Is IBM looking to buy EMC?

The $1.3 billion take-over of Virata by GlobeSpan, and the flood of earnings warnings, ahead of the publication of Q3 results, dominated the international world of IT and telecommunications last week.

[VIDEO]At home, the Global Technology share split news, the speculation re the outcome of the Siltek re-financing/restructuring activity and the changes re ComputerFaire in Johannesburg, took much of the media space.

• we saw good 16-month figures from Websoft (revenues well up);

• good end-of-year figures from EOH (revenue and profit both up but margins squeezed);

• satisfactory year-end (16 months) figures from Intervid (revenue and profit flat when compared on a 12 month basis);

• satisfactory interims from Fintech (revenue up but earnings slightly down on last year`s equivalent);

• and disappointing half-year numbers from Power Technologies (revenue up but earnings down);

• a set of "profitable" interims from Micrologix that reflects the creditors compromise offer that is part of the rescue operation;

• and good revenue figures from IQ Business Group`s financial services arm in its first year of operation.

Additionally, the shares of JemTech were suspended for failure to submit their annual accounts; CCH shares were de-listed as from today following its acquisition by MGX; and Global Technology warned that split listing under review following Temenos warning.

[Local]

Other local news included:

• the abandonment of the black empowerment deal by Prism;

• the announcement of several changes to ComputerFaire, which includes the omission of the Saturday from its schedule (something I`ve championed for some 10 years!) together with a new electronics exhibition planned for October 2002;

• the voluntary retrenchment of many HP staff;

• the resignation of two non-executive directors of E-Data Holdings, which itself is in the process of being acquired by a third party.

Currently EMC`s market capitalisation is about $30 billion, compared to the $100 billion or so at this time last year, so the timing for IBM could not be better.

Paul Booth, MD, Global Research Partners

Furthermore, it would seem that the PQ name is to disappear this week, with all activities being re-organised under the Comparex umbrella.

• On the international scene we saw the announcement that Xerox had transferred its office manufacturing operations to Flextronics International Ltd, thus closing operations in Toronto Canada, Brazil, Mexico, Penang Malaysia, with some Californian sites to follow next year;

• the re-naming of eONE Global as Encorus Technologies, following its acquisition of the mobile business unit of Brokat Technologies;

• and the suspension of the shares of Atlantic Telecom, as it calls in administrators after failing to find a satisfactory rescue package.

Additionally, look out for a possible joint venture between Motorola and Siemens involving their wireless infrastructure businesses, and handset businesses or both; the possible acquisition of bits of PSINet and Exodus Comms by Cable & Wireless, following their recent purchase of Digital Island; and the possible acquisition of EMC by IBM.

The acquisition of EMC by IBM would consolidate IBM`s storage revenues for its OS/390 market. Last year EMC took 45% of this compared to IBM`s 29% and the latter is always playing "catch-up". Currently EMC`s market capitalisation is about $30 billion, compared to the $100 billion or so at this time last year, so the timing for IBM could not be better. At this stage both companies are denying any discussions.

[International]

Other international news included:

• the

  appointments

  of Roger Ballou as CEO of CDI, Ed Breen as President and COO of Motorola, Alfred Chuang as CEO of BEA Systems, William Conroy as President and COO of Click Commerce, Frank Dunn as President and CEO of Nortel Networks, Michael Haydock as President and CEO of Cray and Leo Hindery as Chairman of GT Group Telecom;

• the

  resignations

  of Bill Coleman, CEO of BEA Systems and Bob Watkins, CEO of Amstrad;

• the

  retirements

  of Bob Growney, President and COO of Motorola, Barry Romeril, CFO of Xerox and John Roth, CEO of Nortel Networks;

• job loss announcements

  from Alcatel, Ascential Software, Cirrus Logic, Click Commerce, Cognex, Corning, CoSine Comms, IKON, Inktomi, Intershop Comms AG, Jupiter Media Metrix, Manugistics, McLeodUSA, MicroStrategy, Nortel Networks, Philips, ReadSoft AB, Segue Software, Sun Microsystems, SuSe Linux AG, TDK, Turnstone Systems, Verilink, WorldCom and XO Comms.

On the results front, we saw excellent figures from Netgateway (back in the black).

Good numbers were recorded by GFI Informatique SA and MSB International Plc.

Mediocre returns came from CSI, Nu Horizons Electronics and Oce; while very poor results came from BCT International.

Losses came from AFA Systems, ATI Technologies, Cable Design Technologies, CTI, Ingenuus, Intentia, Intraware, Manugistics, Novo Networks and Optika, Research in Motion.

Other financial news included share buy-back announcements from Cognos, Dassault Systemes, Micro General, Trident and Turnstone Systems; profit warnings from 724 Solutions, Advanced Switching Comms, AMD, Arc International Plc., Ascential Software, Avnet, Bell Microproducts, BMC Software, Check Point Software, Compaq, Compuware, Corning, CoSine Comms, Datastream, Digital Lightwave, Epicor, Fayrewood Plc., Gateway, Gilat Satellite Networks, Global Crossing, GSI Lumonics, HNC Software, Imagination Technologies Group Plc., Insight Enterprises, Integrated Silicon Solution, Intershop Comms AG, Interwoven, Iona Technologies Plc., JDA Software, Kana, Lantronix, Latitude Comms, Lightbridge, MapInfo, MatrixOne, McLeodUSA, Mercury Interactive, Metawave Comms, Netegrity, Nortel Networks, OpenWave Systems, Optimal Robotics, Orchestream, Peregrine Systems, Phoenix Technologies, Pivotal, ProQuest, Proxim, Quest Software, Radware, ReadSoft AB, RSA Security, Salem comms, Sanchez Computer Associates, SeeBeyond Technology, Sipex, Sun Microsystems, SunGard Data Systems, TranSwitch, Temenos, Turnstone Systems, United Microelectronics, Valassis, Verilink, Verizon Comms, Via Technologies and WebMethods; share split announcements from Brokat Technologies (reverse) and OnSpan (reverse); the shelving of a stock split by Glenayre and NetManage; withdrawn IPOs from FirstMark Comms and KMC Telecom; and a satisfactory IPO from Israeli-based Given Imaging Ltd.

Locally

Explorer (+100%)
Global Technology (-29%)
Hicor (+60%)
Infowave (-33.3%)
Jasco (+27.3%)
Micrologix (-33.3%)
OSI (-50%)
Pradatech (-50%)
Spicer (-33.3%)
Stella Vista (+33.3%)

Internationally

Actuate (+57.5%)
BackWeb (+77.9%)
Cedar Group (+62.2%)
Energis (+57.2%)
Focal Comms (+69%)
Global Imaging Systems (+62.4%)
Internet Security Systems (+74.4%)
Micromuse (+57.2%)
Read-Rite (+59.3%)
United Microelectronics (-61.6%)
VerticalNet (+108.3%)

Finally, this week should see the publication of Siltek`s year-end results, and the start of the publication of Q3 results from around the globe, although the floodgates won`t open until next week. Many of these results will not present pleasant reading, especially if the spate of earnings warnings continue to be published at the current rate.