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IBM in mega-deal to buy cloud computing firm SoftLayer Technologies

BY Marianne Wilson

Armonk, N.Y. — IBM on Tuesday strengthened its position in the fast-growing market for cloud-computing services with the news that it has entered into an agreement to acquire SoftLayer Technologies Inc. The Dallas-based firm is the world’s largest privately held cloud computing infrastructure provider, according to IBM.

The financial terms of the deal were not disclosed. But reports, including one by the New York Times, valued it at approximately $2 billion,

The acquisition is expected to close in the third quarter. Once the transaction is completed, SoftLayer and IBM’s existing SmartCloud unit will be combined in a new Cloud Services division. The division will report to Erich Clementi, senior VP, IBM global technology services.

“As businesses add public cloud capabilities to their on-premise IT systems, they need enterprise-grade reliability, security and management. To address this opportunity, IBM has built a portfolio of high-value private public and hybrid cloud offerings, as well as software-as-a-service business solutions,” said Clementi. “With SoftLayer, IBM will accelerate the build-out of our public cloud infrastructure to give clients the broadest choice of cloud offerings to drive business innovation.”

SoftLayer serves roughly 21,000 customers with a global cloud infrastructure platform spanning 13 data centers in the U.S., Europe and Asia. Among its many cloud infrastructure services, the company allows clients to buy enterprise-class cloud services on dedicated or shared servers, offering clients a choice of where to deploy their applications.

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S.Jones says:
Jul-21-2013 10:13 pm

This will be a welcoming step
This will be a welcoming step by IBM. And I think that IBM shall introduce improvements in the already existing service and will make it more efficient for the customers. IBM in itself is the name of security, trust, reliability and management. IBM will certainly come up to the expectations of its customers once again by taking over this private cloud computing. .

S.Jones says:
Jul-21-2013 10:13 pm

This will be a welcoming step by IBM. And I think that IBM shall introduce improvements in the already existing service and will make it more efficient for the customers. IBM in itself is the name of security, trust, reliability and management. IBM will certainly come up to the expectations of its customers once again by taking over this private cloud computing. .

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Consumables buoy Dollar General’s record Q1 results

BY CSA STAFF

GOODLETTSVILLE, Tenn. — Dollar General reported record sales, operating profit and net income for the first quarter ended May 3, thanks to strong growth in its consumables categories.

The company reported net sales of $4.23 billion for the quarter, an increase of 8.5% from $3.9 billion in the prior year’s quarter. Same-store sales increased 2.6%, resulting from increases in both customer traffic and average transaction amount. Total sales increases in consumables significantly outpaced increases in the company’s non-consumable categories, reflecting the impact of continued financial pressures on consumers as well as unfavorable weather conditions in many of the company’s geographic regions.

The company’s gross profit, as a percentage of sales, was 31% in the 2013 first quarter, a decrease of 89 basis points from the 2012 first quarter. The gross profit rate was negatively affected by higher markdowns; a higher mix of consumables, which generally have lower gross profit rates; increased inventory shrinkage; and lower initial markups. These factors were partially offset by improved transportation efficiencies and other logistics initiatives, in addition to modestly lower fuel rates.

While the company’s gross profit was lower than it anticipated, its operational profit saw record growth. Dollar General’s operating profit for the quarter was $395 million, or 9.3% of sales, a 3% increase from $384 million, or 9.9% of sales, in the prior year’s quarter.

“For the quarter, we achieved same-store sales growth of 2.6% reflecting strong growth in our consumables categories offset by softer sales in seasonal and weather-sensitive categories,” said chairman and CEO Rick Dreiling. “We believe the continued strength in consumables is a sign of the underlying health of our business.”

The company’s net income was $220 million for the quarter, a 3.5% increase from $213 million in the prior year’s quarter. Adjusted net income — which excludes expenses relating to secondary offerings of the company’s stock in both the 2013 and 2012 periods, losses associated with restructuring the company’s credit facility in 2013, an amendment of the company’s revolving credit facility in 2012 and income tax effect of adjustments — was $232 million for the quarter, an 8% increase from $215 million in the prior year’s quarter.

“We have updated our outlook for the year to reflect moderating sales growth and a lower expected gross profit rate than we previously anticipated,” Dreiling added. “We are well positioned for our same-store sales growth to accelerate to 4 to 5% for the year as our key initiatives, such as the roll out of tobacco and Phase 5 planogram changes, continue to gain traction through the year. Sales of non-consumables are expected to remain challenging, and we anticipate a continued shift to lower margin items within consumables and higher inventory shrink. We believe that our customers’ dependence on our everyday low pricing and convenient locations has never been greater.”

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Neiman Marcus’ revenues, net earnings up in Q3

BY CSA STAFF

DALLAS — Neiman Marcus reported net earnings of $71 million for the third quarter ended April 27, a 13% increase from $63 million in the prior year.

The company’s total revenues for the quarter were $1.1 billion, a 4% increase from $1.06 billion in the prior year. Comparable revenues increased 4%.

For the 39-week period ended April 27, the company reported total revenues of $3.53 billion, a 5.7% increase from $3.34 billion in the prior year. Comparable revenues increased nearly 5%, while net earnings for the 39-week period were $161 million, an almost 7% increase from $151 million the prior year.

The company incurred a pre-tax loss on debt extinguishment of $15.6 million, or $9.4 million after-tax, which included costs of $10.7 million related to the tender and redemption of its senior subordinated notes, as well as the write-off of $4.9 million of debt issuance costs related to the extinguished debt facility. The total loss on debt extinguishment was recorded in the second quarter of fiscal year 2013 as a component of interest expense. Excluding that $9.4 million after-tax loss, the company’s adjusted net earnings for the 39 weeks ended April 27 were $170 million, a nearly 13% increase from $151.1 million in the prior year.

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