The digital business week


24 Jan 2011

A digest of the top business and technology news stories from the past week.

Apple’s Steve Jobs takes medical leave of absence

Apple’s CEO Steve Jobs will take a medical leave of absence, though he will stay on as CEO and remain involved in “major strategic decisions” for the company.

In a letter to Apple employees, Jobs said the board of directors has granted him this time off and COO Tim Cook will take responsibility for Apple’s day-to-day operations.

The cause of Jobs’ medical leave of absence is unclear. He beat pancreatic cancer in 2004 and underwent a liver transplant in 2009.

Jobs said he will return “as soon as (he) can” and he and his family requests respect for their privacy during this time.

Eric Schmidt to step down as CEO – Google reports US$8.4bn revenues

Eric Schmidt is to hand the role of CEO of Google over to the company’s co-founder Larry Page in April. Google reported a 26pc rise in Q4 revenues of US$8.44bn.

Google reported operating income in the fourth quarter of 2010 was US$2.98bn, or 35pc of revenues. For the quarter, the company posted a net profit of US$2.94bn, up from US$1.97bn a year ago. The results yielded earnings per share of US$7.81.

Google-owned sites generated revenues of US$5.67bn, or 67pc, while revenues from outside of the United States totalled US$4.38bn, representing 52pc of total revenues.

While Schmidt will step down as CEO he will assume the role of executive chairman, focusing on deals, partnerships and broader business relationships, as well as advising Page and co-founder Sergey Brin.

“We’ve been talking about how best to simplify our management structure and speed up decision making for a long time,” Schmidt said.

“By clarifying our individual roles we’ll create clearer responsibility and accountability at the top of the company.”

Intel to invest US$2.2bn in 22nm chip plant in Israel

Intel has revealed it is moving to 22-nanometer (nm) processes and is investing US$2.5bn to build a new fab in Israel.

Intel’s latest 2nd Generation Intel Core Processor, code-named ‘Sandy Bridge’ was manufactured using the 32-nanometer process. Intel CEO Paul Otellini told CES that Intel will have 20 new processors coming out in the year ahead, with more than 500 new design wins for laptops and desktops. “To give you a scale, in 2011 alone, Sandy Bridge will represent one-third of Intel’s corporate revenues.”

Moving from existing 65-nanometer and 45-nanometer to 32-nanometer and 22-nanometer processes would guarantee the longevity of Intel plants around the world for at least a decade to come.

The Intel plant in Southern Israel will be ready to begin production of 22-nanometer chips by December. The project will be supported by a US$210m grant from the Israeli government.

Apple reports record US$26.7bn quarter and US$6bn profit

With more than 16m iPhones and 7m iPads sold, Apple posted a record first quarter with record revenues of close to US$27bn, delivering the tech juggernaut a massive US$6bn profit.

The first quarter results delivered US$6.43 per diluted share.

These results compare to revenue of $15.68bn and net quarterly profit of US$3.38bn, or US$3.67 per diluted share, in the year-ago quarter.

Gross margin was 38.5pc compared to 40.9pc in the year-ago quarter. International sales accounted for 62pc of the quarter’s revenue.

Apple sold 4.13m Macs during the quarter, a 23pc unit increase over last year.

The company sold 16.24m iPhones in the quarter, representing 86pc unit growth over the year-ago quarter.

Apple sold 19.45m iPods during the quarter, representing a 7pc unit decline from the year-ago quarter.

The company also sold 7.33m iPads during the quarter.

IBM Q4 net income increases 9pc

IBM has completed “an outstanding year, with record profit and free cash flow, and exceeded the high end of our 2010 earnings per share road map objective,” said Samuel J Palmisano, IBM chairman, president and chief executive officer upon the company’s releasing its 2010 fourth-quarter and full-year results.

IBM’s fourth-quarter 2010 diluted earnings were US$4.18 per share, compared with diluted earnings of $3.59 per share in the fourth quarter of 2009, an increase of 16pc.

Fourth-quarter net income was $5.3bn compared with $4.8bn in the fourth quarter of 2009, an increase of 9pc. Total revenues for the fourth quarter of 2010 of $29.0bn increased 7pc (7pc, adjusting for currency) from the fourth quarter of 2009.

Net income for the year ended 31 December 2010 was $14.8bn, compared with $13.4bn in the year-ago period, an increase of 10pc. Diluted earnings were $11.52 per share compared with $10.01 per diluted share in 2009, an increase of 15pc, the eighth consecutive year of double-digit EPS growth. Revenues for 2010 totalled $99.9bn, an increase of 4pc (3pc, adjusting for currency), compared with $95.8bn in 2009.

HP reshuffles its board of directors

Five new board members have begun their roles at Hewlett-Packard, following the departure of four members in the wake of Mark Hurd’s resignation as its chief executive.

Joel Z Hyatt, John R Joyce, Robert L Ryan and Lucille S Salhany have left HP’s board of directors.

The new members, who are experienced in international business and technology, are:

  • Shumeet Banerji, chief executive of Booz & Company;
  • Gary M Reiner, former chief information officer of General Electric and a special adviser to private investment company General Atlantic;
  • Patricia F Russo, former chief executive of Alcatel-Lucent;
  • Dominique Senequier, chief executive of AXA Private Equity;
  • Meg Whitman, eBay’s former chief executive.

The changes come just months after Léo Apotheker was hired as chief executive.

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