August 27, 2015
The main point of the write up in my opinion was:
The company shares have dropped 41.65% in the past 52 Weeks. On August 25, 2014 The shares registered one year high of $50.63 and one year low was seen on August 21, 2015 at $29.11.
Today as I write this (August 26, 2015), Lexmark is trading at $28.25.
Why do I care?
The company acquired several search and content processing systems in the firm’s effort to find a replacement for the firm’s traditional business, printers. As you know, Lexmark is one of the IBM units which had an opportunity to find its future outside of IBM.
The company purchased three vendors which were among the companies I monitored:
- Brainware, the trigram folks
- ISYS Search Software, the 1988 old school search and retrieval system
- Kapow (via Lexmark’s purchase of Kofax), the data normalization outfit.
Also, the company’s headquarters are about an hour from my cabin next to the pond filled with mine run off. Cutbacks at Lexmark may spell more mobile homes in my neck of the woods.
Stephen E Arnold, August 27, 2015
August 27, 2015
EMC is into data lakes, wheels, and hubs.
OpenText has a different view. Navigate to “What Is a Digital Enterprise?”
The main idea is that a digital business is “empowered by digital technology.” Okay, I think that means computers, mobile devices, software. For the last 50 years I have been involved with organizations which have leased, purchased, or invented digital technology.
Is this a news flash?
The write up explains:
This means that the business engages customers and conducts business through digital channels, uses digital assets and/or capabilities, and sells digital products or services. As in the case of startups, the value proposition is keenly focusing on serving digital consumers and is enabled by digital technology. This fundamentally impacts an organization’s value chain.
But the real payoff is this statement:
The value chain of a digital business is more cyclical than it is linear.
But wait, that’s only sort of correct. The value chain is going the way of the snail darter. The Darwinian law of software and service companies is that the future is the ecosystem. Here’s a diagram which makes sense of these remarkable leaps from sequences (what a mid tier consultant calls algorithms which is equally wacky) to value chains to ecosystems.
I like the use of a circle, the interior pentagon, and lines. Very Euclidean in a somewhat four dimensional world. But, hey, Euclid is high school and reality is something else again.
I liked this closing statement:
As we move rapidly toward a Digital World, one thing is clear: information lies at the heart of innovation and disruption. No longer considered just the cost of doing business, information is instrumental in driving innovation and growth. When used the right way, information leads to greater customer satisfaction, accelerates time-to-market, helps to create new opportunities, and enables businesses to remain relevant and competitive. Information is a key strategic component for every organization today and critical to enabling transformation.
I suppose my work career which spans more than a half century in things with zeros and ones, the “rapidly” surprises me.
Perhaps OpenText will open the door to the future. With technology from Fulcrum, Information Dimensions, BRS, and many other slightly long in the tooth digital giants, OpenText may become the go to outfit for this digital stuff.
Stakeholders hope so. The revenues are creeping up but the profitability of the firm has flat lined.
Maybe the digital future thing does not deliver the bottom line impact that some senior managers are supposed to deliver. Without enough money to invest in refurbing old search technology, the future may not be too bright and shiny.
What happens if the ecosystem dies?
Stephen E Arnold, August 27, 2015
August 26, 2015
I read “SLI CEO Ryan Bemoans Low Share price, Says It Should Be $2-Plus.” This is a woulda, coulda, shoulda write up. Reality seems to ignore this somewhat lame mantra.
The write up says:
SLI Systems chief executive Shaun Ryan says the company’s share price is “significantly underpriced” and could be at least four times higher based on other public software-as-a-service valuations.
The write up included this bit of information:
The company today reported a loss of $7.1 million in the year ended June 30, widening from a loss of $5.7 million a year earlier. Operating revenue increased 27 percent to $28.1 million, in line with the $28 million guidance given in April, when it flagged that second-half sales would be lower than expected. Annualized recurring revenue (ARR), its preferred financial measure based on forward subscription revenue, rose 39 percent to $34.6 million.
SLI says its system
… helps you increase e-commerce revenue by connecting your online and mobile shoppers with the products they’re most likely to buy. SLI solutions include SaaS-based learning search, navigation, merchandising, mobile, recommendations and user-generated SEO.
Other publicly trade search vendors are struggling with their financial performance too. For example, Sprylogics, a Canadian vendor, sees it shares trading at $0.33. Lexmark shares are at $28 and change.
Search is a tough niche as Hewlett Packard and IBM are learning.
Stephen E Arnold, August 29, 2015
August 21, 2015
Hewlett-Packard said on Thursday that its profit fell 13 percent in the third quarter, a reminder of the grim challenges prompting a break-up of the company in the coming months. The Gray Lady played it straight, pointing out:
The company said its net income for the quarter, which ended July 31, fell to $900 million, or 47 cents a share, from $1 billion, or 52 cents a share, in the same period a year earlier. Net revenue fell 8 percent, to $25.3 billion, from $27.6 billion a year ago. I read several reports about Hewlett Packard’s financial statements which cushion the impact of revenue decline.
The Register was more insightful. The headline “HP Is Getting So Good Now at Negative Growth, It Should Patent It.” I learned in the Negative Growth article:
The Enterprise Group experienced a modest 2 per cent annual gain, with total revenue for the quarter at $7bn. Once again, sales of industry standard servers were up an encouraging 7.7 per cent. But the higher-margin “business critical systems” saw sales slump 21 per cent, year on year. Technology services revenue was also down 9.3 per cent. Curiously, however, sales of networking equipment were up 22.5 per cent. Things weren’t so great on the Enterprise Services side, however, which saw its revenue dip to $4.98bn, an 11 per cent year-on-year decline. Infrastructure outsourcing was down 13.1 per cent, while application and business services was down 7.4 per cent.
IBM leads in the declining revenue race, however. IBM has 13 straight quarters of decline. HP will split into two companies whose value may be dragged down by the company’s performance. If the split does not take place, HP may have a chance to eat into IBM’s lead in the downhill slide, pro division.
Watson may turn around IBM. HP seems to be wrestling with its Autonomy deal. Both companies bet big on search and content processing. I wonder how the senior managers at each firm views the upside of whiz bang information access technology.
Stephen E Arnold, August 21, 2015
August 20, 2015
I read “Facebook Has Taken Over from Google As a Traffic Source for news.” In my experience, data about online traffic can be a slippery fish. What’s a unique? Is a visitor a human or a software script? Did the log file overwrite itself? Did the administrator dutifully make copies of log files just in the off chance that one of those FAA super redundant computers finds a way to crash?
Now to the write up. Here’s the passage I highlighted:
according to new numbers from the traffic-analytics service Parse.ly, Facebook is no longer just vying with Google but has overtaken it by a significant amount. Parse.ly’s chief technical officer Andrew Montalenti said in an interview with Fortune that the company’s latest estimates show that social-media sources (of which Facebook is by far the largest) accounted for about 43% of the traffic to the Parse.ly network of media sites, while Google accounted for just 38%.
Let’s assume that these data points are accurate?
Google’s revenue is the golden goose which continues to lay eggs like Loon balloons, self driving cars, and solving death. If Facebook continues to siphon traffic and, therefore, revenue from Google, excitement will ensue.
Stephen E Arnold, August 20, 2015
August 13, 2015
Not for Lenovo.
Good old Lenovo, the former IBM personal computer until, seems to be hitting some rough water. I learned that the company is nuking some folks. The motivation for the cost cutting is tucked in the firm’s write up “Lenovo First Quarter FY 15-16: Tough Markets, Solid Results.” Reuters suggested that 3,200 folks are now able to find their future elsewhere.
As the proud owner of a Lenovo laptop, I wondered by I had lots of weird Lenovo software on the machine after we used the extra cost recovery discs to put a fresh version of Windows 8.1 on the limping dog.
Based on my research for my forthcoming study of the Dark Web, I knew there was big money in malware. Bad guys make money. Good guys make money. It seems that Lenovo, if the TNW News story “Lenovo Used a Hidden Windows Feature to Ensure Its Software Could Not Be Deleted” is correct, Lenovo drifted toward the dark side of the force.
The write up says:
The users discovered the issue in May when using a new Lenovo laptop that automatically and covertly overwrote a system file on every boot, which downloaded a Lenovo updater and installed software automatically, even if Windows was reinstalled from a DVD. The only problem is that nobody actually asked for this software, and it persisted between clean installs of Windows. Lenovo was essentially exploiting a root kit on its own laptops to ensure its software persists if wiped.
From my vantage point in rural Kentucky, it would seem that Lenovo is not able to make money selling personal computers and it cannot make money with malware.
The company may need a product optimizer or engineering that allows my limping dog to make haste less slowly. I find it interesting how Dark Web shadows fall across the sunny meadow next to the pond filled with mine drainage. Into every sunny Kentucky day, a cloud must drift.
I love the search system on the Lenovo Web site. Quite a challenge I had to locate the fix. I assume the malware specialists remain on staff, don’t you?
Stephen E Arnold, August 13, 2015
August 5, 2015
If you are interested in smart software, you may want to read “Machine Learning: the High Interest Credit Card of Technical Debt.” I like the credit card analogy. It combines big costs with what some folks see as a something-for-nothing feature of the modern world.
The write up is important because it makes clear the future cost of using certain machine learning methods. The paper helps explain why search and content processing companies often burn more cash than available.
The paper identifies specific cost points which most MBAs happily ignore or downplay in post mortems of failed search and content processing companies. The whiz kids, both boys and girls, rationalize their failure to deal with shifting boundaries, “dark dependencies,” expensive spaghetti, and the tendency of smart software to sort of drift off center.
There is a fix. It is just darned expensive like credit card interest as the clueless consumer just covers the interest.
Applying the Google paper to search and content processing vendors, the only positive financial outcome is to sell the dog before it dies. Shift the search and content problem “credit card debt” to some other firm.
Perhaps that helps explain the Lexmark financial challenge and the dismay at Hewlett Packard as the reality of Autonomy dawned on those quick to spend billions.
Worth reading. Well done, Googlers.
Stephen E Arnold, August 5, 2015
August 4, 2015
I love reading the dead tree edition of the Wall Street Journal. This morning I learned that “Apple and Google Race to Predict What You Want.” The print story appears in the Business & Tech section on B1 and B6 for August 4, 2014. Note that the online version of the story has this title: “Apple and Google Know What You Want before You Do.” There is a difference for me between a “race” and “know.”
Nevertheless, the write up is interesting because of what is omitted. The story seems to fixate on mobile phone users and the notion of an assistant. The first thing I do with my mobile phone is find a way to disable this stuff. I dumped my test Microsoft phone because the stupid Cortana button was in a location which I inadvertently pressed. The Blackberry Classic is equally annoying, defaulting to a screen which takes three presses to escape. The iPhones and Android devices cannot understand my verbal instructions. Try looking up a Russian or Spanish name. Let me know how that works for you.
Now what’s omitted from the write up. Three points struck me as one which warranted a mention:
- Predictive methods are helping in reduce latency and unnecessary traffic (hence cost) between the user’s device and the service with the “answer”
- Advertisers benefit from predictive analytics. Figuring out that someone wants food opens the door to a special offer. Why not cue that up in advance?
- Predictive technology is not limited to a mobile applications. Google invested some bucks into an outfit called Recorded Future. What does Recorded Future do? Answer: Predictive analytics with a focus on time. The GOOG like Apple is mostly time blind.
Predictive methods are not brand, spanking new to those who have followed the antics of physicists since Einstein miracle year. For the WSJ and its canines, isn’t new whatever today seems bright and shiny.
Stephen E Arnold, August 4, 2015
August 3, 2015
Before IBM purchased i2 Ltd from an investment outfit, I did some work for Mike Hunter, one of the founders of i2 Ltd. i2 is not a household name. The fault lies not with i2’s technology; the fault lies at the feet of IBM.
A bit of history. Back in the 1990s, Hunter was working on an advanced degree in physics at Cambridge University. HIs undergraduate degree was from Manchester University. At about the same time, Michael Lynch, founder of Autonomy and DarkTrace, was a graduate of Cambridge and an early proponent of guided machine learning implemented in the Digital Reasoning Engine or DRE, an influential invention from Lynch’s pre Autonomy student research. Interesting product name: Digital Reasoning Engine. Lynch’s work was influential and triggered some me too approaches in the world of information access and content processing. Examples can be found in the original Fast Search & Transfer enterprise systems and in Recommind’s probabilistic approach, among others.
By 2001, i2 had placed its content processing and analytics systems in most of the NATO alliance countries. There were enough i2 Analyst Workbenches in Washington, DC to cause the Cambridge-based i2 to open an office in Arlington, Virginia.
i2 delivered in the mid 1990s, tools which allowed an analyst to identify people of interest, display relationships among these individuals, and drill down into underlying data to examine surveillance footage or look at text from documents (public and privileged).
IBM has i2 technology, and it also owns the Cybertap technology. The combination allows IBM to deploy for financial institutions a remarkable range of field proven, powerful tools. These tools are mature.
Due to the marketing expertise of IBM, a number of firms looked at what Hunter “invented” and concluded that there were whizzier ways to deliver certain functions. Palantir, for example, focused on Hollywood style visualization, Digital Reasoning emphasized entity extraction, and Haystax stressed insider threat functions. Today there are more than two dozen companies involved in what I call the Hunter-i2 market space.
Some of these have pushed in important new directions. Three examples of important innovators are: Diffeo, Recorded Future, and Terbium Labs. There are others which I can name, but I will not. You will have to wait until my new Dark Web study becomes available. (If you want to reserve a copy, send an email to benkent2020 at yahoo dot com. The book will run about 250 pages and cost about $100 when available as a PDF.)
The reason I mention i2 is because a recent Wall Street Journal article called “”Spy Tools Come to Wall Street” Print edition for August 3, 2015) and “Spy Software Gets a Second Life on Wall Street” did not. That’s not a surprise because the Murdoch property defines “news” in an interesting way.
The write up profiles a company called Digital Reasoning, which was founded in 2000 by a clever lad from the University of Virginia. I am confident of the academic excellence of the university because my son graduated from this fine institution too.
Digital Reasoning is one of the firms engaged in cognitive computing. I am not sure what this means, but I know IBM is pushing the concept for its fascinating Watson technology, which can create recipes and cure cancer. I am not sure about generating a profit, but that’s another issue associated with the cognitive computing “revolution.”
In pitching prospective clients, Digital Reasoning often shows a demonstration of how its system respo9nded when it was fed 500,000 emails related to the Enron scandal made available by the Federal Energy Regulatory Commission. After being “taught” some key concepts about compliance, the Synthesys program identified dozens of suspicious emails in which participants were using language that suggested attempts to conceal or destroy information.
Interesting. I would suggest that the Digital Reasoning approach is 15 years old; that is, only marginally newer than the i2 system. Digital Reasoning lacks the functionality of Cybertap. Furthermore, companies like Diffeo, Recorded Future, and Terbium incorporate sophisticated predictive methods which operate in an environment of real time information flows. The idea is that looking at an archive is interesting and useful to an attorney or investigator looking backwards. However, the focus for many financial firms is on what is happening “now.”
The Wall Street Journal story reminds me of the third party descriptions of Autonomy’s mid 1990s technology. Those who fail to understand the quantity of content preparation and manual, subject matter expert effort required to obtain high value outputs are watching smoke, not investigating the fire.
For organizations looking for next generation technology which is and has been working for several years, one must push beyond the Palantir valuation and look to the value of innovative systems and methods.
For a starter, check out Diffeo, Recorded Future, and Terbium Labs. Please, push IBM to exert some effort to explain the i2-Cybertap capabilities. I tip my hat to the PR firm which may have synthesized some information for a story that is likely to make the investors’ hearts race this fine day.
Stephen E Arnold, August 3, 2015
July 30, 2015
Academic databases provide access to quality research material, which is key for any student, professor, or researcher to succeed in their work. One major drawback to academic databases is the high cost associated with subscription fees. Individual researchers cannot justify subscribing to an academic database and purchasing a single article runs high. This is why they rely on academic libraries to cover the costs. Due to changing publishing trends, academic publishers are raising subscription fees.
Elsevier is one of the largest and most well-known scientific journal database, but it is also the most notorious for its expensive subscription fee and universities are getting tired of it. Univers reports that “Dutch Universities Start Their Elsevier Boycott.” The Netherlands, led by state secretary Sander Dekker, want all scientific content to be free online. In order to be published, the university or financier pays to be so. All content by Dutch scientists will hopefully be open access by 2024.
In the meantime, the Association of Universities in the Netherlands has asked all Dutch scientists that work with Elsevier to resign from their positions. As to be expected, some are willing and others are more reluctant. The goal is to pressure Elsevier to change its practices.
“In Univers nr. 8, in January, professor Jan Blommaert called the current publishing system ‘completely absurd’. Not only because of the costs for subscription, but also because the journals have a lot of power over the content: ‘A young PhD student who has been able to get an article accepted by a journal may still have to wait 18 months for it to be published, because the editors prefer well-known names. It is not unthinkable that if I would submit a love letter, it would be published sooner than an intelligent scholarly article by a young researcher.’ ”
The Dutch universities are setting a standard that many libraries and universities will also follow, but the hardest part is encouraging more to participate. Libraries and universities have an obligation to provide needed materials to researchers and a boycott will hinder the step. Large boycotts, rather than individual, will be more effective and instrumental in changing Elsevier’s practices.