The 2Q15 earnings report of Fujitsu, which is midway through its repositioning, will reveal further revenue declines

By Stephen Belanger (stephen.belanger@tbri.com), Analyst

Fujitsu will report a revenue decline for 2Q15, as shifting demand in its core businesses and currency challenges continue to stress its repositioning strategy

TBR expects Fujitsu will report during its 2Q15 earnings announcement on July 30 revenue decline of 14.4% year-to-year to $9 billion. 2015 has been a year of repositioning for Fujitsu, as it has responded to market demand shifts from traditional servers and PCs in favor of more complete solutions in areas such as cloud computing, analytics and mobility. However, Fujitsu still has many steps to take in its repositioning strategy as it deepens its portfolio to address these new market requirements. TBR expects Fujitsu will end the year with an annual revenue decline of 6.3%. As the company redefines its strategy for long-term growth and begins to curate its product and service offerings, its revenue slide will stabilize, and TBR anticipates revenue growth in the low single digits in 2016 as Fujitsu’s restructuring efforts, R&D investments and channel partners deliver stronger results. Continue reading

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Tier 1 service providers have aggressive NFV and SDN roll-out plans but are delaying deployment due to insufficient proof of cost savings

HAMPTON, N.H. (July 28, 2015) — According to Technology Business Research, Inc.’s (TBR) 2Q15 Telecom Software Mediated Networks (NFV/SDN) Customer Adoption Study, 17 out of the 20 largest Tier 1 service providers plan to adopt network functions virtualization (NFV) and software-defined networking (SDN) technologies by 2017. Continue reading

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A cloud-first approach helps IBM drive clients’ transformation

By Elitsa Bakalova (elitsa.bakalova@tbri.com), Senior Analyst, Professional Services

IBM has the global offerings and resources to help clients generate value from cloud adoption

IBM provided industry analysts an update on IBM Cloud strategy and business in June. Europe-based analysts met in London on June 9, and North America-based analysts met at the IBM Watson facility in Astor Place, N.Y., on June 26. “The overarching themes of the event rang loud and clear. Implicitly and explicitly, IBM touted the shift in messaging, organizational structure, incentives, roles and portfolio to promote its cloud business. Implicitly, IBM went to great lengths to prove the company is no longer the traditional Big Blue that rose to leadership in the traditional IT and services markets,” according to After Its Rebirth as a Cloud Convert, IBM Will Turn Customers Into Cloud Disciples, TBR’s event perspective on the IBM Cloud Analyst Summit in New York. “Despite the convincing messages around how important cloud is for IBM, IBM recognizes customers need help to fully capture the value of cloud. Just as IBM has changed its organization and culture, its customers need to implement similar changes.”

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Xerox will improve revenue with offshore acquisitions totaling $100M to $400M during 2H15, driving global expansion in BPO and DO services

Dakin Smoyer, Research Analyst

Xerox’s revenue contracted 12.1% year-to-year in 2Q15 due to an acquisition-less quarter despite allocating up to $900M to M&A in 2015

With the sale of Xerox’s ITO business in June, the company expects to see an uptick in revenue in the coming quarter, and TBR believes it will continue to concentrate on the more lucrative BPO and DO services offerings. To combat contracting revenue, Xerox aligned its sales team while adding to leadership, appointing Elias Mendoza as new head of Corporate Business and Development of Mergers and Acquisitions. Xerox plans to invest between $100 million and $400 million in acquisitions during 2H15, focusing on global expansion and increasing automation offerings while improving service level quality. Xerox will need to invest additional efforts in the government healthcare space, which TBR estimates made up 8.5% of revenue in 2Q15, to improve service quality. Continue reading

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As the business case for analytics investment grows stronger, BI services vendors benefit by delivering consulting-led solutions

HAMPTON, N.H. (July 24, 2015) — Technology Business Research Inc.’s (TBR) 1Q15 Business Intelligence Professional Services Vendor Benchmark shows the trusted adviser relationship remains central to BI services purchasing, which favors consulting and IT services vendors with industry and analytics deployment expertise. Continued shift of service delivery around BI solutions from major software vendors to partners and stabilization of recent entrants’ startup-like growth rates slowed benchmarked revenue expansion from 14.9% in 1Q14 to 12.4% in 1Q15. However, the BI professional services market far outpaced the broader IT services market, which declined 0.1% year-to-year in 1Q15. Continue reading

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AT&T will sustain long-term revenue growth through IoT, DirecTV and Mexico expansion

Steve Vachon, Research Analyst

AT&T is investing in new revenue streams to ensure revenue growth persists despite continuing postpaid phone subscriber losses

AT&T was unable to gain postpaid phone net additions for the third consecutive quarter in 2Q15, primarily due to the success of T-Mobile’s Un-carrier strategies as well as More Everything promotions offered by Verizon in the quarter. Notably, AT&T did not lower the price of its Mobile Share programs in 2Q15 to contend with Verizon’s promotions, exemplifying AT&T’s reluctance to engage in the wireless pricing war. Instead, AT&T is concentrated on retaining high-value smartphone customers and steering these customers toward connected devices to spur revenue growth. TBR believes AT&T will struggle to report postpaid net phone additions for the foreseeable future but will be able to sustain consistent postpaid subscriber growth over the next two years through tablets and other connected devices. Continue reading

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Cost-reduction initiatives and restructuring led to revenue and margin declines; more of the same is expected in 2H15

Kevin Collupy, Analyst

Leadership changes and product launches assist in turnaround but profitability will remain pressured into 2016

Unisys’ services revenue declined 6% year-to-year in 2Q15; however, on a constant currency basis services revenue rose 3%, accredited to improved application service revenue growth. Gross margin fell 120 basis points year-to-year during 2Q15 to 15.7%, driven down by currency fluctuations and increasing costs related to cloud and infrastructure services. From a geographical view, U.S. and Canada continued to grow by double digits while revenue globally remained pressured by weak global sales, contracting 24%. Continue reading

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