly impressed. “Based on our initial review of the product (and feedback from industry contacts), these new product announcements from Oracle mark a significant step up in the performance of its server products, but do not seem significant enough to change the ongoing competitive dynamics in the industry. As such, we expect IBM’s share gains in the Unix server market to continue. We believe investors will be acutely focused on management commentary on this front.”

As it happens, Rometty’s company, IBM, has a pretty close relationship with Augusta National and the tournament. And if you’re into golf but don’t have the time to watch every minute — and who does? — IBM has made it easy to keep track of it all with a pretty immersive experience, on smartphone, iPad or Web.

Naturally there are a lot of HD video highlights across all three. And on the iPad there’s a lot of exclusive coverage from CBS and ESPN. There’s also a live leaderboard that is intended to mirror exactly what you’d see on the course.

But it’s the iPad app with the feature that everyone will remark on. There’s an impressive 360-degree panoramic view of different spots on the course that takes advantage of the device’s gyroscope capability. Turn it around and you can better understand from the point of view of the player you happen to be watching on TV at that moment the degree of difficulty of the shot he’s trying to make.

But there’s a lot more going on behind the scenes. I had a quick chat earlier this week with IBM’s John Kent, a program manager who leads Big Blue’s many sports sponsorship efforts. The Masters serves as a bit of a demo bed to show what IBM can do.

Sporting occasions like the Masters are by nature unpredictable. A sudden event can generate a sudden burst of activity and interest, and quickly overwhelm unprepared infrastructure. Kent said that IBM had been using its own private cloud technology to adapt to that demand as needed. “We can provision new servers within three minutes if we need to or move workloads to realign capacity; we can move it all around uninterrupted and keep things going,” he told me.

Another new feature this year is IBM’s favorite word: Analytics. IBM’s cloud can predict, based on many different factors, when more people may be checking in on the Web, their iPads or phones, and dynamically provision resources. “It used to be we would project for ourselves, using a spreadsheet, when we’d see our peak traffic,” Kent said. “If there’s a lot of drama, and it can shift pretty suddenly, it drives a lot of viewers. We’re ready to respond right away.”

This was the cloud computing startup that originated at NASA, where the original ideas for OpenStack, the open source cloud computing platform, was born. Anso Labs was acquired by Rackspace a little more than two years ago.

It was a small team. But now a lot of the people who ran Anso Labs are back with a new outfit, still devoted to cloud computing, and still devoted to OpenStack. It’s called Nebula. And it builds a turnkey computer that will turn an ordinary rack of servers into a cloud-ready system, running — you guessed it — OpenStack.

Based in Mountain View, Calif., Nebula claims to have an answer for any company that has ever wanted to build its own private cloud system and not rely on outside vendors like Amazon or Hewlett-Packard or Rackspace to run it for them.

It’s called the Nebula One. And the setup is pretty simple, said Nebula CEO and founder Chris Kemp said: Plug the servers into the Nebula One, then you “turn it on and it boots up cloud.” All of the provisioning and management that a service provider would normally charge you for has been created on a hardware device. There are no services to buy, no consultants to pay to set it up. “Turn on the power switch, and an hour later you have a petascale cloud running on your premise,” Kemp told me.

The Nebula One sits at the top of a rack of servers; on its back are 48 Ethernet ports. It runs an operating system called Cosmos that grabs all the memory and storage and CPU capacity from every server in the rack and makes them part of the cloud. It doesn’t matter who made them — Dell, Hewlett-Packard or IBM.

Kemp named two customers: Genentech and Xerox’s research lab, PARC. There are more customer names coming, he says, and it already boasts investments from Kleiner Perkins, Highland Capital and Comcast Ventures. Nebula is also the only startup company that is a platinum member of the OpenStack Foundation. Others include IBM, HP, Rackspace, RedHat and AT&T.

If OpenStack becomes as easy to deploy as Kemp says it can be, a lot of companies — those that can afford to have their own data centers, anyway — are going to have their own clouds. And that is sort of the point.