Oct
28
2018
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Forget Watson, the Red Hat acquisition may be the thing that saves IBM

With its latest $34 billion acquisition of Red Hat, IBM may have found something more elementary than “Watson” to save its flagging business.

Though the acquisition of Red Hat  is by no means a guaranteed victory for the Armonk, N.Y.-based computing company that has had more downs than ups over the five years, it seems to be a better bet for “Big Blue” than an artificial intelligence program that was always more hype than reality.

Indeed, commentators are already noting that this may be a case where IBM finally hangs up the Watson hat and returns to the enterprise software and services business that has always been its core competency (albeit one that has been weighted far more heavily on consulting services — to the detriment of the company’s business).

Watson, the business division focused on artificial intelligence whose public claims were always more marketing than actually market-driven, has not performed as well as IBM had hoped and investors were losing their patience.

Critics — including analysts at the investment bank Jefferies (as early as one year ago) — were skeptical of Watson’s ability to deliver IBM from its business woes.

As we wrote at the time:

Jefferies pulls from an audit of a partnership between IBM Watson and MD Anderson as a case study for IBM’s broader problems scaling Watson. MD Anderson cut its ties with IBM after wasting $60 million on a Watson project that was ultimately deemed, “not ready for human investigational or clinical use.”

The MD Anderson nightmare doesn’t stand on its own. I regularly hear from startup founders in the AI space that their own financial services and biotech clients have had similar experiences working with IBM.

The narrative isn’t the product of any single malfunction, but rather the result of overhyped marketing, deficiencies in operating with deep learning and GPUs and intensive data preparation demands.

That’s not the only trouble IBM has had with Watson’s healthcare results. Earlier this year, the online medical journal Stat reported that Watson was giving clinicians recommendations for cancer treatments that were “unsafe and incorrect” — based on the training data it had received from the company’s own engineers and doctors at Sloan-Kettering who were working with the technology.

All of these woes were reflected in the company’s latest earnings call where it reported falling revenues primarily from the Cognitive Solutions business, which includes Watson’s artificial intelligence and supercomputing services. Though IBM chief financial officer pointed to “mid-to-high” single digit growth from Watson’s health business in the quarter, transaction processing software business fell by 8% and the company’s suite of hosted software services is basically an afterthought for business gravitating to Microsoft, Alphabet, and Amazon for cloud services.

To be sure, Watson is only one of the segments that IBM had been hoping to tap for its future growth; and while it was a huge investment area for the company, the company always had its eyes partly fixed on the cloud computing environment as it looked for areas of growth.

It’s this area of cloud computing where IBM hopes that Red Hat can help it gain ground.

“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said Ginni Rometty, IBM Chairman, President and Chief Executive Officer, in a statement announcing the acquisition. “IBM will become the world’s number-one hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

The acquisition also puts an incredible amount of marketing power behind Red Hat’s various open source services business — giving all of those IBM project managers and consultants new projects to pitch and maybe juicing open source software adoption a bit more aggressively in the enterprise.

As Red Hat chief executive Jim Whitehurst told TheStreet in September, “The big secular driver of Linux is that big data workloads run on Linux. AI workloads run on Linux. DevOps and those platforms, almost exclusively Linux,” he said. “So much of the net new workloads that are being built have an affinity for Linux.”

Mar
07
2018
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S&P Global snares Kensho for $550 million

S&P Global announced today that it will acquire Kensho, a Cambridge, Massachusetts startup that has concentrated on artificial intelligence and analytics for big financial institutions. The total value of the deal is $550 million in a mix of cash and stock.

Kensho, which counted S&P Global as a client/partner and an investor, launched in 2013 and has raised $67.5 million, according to Crunchbase. The most recent funding round was in fact led by S&P Global for $50 million in February 2017. They apparently liked Kensho so much, they bought the company.

“In just a short amount of time, Kensho’s intuitive platforms, sophisticated algorithms and machine learning capabilities have established a wide following throughout Wall Street and the technology world,” S&P global president and CEO Douglas Peterson said in a statement announcing the deal.

The company doesn’t have small goals. Its stated mission involves solving some of the biggest analytical problems of our time — no pressure or anything. In additional to financial services, the company also has a division called Koto, which concentrates on national security.

As you would expect in a deal like this, Kensho sees S&P Global providing it with financial resources it couldn’t provide alone through conventional funding channels. To solve those big artificial intelligence problems requires world-class engineers, and that requires an owner or investor with deep pockets. They got that with today’s announcement.

The good news for Kensho and its customers is that S&P Global intends to mostly leave it alone and let it do what it’s been doing. It will continue to operate as an independent brand out of its Cambridge offices.

Per usual, the deal is going to be subject to regulatory approval before it closes, but it’s not every day you have a company be your client, your investor and your owner, but that’s what happened to Kensho today as it scored the investment hat trick.

Feb
08
2018
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New credit card skimmer worked in plain sight at Aldi stores

 Police in Lower Pottsgrove, Pennsylvania have spotted a group of thieves who are placing completely camouflaged skimmers on top of credit card terminals in Aldi stores. The skimmers, which the gang placed in plain sight of surveillance video cameras, look exactly like the original credit card terminals but would store debit card numbers and PINs of unsuspecting shoppers. “While Aldi… Read More

Aug
30
2017
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Plaid delivers bank account integration to enterprise developers

 Plaid, which is best known for helping financial services customers build applications with direct connections to their users’ bank accounts, announced today that they have released a new SDK to bring that same type of functionality to enterprise developers. “At a high level we are the middle layer between you and your bank,” Zach Perret, CEO at Plaid told TechCrunch. When… Read More

May
16
2017
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Symphony, a messaging app backed by Wall St, gets $63M at a $1B+ valuation

 Symphony, a secure messaging app that counts 15 of the world’s biggest banks among its investors and 200,000 paying customers, has raised a new tranche of funding to fuel its expansion into new markets. Symphony has closed in on $63 million; and according to sources close to the company, the startup is now valued at over $1 billion — confirming our reporting from December. Read More

Jan
18
2017
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Collibra nabs $50M at reported $650M valuation led by ICONIQ

big data words Data governance and management startup Collibra — originally founded in Belgium but now based out of New York to help businesses in sectors like finance and healthcare to manage and comply with data retention policies — has raised $50 million in its latest round of funding. The company is not disclosing the valuation, but we heard that it is in the region of $650 million (which is… Read More

Jun
04
2015
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Alibaba Invests $194M Into China Business News To Build A Financial Data Platform

Alibaba Share 86-88 Alibaba, the Chinese internet giant, is currently focused on investing internationally to grow its business, but is also continuing to build out operations at home. In the latest move, it has invested $193.6 million (RMB1.2 billion) into China Business News to create a new financial data and information services company. “The era of Data Technology is here and it will surpass the… Read More

Feb
26
2015
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Box’s Latest Vertical Package Focuses On Financial Services

Wall Street Bull Box has a plan to keep growing and it involves building vertical pillars on top of the base Box platform and APIs. To that end, Box announced a new financial services vertical today with a set of tools and technologies geared specifically to firms in the financial services industry. The company first revealed this vertical approach last Fall at the BoxWorks user conference, dubbing it Box… Read More

Feb
21
2015
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Wall Street-Backed Symphony Wants To Revolutionize Financial Services Communication

Two men sitting in front of bank of monitors with stock prices. The company’s backers include a who’s who of Wall Street financial companies: Bank of America Merrill Lynch, BNY Mellon, BlackRock, Citadel, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Jefferies, JPMorgan, Maverick, Morgan Stanley, Nomura and Wells Fargo. Last fall, these companies contributed $66M to finance Symphony, and using that money, purchased Perzo, a… Read More

Apr
15
2014
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The Currency Cloud, An API-Based Money Mover, Raises Another $10M

326974467_fb7ddc6829_b With the news that Facebook has been talking to financial services startups in the UK about launching e-money services, one of the companies that powers payments for those startups has raised a round of funding. The Currency Cloud, which provides an API that end user-facing companies use for cross-currency transfers, has raised a $10 million Series B round of funding from existing… Read More

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