Revenue Beats Lowest in Past 9 Quarters - Infrastructure Takes a Beating
With 76% of the model accounted for, 56% of vendors and/or business units have met or beaten the estimate, extraordinarily low compared to the prior 9 quarters (typically ~66%) we’ve been measuring this indicator. Interestingly, 67% of application and solution vendors met or beat their estimates, while (excluding Apple) only 40% of infrastructure vendors (i.e. HP and Dell) met or beat their estimates.
We’re expecting pretty pathetic results from these two – with Dell showing more strength than HP. Here’s what we are expecting.
Predicted Q411 Revenue
Predicted Q411 YoY Growth
Notes
HP Product Total
Sagging
ESS
$5.398B
-4%
-4% last time
Services
$9.263B
+8%
+2% last time
IPG
$5.896B
-11%
-10% last time
PSG
$10.204B
-2%
-2% last time
Software
$0.955B
+32%
???????
Dell Total
All around, better than HP
Desktops
$3.762B
+5%
-6% last time
Mobility
$4.818B
-1%
-2% last time
Servers and NW
$2.133B
+2%
+13% last time
Storage
$0.533B
-7%
-15% last time
Services
$2.169B
+12%
+10% last time
SW & Peripherals
$2.575B
-3%
-2% last time
2011 and 2012
The 2011 final data will be determined by what happens over the next week. For 2012, we’re pretty much where we were last time.
Hardware: +9.7%
Software: +8.0%
Services: +4.1% (+4.4% last time)
All Spend: +7.1% (+7.2% last time)
After HP and Dell report, we’ll have the 2011 Finals and a better view of 2012.
January 30, 2012 WW IT Spending Update
Apple Drives up 2012 HW and Total Spending Dramatically
IBM and Oracle Results Trim 2012 Service and Software Forecast
Revenue Beats Lowest in Past 9 Quarters
Regarding Apple’s IT industry leadership - Otto von Bismarck said it best (with apologies to God) “The [IT Executive’s] task is to hear [Apple’s] footsteps marching through history, and to try and catch on to [its] coattails as [it] marches past”
Apple was the main story – the most dramatic performance improvement in years - single-handedly pulling the 2012 HW forecast forward to an estimated +9.7% (from our previous +6.4%) and the entire spend model up to +7.2%. This despite IBM’s very significant HW shortfall (against the model estimate).
However, only 43% of the other vendor/business units met or beat the estimates – the lowest % in the past 9 quarters (compared to the typically ~65% we’ve been seeing). Currency has played some role here, but the net is that Q4 growth overall looks a little suspect.
Overall, everything but the paperwork on 2011 (+10.1% overall) is almost done. Apple is changing the 2011 actuals – so we’ll probably be closer to +11% by the time the final tally is in in February.
With 52% of the model revenue in for Q411, the 2012 forecast is now:
Hardware: +9.7% (up from +6.4% last time)
Software: +8.0% (down from +8.4% last time)
Services: +4.4% (down from +5.5% last time)
All Spend: +7.2% (up from +6.4% last time)
Handhelds are going through the roof, while Servers (IBM) and Networking (Juniper) ratcheted downwards. EMC bolstered the Storage numbers. IBM (Services) and Oracle (last time) dragged down the 2012 Services and Software forecasts respectively.
Here’s What Happened
Red is Hot!Blue is Not!
Company
Expected YoY Growth Rate
Actual YoY Growth Rate
1/16/12 Note
1/30/12 Note
Apple
Mac
Peripherals
iPhones
SW & Other
iPads
+15%
+11%
+24%
+1%
+41%
+22%
+29%
+133%
+7%
+99%
Apple is its own market segment. This is what the model says, but it looks too easy to me.
29% last time, 15% this time
34% last time, 11% this time
24% last time, 24% this time
10% last time, 1% this time
+117% last time, maybe +41% this time
I guess that was right
Good results!
Good results!
Good results!
A rising tide lifts all the boats
Holy Crap!
EMC
+7%
+11%
15% last time, 7% this time - excluding VMWare. Looks too easy to me.
Pretty strong – but it was too easy
IBM
Service
Software
Hardware
+6%
+8%
+0%
+3%
+9%
-8%
Systems looks too easy
+8% last time, 6% this time
+13% last time, 8% this time
+3% last time, 0% this time
Not!
Light
Right on
Much worse
Microsoft SW
Client
Server
MBDS
-4%
+7%
-1%
-6%
+9%
+4%
Looks way too easy
+2% last time, -4% this time
7% last time, 7% this time
10% last time, -1% this time
Pretty good overall
A little worse
Pretty good
Pretty strong
VMWare
+29%
+27%
32% last time. 29% this time? Red Hat fell short, could be a tough quarter.
A little short
January 16, 2011 WW IT Spending Update
Apple, IBM, EMC, VMWare, and Microsoft up this Week
The Model is Currently at 10.2% and 7.9% Growth for 2011 and 2012 Respectively
The December early Q411 reports were generally disappointing, so we’re concerned about what’s happening with the leaders below.They represent ~50% of the model, so we’ll have a good view of the 2011 finish (albeit with 3Qs already in, the 2011 growth rate isn’t going anywhere) and a decent view of 2012, which could move significantly.
Here’s What We Think
The model is being very conservative, but Oracle’s weak results and Intel’s downward guidance suggests we shouldn’t be too optimistic. Currency will be an inhibiting factor as well. On the other hand, its Q4 and these projections look too low compared to where we’ve been in 2011 so far.Besides RIM and Adobe, operating margins have been holding up nicely.If we get some solid beats, our current +10.1% for 2011 and +7.6% for 2012 will move upwards.
Company
Expected Q411 Revenue
1/16 Note
Apple Mac Peripherals iPhones SW & Other iPads
$6.229B $0.659B $12.962B $0.791B A lot
Apple is its own market segment.This is what the model says, but it looks too easy to me. 29% last time, 15% this time 34% last time, 11% this time 24% last time, 24% this time 10% last time, 1% this time +117% last time, maybe +41% this time
EMC
$4.325B
15% last time, 7% this time - excluding VMWare.Looks too easy to me.
IBM Software Service Hardware
$7.663B $15.872B $6.297B
Systems looks too easy +13% last time, 8% this time +8% last time, 6% this time +3% last time, 0% this time
Microsoft SW Client Server MBDS
$4.864B $4.703B $5.951B
Looks way too easy +2% last time, -4% this time 7% last time, 7% this time 10% last time, -1% this time
VMWare
$1.080B
32% last time.29% this time?Red Hat fell short, could be a tough quarter.
December 22, 2011 WW IT Spending Update
Oracle Stumbles Across All Product Segments
The Mo Definitely is Not Continuing
Happy Holidays!
The collective performance of the early CQ42011 reporters was the worst since we started calibrating this indicator in CQ42009.Oracle and Rim are walking down the corridor of shame.Red Hat was disappointing, but perhaps we asked too much.Adobe bounced back nicely after a Q3 miss and Accenture had great numbers, but each had modest guidance.Tibco beat their number again.
The Oracle results (especially Upgrades) point to Software market weakness in Q42011 and a more difficult 2012 than we’ve been forecasting.The Accenture results and guidance point to a strong Q4 for Services (Oracle’s weak Service results notwithstanding) but a slightly more modest 2012.Currency whining was everywhere, and the Euro may be a factor for the next Q or two, but we’ll wait to see if we’ll have a Euro miracle before going too far out on that tack.
Looking out to 2012, Oracle, RIM, Red Hat, and Adobe results and Q12012 guidance each bent their own 2012 forecast downward significantly.The 2012 forecasts for Accenture (they’ve been guiding ~4%pts too low all year) and Tibco are holding steady for now.
But this is not a good picture.
The data is too thin to recalibrate the 2012 forecasts.But the downward drift we began to see after the close of CalQ32011 on November 28, is highly likely to continue, especially for HW and SW.
* All Spend: +6.4% (vs. +6.6% estimated last month)
* Hardware: +6.4% (vs. +6.7% estimated last month)
* Software: +8.4% (vs. +8.0% estimated last month)
* Services: +5.5% (vs. +5.9% estimated last month)
Red is hot, Blue is not!
Company
Quarterly Growth Rate Predicted
Quarterly Growth Rate Actual
12/19 Note
12/22 Note
Accenture
+13%
17%
Accenture beat the revenue guidance midpoint again, coming in with $7.046B, a +17% vs. the +13% prediction.Has beat the estimate 6 straight quarters.
Modest guidance (as is their wont) for 2012 of 6-9% in US$
Adobe
+9%
+14%
Adobe came in at a great $1.152, +15% beating the midpoint of the guidance handily.Misses the estimate last time, so a nice rebound.
Guidance Midpoint is +2%?Whoa!
Oracle Total Software Service Apps DB Hardware & HW Service
+9% +13% +8% +11% +14% -6%
+2% +7% -0% +4% +8% -10%
Oracle results by category have been bumpy for the past 3 Qs, so we’re getting a little nervous.Currency will help, but they really need to be doing better.HW and HW Services may have already hit the bottom as Larry has been indicating, but we’ll see.
Significantly bad news.Blame HW and Services, but SW was poor as well.SW Upgrades is a key miss, pointing to weak Q2011 for SW overall.
Progress
-9%
Did -1% last Q.The model and change in management says it gets worse.Has missed the estimate 2Qs in a row.
The bad news isn’t in yet…
Paychex
+8%
+5%
HR will be double digits, Payroll growing decently well.Has beat the estimate the past 2Qs.
Missed on both payroll and HR.
Red Hat
+26%
+23%
Continues to roll.Has beat the estimate 6 straight quarters.
“Disappointing” at only +23%, but the streak is over.
RIM
-1%
-6%
Bad News. Came in at $5.169B (-6%) well below the guidance midpoint.
Lower expectations for Q12012.RIM for Sale?
Tibco
+18%
+20%
Was +24% last Q.Has beat the estimate 10 straight quarters.
Make it 11 in a row.SOA and BPM is the place to be!
December 19, 2011 WW IT Spending Update
Accenture and Adobe do Well with Currency Tailwind
RIM Down as Exected
Oracle Progress, Paychex, Tibco, Red Hat up to Bat
Europe Making 2012 Murky
The vendors below are the first up to bat for the yearend close.Accenture results were positive.Oracle is a key predictor of Services, Software, and overall IT spending.
Currency continues to be helpful with Accenture reporting a +3% pt assist to their 17% YoY result.The US$ Index is cycling back towards more normal rates this month, so the impact of currency on vendors’ reporting won’t be as positive.
Red results are Bullish, Blue is Bearish.
Company
Quarterly Revenue Predicted
Quarterly Growth Rate Predicted
Note
Accenture
$6.850B
+13%
Accenture beat the revenue guidance midpoint again, coming in with $7.046B, a +17% vs. the +13% prediction.Has beat the estimate 6 straight quarters.
Adobe
$1.100B
+9%
Adobe came in at a great $1.152, +15% beating the midpoint of the guidance handily.Misses the estimate last time, so a nice rebound.
Oracle Total Software Service Apps DB Hardware & HW Service
$9.333B $6.398B $1.282B $1.981B $4.417B $1.653B
+9% +13% +8% +11% +14% -6%
Oracle results by category have been bumpy for the past 3 Qs, so we’re getting a little nervous.Currency will help, but they really need to be doing better.HW and HW Services may have already hit the bottom as Larry has been indicating, but we’ll see.
Progress
$132M
-9%
Did -1% last Q.The model and change in management says it gets worse.Has missed the estimate 2Qs in a row.
Paychex
$554M
+8%
HR will be double digits, Payroll growing decently well.Has beat the estimate the past 2Qs.
Red Hat
$297M
+26%
Continues to roll.Has beat the estimate 6 straight quarters.
RIM
$5.450B
-1%
Bad News. Came in at $5.169B (-6%) well below the guidance midpoint.
Tibco
$284M
+18%
Was +24% last Q.Has beat the estimate 10 straight quarters.
November 28, 2011 WW IT Spending Forecast
Dell and HP are a Downer
2012 Revenue Picture Firming Up
2012 Earnings Growth Looks to be Weaker
Dell and HP results dampened the 2011 and 2012 revenue growth pictures with lower than expected YoY results in 9 of 10 reporting categories between them (not counting HP SW/Autonomy).In terms of YoY revenue meets and beats (66% in Q32011), the rest of the industry performed in line with the Q32010 results.
In terms of earnings growth, the trend line is not encouraging.Q32011 Operating Margins grew by +15% on revenue growth of +11%.Over the past 4 quarters the difference between the two growth measures has ranged between 2.9% and 4.5%.With current 2012 growth looking like ~7%, that suggests profit growth in the 10-11% range.Q411 is looking weaker overall, with YoY revenue growth to be ~9% (suggesting profit growth ~13%).Blow-out tablet sales are the only category that can alter this trend.
Re Dell and HP, here’s what we expected and here’s what happened.
Predicted Q311 YoY Growth
Actual Q311 Yoy Growth
YoY Notes
HP Product Total
Terrible overall.Correlates with Dell.Probably taking punishment now to show 2012 progress under new leadership.
ESS
+1%
-4%
+7% last time
Services
+3%
+2%
A little light
IPG
-2%
-10%
Big downside surprise this time – is it really the supply chain?
PSG
+4%
-2%
Negative again
Software
+2%
+28%
Autonomy was most of this
Dell Total
Weak overall, but better than HP.
Desktops
-1%
-6%
Worse than HP
Mobility
-1%
-2%
Better than HP
Servers and NW
+14%
+13%
Doing significantly better than HP
Storage
-11%
-15%
Worse than HP
Services
+8%
+10%
Better business than HP
SW & Peripherals
+2%
-2%
Better than HP
2011 Wrap-up For 2011, we’re coming in as follows:
* Overall 2011 WW IT Spending – +10.1% (same as August estimate, and up from the June 8.4% estimate)
* HW – +10.3% (down from 10.7% in August)
* Software – +10.9% (up from 10.3% in August)
* Services – +9.6% (up from 9.4% in August)
2012 View
For 2012, the model is predicting the following:
* All Spend: +6.4% (vs. +6.6% estimated last month)
* Hardware: +6.4% (vs. +6.7% estimated last month)
* Software: +8.4% (vs. +8.0% estimated last month)
* Services: +5.5% (vs. +5.9% estimated last month)
Over the past three years (2009-2011), the model’s 12 month view has been conservative (on both the upside and downside) by ~5% pts.iPhones and Tablets have been the major difference.Depending on what tablets do, a +10% 2012 is not out of the question.+6.4% for everything else is probably a fair estimate.
2011 & 2012 Segment Outlook
In August, we provided the Product/Service Offerings forecast for 2011 and 2012 would look like.Here’s the forecast update for those periods:
Segments
2010 Growth
2011 Growth Est.
2012 Growth Est.
Notes on Outlook
Date of Estimate
August 2011
Nov 2011
Aug 2011
Nov 2011
Handhelds
61.5%
100%
56%
35%
16%
Coming back to earth?
PCs
15.6%
6.3%
7.4%
6.2%
6.3%
Lenovo keeps this afloat
Servers
13.6%
6.0%
5.7%
1.9%
3.3%
Weaker
Storage
20.8%
6.4%
10.6%
6.3%
3.0%
Weaker
Peripherals
8.7%
3.0%
-1.6%
1.7%
-0.8%
Very weak
Networking HW
21.7%
6.0%
5.5%
3.6%
4.1%
A little weaker
System & Mgt. Software
17.8%
6.2%
9.0%
7.8%
8.3%
Virtualization and management
Database/MW SW
17.4%
13.3%
15.5%
10.3%
9.1%
Steady Strength
Office & Content SW
15.1%
8.1%
9.8%
7.9%
9.1%
Steady Strength
Cross Industry SW
8.6%
15.8%
18.4%
7.4%
9.3%
Solutions!
Engineering SW
9.7%
11.2%
10.6%
7.7%
8.3%
Steady
Industry-Specific SW
10.4%
12.8%
15.0%
6.3%
8.7%
Solutions!
Services
3.4%
7.6%
9.3%
5.9%
5.8%
Nice currency-aided 2011
Q3 2011 Profit Growth in Line with Prior Periods, But Cloudy for Q4 2011 and 2012
Q32011 profits were up 15% for the IT Industry YoY on +11% Revenue Growth, but differs significantly among product segments.
* Most Hardware categories (Infrastructure HW, PCs, Peripherals, and Comm equipment) have been on a declining profit improvement trajectory vs. earlier 2011 quarters).Comm gear has been in negative YoY growth territory for the past 4 quarters, so their Q411 comparison will probably reverse that trend.
* Apple’s YoY compares are getting tougher, but they still grew operating margin by +41% in Q3.
* Microprocessors (basically Intel) had a good Q32011 (+15%)
* SW YoY operating margin growth is holding in the mid-teens, and appears to have an easy Q411 comparison coming up.But no one’s growing margins with SaaS.
* IT, Internet, and Business Services all have accelerating profit growth.