TIME Gadgets

Check Out Microsoft’s Very First Wearable Fitness Tracker

It's Microsoft's new foray into the wearables market

Microsoft is joining the parade of tech companies flooding the crowded wearable health space with a big bet that it can make its way not only to consumers’ desks and laps, but onto their wrists, too.

The company announced a new device Wednesday evening called the Microsoft Band, which will be coupled to a service called Microsoft Health.

Microsoft Band works much like a Fitbit or a Jawbone Up: throughout the day, it tracks your heart rate, steps, calories burned and the quality and length of your sleep. It contains a GPS device, so it tracks distance traveled, too. The Band feeds data back to your Microsoft Health app, which works on Microsoft phones as well as Android and Apple.

The Band does things some other wearables can’t: it notifies you when you receive a text message or a call and allows you to monitor your email. It also lets you interact with Microsoft’s intelligent personal assistant, Cortana, provided you have a Windows Phone. Microsoft also touted Microsoft Health’s coordination with its HealthVault program, which can share information with doctors. And at $199, The Microsoft Band is considerably cheaper than the cheapest Apple Watch will be when that launches early next year at a $349 starting price.

“We don’t think there’s any other device with this level of functionality,” Yusuf Mehdi, a Microsoft vice president, said according to the New York Times in a demonstration of the device on Wednesday. Microsoft released the Band after it apparently leaked early in some app stores.

The big question for the Microsoft Band is whether it’ll hold users’ interest. In a recent survey, PricewaterhouseCoopers found about a third of respondents said they no longer use their wearable device or do so infrequently just a year after purchasing one.

MONEY stocks

Why It’s Not Too Late to Buy Apple Stock

Michele Mattana of Sardinia, Italy, poses with an iPhone 6 Plus and an iPhone 6 on the first day of sales at the Fifth Avenue store in Manhattan, New York September 19, 2014.
Adrees Latif—Reuters

Apple could very well have another blowout quarter up its sleeve.

It’s taken 2 years to get back to this point. After peaking in September 2012 at approximately $705 (pre-split), Apple has now climbed all the way back after its prolonged pullback to fresh all-time highs. Shares have now traded over $105, the equivalent of $735 pre-split.

Naturally, with shares back to all-time highs investors are now wondering if it’s too late to get in, or if they can still buy Apple. Let’s take a look.

Word on the Street

For starters, let’s consider the Street’s opinion on Apple. According to Yahoo! Finance, the average price target for Apple is $115, which represents about 10% upside from here. That may not seem like a lot, and it’s also a modest hurdle for the S&P 500 to clear in the next year, which determines if Apple were to outperform or underperform should it hit that average price target.

The high price target is $143. After giving up the Street high target temporarily, Cantor Fitzgerald analyst Brian White is back at the top of the list. White seems to always want to have the Street high price target on Apple, and reclaimed his title from JPM Securities analyst Alex Gauna earlier this month. The low price target is $60, but we’ve already covered how silly that sounds.

For the most part, the Street remains bullish overall, suggesting that it’s not too late to buy.

Apple pays

Re-initiated in 2012 after a 17-year hiatus, Apple’s dividend continues to climb higher as the company remains committed to returning its copious amounts of cash to shareholders. While the majority of Apple’s capital return program is being allocated to share repurchases, its still paying out hefty amounts of cash in the form of dividends.

Apple increased its quarterly payout by 15% in early 2013, following up with an 8% increase earlier this year. The Mac maker usually updates its capital return program in March or April, which is likely when investors will find out more about the next dividend boost.

Importantly, Apple’s dividend is sustainable — its dividend payout ratio has averaged 30% since bringing its dividend back.

Source: SEC filings and author's calculations. Fiscal quarters shown.
Source: SEC filings and author’s calculations. Fiscal quarters shown.

There’s no magic number when it comes to payout ratios, but generally investors prefer a figure in the 30% to 60% range. A payout ratio that’s too low may have investors asking for more, while a ratio that’s too high could potentially suggest that the company is being too generous and a dividend cut could be in the cards.

At current levels, Apple’s dividend represents a 1.8% yield. That’s less than some fellow tech giants like Microsoft and Intel, both of which yield around 2.7% right now, but it’s still a respectable yield nonetheless. There’s something for income investors here too.

Apple buys (itself)

As mentioned, the other aspect of Apple’s capital return is its massive share repurchase authorization, which currently sits at $90 billion. This is where Apple has been focusing most of its capital return efforts, believing shares remain cheap.

It should be telling that Apple just embarked upon its fourth accelerated share repurchase program while shares are at all-time highs. That’s literally Apple telling you that it thinks its shares are cheap at current prices and putting its money where its mouth is — because it’s also repurchasing shares itself. While many companies have rather bad timing with repurchases, it’s hard to argue that Apple is overpaying for itself when it’s trading at just 16 times earnings (a discount to the S&P 500).

Thanks to the resulting earnings accretion, EPS growth has been continuously outpacing net income growth by a healthy margin.

Source: SEC filings. Fiscal quarters shown.

Considering the sheer magnitude of Apple’s repurchase program, it’s also worth noting that share repurchases can drive capital appreciation. As Apple continues to amplify EPS growth through aggressive repurchases, its earnings multiple will contract (all else equal) due to a larger denominator.

If Apple’s earnings multiple contracts, shares look even cheaper, which creates buying interest. If the market is willing to simply maintain Apple’s earnings multiple, then that requires prices to go higher still.

An all-time record quarter is around the corner

Apple’s guidance for the current quarter is mind-boggling. The roughly $14.4 billion that the company expects to make over the holidays is well above what any other company in the S&P 500 is capable of producing, including oil companies. As Apple has just dramatically broadened its addressable market by launching larger iPhones (opening up a whole new world of potential Android switchers), Apple could very well have another blowout quarter up its sleeve. The iPhone and Mac businesses are as strong as ever, and the iPad’s recent woes are possibly temporary hiccups.

When the company releases its fiscal first quarter earnings in January, the figures could potentially be a positive catalyst as the quarter is expected to set new all-time records in both top and bottom lines. Shortly thereafter, Apple Watch will ship, potentially boosting investor confidence (and share prices) further.

Yes, you can still buy Apple.

TIME Video Games

The 5 Best Xbox One Games Right Now

Have a look at our essential video game checklist for new Xbox One owners

So you just picked up an Xbox One, and you’re wondering what to buy. That’s something we can say now—the “after you bought it” thing—because with consoles like the PlayStation 4 and Xbox One, every game is available through the console’s e-tail store as a digital download. Or maybe you haven’t bought one yet, but you’re leaning in Microsoft’s general direction. Either way, we think these are hands-down the best games on the platform at the moment.

  • Child of Light

    Ubisoft’s Child of Light is like platforming through a fairy tale painting, a roleplaying adventure in which you guide an Austrian girl who’s died and been transported to another world through a dark fantasy landscape, battling folk creatures to restore the sun, moon and stars. The turn-based battle system and skill-based character progression are straightforward enough, but most unusual for a game: both the narration and dialogue unfurl in poetic verse.

    Buy this game if… You’re into modern poetry, like the earlier Final Fantasy roleplaying games, enjoy unusual settings and stories that veer from classic fantasy tropes, and love the idea of scrolling through beautifully hand-drawn landscapes.

    Steer clear if… You’re no fan of fairy tales, turn-based combat, side-scrolling roleplaying games or stories told as poems.

    What critics said: “… riffs on beloved roleplaying tropes while serving up an evocative, hand-drawn fantasy pastiche with traces of Yoshitaka Amano and Hayao Miyazaki” (TIME); “…a memorable experience that’s as fun to play as it is artistically pleasing” (Gamesradar); “… a wonderfully realized, somber adventure” (GameSpot).

    ESRB Rating: Everyone 10+

  • Diablo III: Ultimate Evil Edition

    Blizzard third dance with the devil turns out to be the series’ best, with the slickest boss fights, craftable gear, legendary item sets and an emporium’s worth of unlockable achievements. It’s even better on consoles, where using the gamepad to dodge enemies or just stroll around feels like the more natural fit. If you’re new to this installment, the PlayStation 4 and Xbox One versions also come with the Diablo III: Reaper of Souls expansion.

    Buy this game if… Wailing on hordes of attacking enemies sounds fun, you like games with endless leveling up possibilities, you like settings steeped in Judeo-Christian demonology.

    Steer clear if… You’re burned out on hack-and-slash games, or you’re looking for a fantasy game with a well-written story.

    What critics said: “…a mediocre action-RPG [starting out] that eventually turns into a good and sometimes even great one” (TIME); “the definitive version of Diablo III” (GameSpot).

    ESRB Rating: Everyone 10+

  • Forza Horizon 2

    In Forza Horizon 2, you can drive a gleaming 2015 Lamborghini Huracán (among other luxury vehicles you’ll probably never get to in real life) through the game’s open world–a world that’s three times bigger than the original Forza Horizon–while availing yourself of improved Drivatar technology (A.I. vehicles you can race against, based on the driving attributes of real players’ in your friends list) and admiring the startling visual effects, like the way light now refracts through drops of moisture, the render tech plausibly simulating something as intangible but essential as the earth’s atmosphere.

    Buy this game if… You love obnoxiously beautiful cars, you love the idea of racing luxury vehicles through gorgeously photorealistic scenery (southern France and northern Italy), or you’d like to race against friends online even when they’re not online.

    Steer clear if… You’re no fan of racing games, or the notion of playing them with a gamepad (in which case there are optional racing wheels available, but the high fidelity ones cost more than the Xbox One itself).

    What critics said: “A meticulously crafted, marvelous-looking and superbly designed racer that dishes up an absolute feast of automotive madness and mayhem” (USgamer); “…Horizon 2 earns its stripes with a breezy determination to simply show you a ruddy good time” (Telegraph); “…one of the best racing-game experiences I’ve ever had” (GamesBeat).

    ESRB Rating: Everyone 10+

  • Sunset Overdrive

    Sunset Overdrive is developer Insomniac’s first try at an open world game, tapping the same screwball vein as its Ratchet & Clank series, only with a grownup twist. Imagine a punk-informed quasi-parkour game by way of a zany skateboarding simulation by way of a metropolis-sized circus playground that knowingly winks at you as it periodically deconstructs itself.

    Buy this game if… Grinding, back-flipping and zip-lining on wires, cables, pipes, railings and pretty much the edge of anything while blasting lunatic mutants sounds appealing.

    Steer clear if… You hate goofball humor, you’re not into open-world games.

    What critics said: “…you’re some kind of grind-fu god, working a style meter that requires continuously deft finger work into an acrobatic lather” (TIME); “…probably the most enjoyable game I’ve played so far this generation” (EGM); “…piles the number of options you can choose from sky-high” (Joystiq).

    ESRB Rating: Mature

  • Titanfall

    Titanfall covers the Xbox One’s online-only angle reasonably well if you’re looking for a game about shooting guns or piloting giant mechs that shoot even bigger guns and the option to alternate between both modes in a single match. The idea’s simple enough: two teams of six players engage in all-out ballistic combat on multiplayer maps while attempting to complete team objectives and summoning giant, drivable mechs that periodically drop from the sky.

    Buy this game if… You love the idea of being able to alternate between playing as a nimble, wall-running soldier and a giant rock-em-sock-em mech in an futuristic online gunslinging extravaganza.

    Steer clear if… You find highly competitive, frenetically paced first-person shooters overwhelming.

    What critics said: “…for a certain kind of highly competitive someone with more of an e-sports mentality.” (TIME); “…a thunderously good time; an accessible yet skilful, hulking yet ferociously nimble shot in the arm for a well-populated genre” (Telegraph); “by reinventing the way you move, Titanfall reinvents what it feels like to play a competitive shooter” (GameSpot).

    ESRB Rating: Mature

TIME Video Games

The Xbox One’s Price Just Dropped $50 Until Next Year

Microsoft says you can knock $50 off any Xbox One, bundle or base, through January 3, 2015.

The once-$499 Xbox One, which plummeted to $399 in June, just dropped in price again: You can have one starting next week for $350.

It’s a limited-time thing, but Microsoft’s giving fence-sitters plenty of time to make up their minds, running the promotional pricing from November 2 (next Sunday) through January 3, 2015. You’ll have to find a participating retailer, but Microsoft’s list covers the majors.

It’s also an “any Xbox One” thing, so you can basically knock $50 off whatever you like, from the base model without a game to any of the bundles, including the upcoming Assassin’s Creed Unity ($349, or $449 with Kinect and Dance Central Spotlight), Call of Duty: Advanced Warfare ($449 with 1TB hard drive and custom housing) and Sunset Overdrive ($349 and a white finish) SKUs.

Phil Spencer’s wrong when he boasts, “Only on Xbox One can you play some of the most anticipated exclusives, newest blockbuster franchises and innovative independent games of the year.” The Xbox One checks those boxes, sure, but so does Sony’s PlayStation 4 (to say nothing of Windows PCs). I’d include Nintendo’s Wii U, which checks the “most anticipated exclusives” and “innovative independent games” boxes, but it fumbles the “newest blockbuster franchises” one because of the abject state of third-party support.

The Xbox One’s temporary price drop is both a sign of how much Microsoft’s trying to change the sales narrative around its flagship console — the perception that its basically getting clobbered by the PlayStation 4 worldwide — and an indication that the company’s willing to do more than it’s competition to make that happen. If you want an example of a system that’s arguably not doing enough, price-wise, to shore up the gulf between its price and perceived value, look no further than Nintendo’s Wii U.

TIME Games

Sunset Overdrive Review: Masterful Grindhouse

Insomniac Games/Microsoft

Still need a reason to own an Xbox One? Here it is.

At heart, Sunset Overdrive is a nerd-power fantasy that wants you to know it knows it’s a nerd-power fantasy. But it’s also about pulling the Xbox One out of the Bermuda Triangle. Sony’s PlayStation 4 has sold so well that even Sony’s baffled, whereas Microsoft clammed up about Xbox One sales back in April. Microsoft’s implied system sales have been solid, but the console needs a holiday dunk shot beyond recycled Halo. Now it definitely has one in Insomniac Games’ magnificent Sunset Overdrive.

Most probably know Insomniac for the Ratchet & Clank platform hoppers, where a bipedal cat and robot sidekick gallivant around the universe. You can see the lines back to those games here — the colorful environments, ridiculous weaponry and general daffiness — but Sunset Overdrive is a lot more than just Ratchet & Clank for grownups.

In the game you play a nerd who can grind — who cares how or why — on nearly anything, Cirque du Soleiling around a zany postapocalyptic metropolis, pulping exploding mutants and ruthless robots, egged on by gorgeous scenery and goofball factions and a punk backbeat. Imagine Tony Hawk meets Sam Raimi crossed with Sid Vicious multiplied by pinball.

The plot’s intentionally daft enough to slide almost beneath notice: a corporate soda maker’s new energy drink turns imbibers into mutants, because, to paraphrase one of the characters you interact with, “Y’know, science and somethin’-somethin’ bullsh–.” It’s just a permission slip to build a city that’s effectively a giant fun-park ride.

Insomniac Games/Microsoft

Nothing has to make sense, which is how the game then goes about making perfect sense. Sandbox games let you go anywhere, but eventually amount to doing this thing to get that thing to level up and do the next thing. But what you’re thinking during the cutscene exposition and wordy banter is “What’s my next upgrade?” or “How do I collect this many of that?” or “How’s my next opponent going to fight?” or “What’s that part of the map going to play like?”

It’s as if Sunset Overdrive reads minds, because it cannonballs you from thrill to thrill, burning all the exposition and busywork to the ground and using what little there is to slyly poke fun at genre conventions. “Bryllcream, what kind of a name is that?” says the protagonist at one point after hearing another character’s goofy handle. “One that’s easy to remember, I guess,” goes the response. It’s a moment that stands for everything else about the game: subtext schmubtext, just go with the flow.

And boy does this thing flow. Never in a game world this big and geometrically complex have I felt as firmly connected to the skyline and simultaneously able to power through it, chaining leaps, air dashes, swings, flips, attacks, wall runs, zip-line “undergrinds,” trampoline bounces and ground pounds while skating across anything with an edge. Sunset City — that’s its name, though most of the game transpires under blue skies — has been scrupulously overlaid with railways and cables and packed with elaborate angular structures so you can grind from one side of the city to any other without touching down. This, finally, is the aerial skating game Sucker Punch’s Infamous only teased five years ago.

Insomniac Games / Microsoft

Staying off the ground is essential. On the ground you’re slow and clumsy, but in the air you’re some kind of grind-fu god, working a style meter that requires continuously deft finger work into an acrobatic lather by mixing maneuvers and weapon attacks — a familiar idea that’s been scaled way up here. Basically, think of the ground in Sunset Overdrive as kryptonite.

Then think about how ridiculous you’d want your nonsense arsenal of destruction to be, and Sunset Overdrive manages to go one better. So, for instance, you can wield: a rifle that flings vinyl records that bounce from enemy to enemy, an explosive teddy-bear launcher, a crowd-control gun that deploys taunting holographic decoys, a pistol that spits projectiles that turn into floating turrets, and a weapon (dubbed “The Dude”) that lobs incendiary bowling balls.

Nonsensical, but not superficial. The pyrotechnics feel purposeful, and each weapon deploys unique damage against the game’s four basic enemy types — you’ll die, and die again, then die some more if you opt to fight robots with shotguns or human thugs with harpoon launchers, for instance (though dying itself is delightful and a clever in-joke here — a collage of cultural sendups playing with the idea that these kinds of games are basically immortality simulators).

All of that’s fed by a backend system of configurable power-ups you unlock by feats of derring-do as the game unfolds. You can finesse these in all kinds of cool ways, from monkeying with weapon damage to how fast the style meter climbs to the sort of ballistic damage you want to kick out (shockwaves, tesla bolts, tornadoes and more) as you jump style levels. It’s an elegant relational lattice that feels balanced and very you-centric, where the permutations from your choices amount to meaningfully different ways of squaring off with opponents or completing challenges.

Insomniac Games/Microsoft

My only complaints are a few niggling completeness problems Insomniac needs to fix: I encountered a few missions that wouldn’t advance without resets, a few spots where enemies weirdly stopped being able to damage me, half a dozen places where I got stuck in the world geometry and had to reset the game, and I don’t know if it was code shenanigans or the Xbox One, but the game crashed outright twice.

I suppose I should say something about the next-gen stuff, the crazy number of enemies the game can shoehorn into battles at once, the crazy-big bosses and ambitiously multilayered missions and combat scenarios, the magnificent architectural and kaleidoscopic sweep of Sunset City itself. But at this point I don’t really notice that stuff. And that’s the biggest compliment I can pay the game, really — that it’s great without bothering to highlight the chrome.

Insomniac calls Sunset Overdrive a “traversal shooter,” as if that explains anything. I’d just call it a damned good time.

5 out of 5

Xbox One

TIME Earnings

Microsoft’s Revenue Jumps, But Profits Decline on Job Cuts and Nokia Costs

The Microsoft Corp. logo sits on display during the Microsoft Worldwide Partner Conference in Washington, D.C. on July 16, 2014.
The Microsoft Corp. logo sits on display during the Microsoft Worldwide Partner Conference in Washington, D.C. on July 16, 2014. Bloomberg—Getty Images

Shares of the tech giant rose 4% in after hours after reporting a 25% sales bump in the first quarter of its 2015 fiscal year

Microsoft posted a 25% sales bump in its most recent quarter, beating Wall Street predictions on the strength of improved personal-computer sales as well as added revenue from the mobile phone business that the company Microsoft acquired from Nokia for $7.5 billion earlier this year. Here are the key points from Thursday’s Microsoft earnings report.

What you need to know: Sales improved to $23.2 billion in the first quarter of its 2015 fiscal year, which was also Satya Nadella‘s second full quarter as CEO of the company. But at the same time, Microsoft’s profits dipped more than 13%, to $4.5 billion, or 55 cents per share. The drop in profits was attributed to a $1.1 billion charge the company took in connection with massive layoffs, first announced over the summer, along with some ongoing costs of integrating Nokia’s handset business.

Microsoft got $2.6 billion from phone hardware sales in the most recent quarter, thanks to its new handset business, while the company’s unit that handles corporate sales grew revenue by 10% overall to $12.3 billion. The latter figure includes a 2.7% bump for commercial licensing sales, which cover server programs and corporate Windows and Office products.

The big number: Nadella has been putting a lot of focus toward selling Microsoft’s cloud-based business services, and the company said Thursday that its commercial cloud revenue, including sales from Office 365 and Azure cloud platform, grew 128% in the first quarter. Overall, the company reported a 50% jump in sales for its “Commercial Other” line, which includes the cloud products, to $2.41 billion. This is a closely-watched part of Microsoft’s business, as investors want to be sure that the tech giant is nimble and modern enough to be a big player in the cloud services market. Microsoft’s shares jumped almost 4% in after-hours trading, so it seems like investors were pleased with the company’s efforts.

What you might have missed: Microsoft also reported a 74% first-quarter revenue increase, to roughly $2.5 billion, for its computing and gaming hardware segment, reflecting sales growth for the company’s Xbox gaming console as well as the market-wide rebound in PC sales. Microsoft revealed Thursday that it sold 2.4 million Xbox consoles during the first quarter, representing a 102% bump. However, the company did not specify whether those sales came from the new Xbox One, which launched in 28 new markets during the quarter, as opposed to older iterations of the gaming system.

This article originally appeared on Fortune.com

TIME Video Games

In the Sunset Overdrive Launch Trailer, It’s Mostly Blue Skies

A corporate soda outfit releases an energy drink that turns its imbibers into mutants, and that's where you come in.

So here’s what I want to ask whoever put the Sunset Overdrive launch trailer together: where’s the sunset?

First it’s nighttime, then it’s daytime, then you get a few seconds of post-sunset skyline while the protagonist gets all motivational-speaky. But the action takes place midday. Look at that cerulean blue sky! Look at all those fat cottony clouds! ELO would approve!

But the overdrive angle…that’s hard to miss. This is a game about the opposite of narrative gravitas. You’re the former employee of a soda-maker that’s released an energy drink that turns people into slavering super-powered mutant bad guys. Your job is to grind around a carnivalesque sandbox and do goofy, epic battle with (flying?) worms, robots, sac-covered troll-things and giant floating dolls.

Sunset Overdrive is one of Microsoft’s two holiday Xbox One-exclusive pillars, the other being that thing about a military cipher who fights tittering aliens still, in 2014, more behaviorally interesting than the ones the studio that created said military fellow more recently introduced.

Studio Insomniac Games has a respectable design track record with this sort of thing. The ups and downs of the later Resistance games aside, the Ratchet & Clank series is terrific. Sunset Overdrive looks like a punk version of the latter, a third-person gonzo playscape: Tony Hawk meets Tank Girl meets Sam Raimi. (Is it me, or does the protagonist look a little like teenage Bruce Campbell?) If you’re a game aficionado, Insomniac’s also name-dropped Crazy Taxi and Jet Set Radio as inspirations.

Microsoft claims the game “rewrites the rules of traditional shooters.” We’ll see, when the game arrives next Tuesday, October 28.

TIME Companies

Microsoft CEO Satya Nadella Says Company Pays Men and Women Equally

Microsoft Corp Chief Executive Officer Satya NadellaSpeaks At Company Event
Satya Nadella, chief executive officer of Microsoft Corp., speaks to students during the Microsoft Talent India conference in New Delhi, India, on Tuesday, Sept. 30, 2014. Graham Crouch—Bloomberg/Getty Images

Verifying the lack of a pay gap is difficult, however

Microsoft CEO Satya Nadella, who was criticized earlier this month for saying women should not ask for raises, said Monday that his company pays men and women equally.

“I checked that it is something that we are enforcing,” said Nadella, who has apologized for the earlier remarks, at a presentation in San Francisco, Reuters reports. “We are in fact in good shape. Men and women get paid equally at Microsoft.”

Nadella’s statement is difficult to verify, as Microsoft does not make its pay structure public. Nadella’s comments also seem to contradict data from the site Glassdoor, which reported — based on a very small sample of employees who voluntarily shared their salaries — that men seem to earn more than woman doing the same job. According to its figures, male senior software development engineers earn around $137,000 a year, while women with that title earn around $129,000 a year.

“We have made some progress,” Nadella said during the presentation. “We have a lot more to do.”

[Reuters]

MONEY stocks

3 Things to Know About IBM’s Sinking Stock

141020_INV_IBM
Niall Carson—PA Wire/Press Association Images

IBM's shares plunged 7% Monday after a disappointing earnings report. Can tech's ultimate survivor transform itself one more time?

International Business Machines INTERNATIONAL BUSINESS MACHINES CORP. IBM -0.0122% has long enjoyed a unique status on Wall Street — a tech growth powerhouse that investors also see as a reliable blue chip, with steady profit growth and a hefty dividend. But with the rise of new technologies like cloud computing, Big Blue has struggled to maintain that balancing act.

Now investor confidence has suffered a big blow.

On Monday the company announced the results of a pretty lousy quarter. IBM’s third-quarter operating profit was down by nearly one fifth, and the company failed to generate year-over-year revenue growth for the 10th consecutive quarter.

Big Blue also revealed plans to sell-off its struggling semiconductor business, a move that involves taking $4.7 pre-tax billion charge against IBM’s bottom line. Actually, it is paying another company to take this unit off its hand.

While CEO Virginia Rometty acknowledged she was “disappointed” with IBM’s recent performance, she’s also pledged to turn the company around, led in part by IBM’s own foray into the cloud.

Now, you don’t get to be a 103-year-old tech company without learning to adapt. That’s what IBM famously did in the ’90s, when the computer giant started to shift away from profitable PC hardware in favor of consulting and service contracts for businesses.

But Monday’s dismal earnings show just how hard repeating that trick could turn out to be.

Here’s what else you need to know about the stock:

1) You can’t really call IBM a growth company anymore since its sales aren’t rising.

When it comes to revenues, IBM ranks behind only Apple APPLE INC. AAPL -0.5357% and Hewlett-Packard HEWLETT-PACKARD CO. HPQ -0.2829% among U.S. tech companies. On a quarterly basis, though, sales have actually shrunk for 10 periods in a row, including a 4% slide in the third quarter. The big culprit is cloud computing, in which businesses can access computing services remotely via the Internet.

Since the 1990s, IBM’s model has been premised on selling powerful, expensive computers to large businesses, then earning added profits on contracts to help firms run those machines. But the cloud lets companies rent, not buy, this computing power. “You only pay for what you use,” says Janney Montgomery Scott analyst Joseph Foresi. The result: IBM’s hardware revenues sank 15% last quarter.

2) IBM is racing to be a leader in cloud computing, but with mixed results.

The company has identified four alternative areas of growth. One is the cloud, the very technology eating into IBM’s hardware sales. Big Blue has spent more than $7 billion on cloud-related acquisitions. It’s also going after mobile, IT security, and big data, the analysis of information sets that are too large for traditional computers. An example of that is Watson. IBM’s artificial-intelligence project, which won Jeopardy! in 2011, is being marketed to businesses in finance and health care.

These initiatives have promise, but IBM’s size is a curse. For instance, the company’s cloud revenues jumped 69% to $4.4 billion last year, but with nearly $100 billion in overall sales, “it’s hard to move the needle,” says S&P Capital IQ analyst Scott Kessler.

3) The stock is now much cheaper than its tech peers, but it may deserve to be.

Investors willing to wait and see if these moves will transform IBM may take comfort in the fact that the stock looks cheap. What’s more, the shares yield 2.4%, vs. 2% for the broad market. This could make the company look like a good value.

But investors should tread carefully, says Ivan Feinseth, chief investment officer at Tigress Financial Partners. He notes IBM has spent $90 billion on stock buybacks in the past decade, which has kept the P/E low by increasing earnings per share. Yet none of that money was invested for growth, as evidenced by IBM’s sluggish annual growth rate. It is hard to imagine IBM outmuscling Amazon AMAZON.COM INC. AMZN 0.0442% , Cisco CISCO SYSTEMS INC. CSCO -0.2075% , Microsoft MICROSOFT CORP. MSFT -1.405% , HP HEWLETT-PACKARD CO. HPQ -0.2829% , and Google GOOGLE INC. GOOG -0.9466% in the cloud — and there are better values in tech.

TIME career

Microsoft CEO Says He Was ‘Completely Wrong’ to Suggest Women Shouldn’t Ask for Raises

Satya Nadella had previously apologized for his remarks

Microsoft CEO Satya Nadella said in a new interview that he was “completely wrong” to suggest it’s “good karma” for women to wait for a raise instead of asking for one.

“It’s been a very humbling and learning experience for me,” Nadella told CNBC in his first interview since his initial comments drew outrage.

Nadella said anyone held back in their career by gender bias should push back against their managers, and that he had wrongly extrapolated the advice from his own experiences.

“I basically took my own approach to how I’ve approached my career and sprung it on half of humanity,” he said.

Nadella had previously apologized for his remarks in a letter to the company.

“I believe men and women should get equal pay for equal work,” he wrote. “If you think you deserve a raise, you should just ask.”

See the interview below.

[CNBC]

 

 

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