“We do business with … the top 100 insurance companies in the world,” said Mark McLaughlin (pictured), IBM’s general manager of insurance.
That reality appears to be not widely known.
“The number one complaint I hear from our customers, from our insurtech partners and from our salespeople is ‘I didn’t know IBM did that,’” McLaughlin said during the latest ITC 2022 conference in Las Vegas. “I don’t think we’ve gotten the word out as much as we need to.”
McLaughlin, speaking during the latest ITC 2022 conference in Las Vegas, explained that the company’s insurance industry business is quite substantive, helping insurer clients pull together software, data, AI, security, and services. IBM also offers process consulting, process automation, technical assistance support and hardware capabilities.
IBM’s insurance reach includes personal lines, commercial lines, life insurance, group benefits and reinsurance, McLaughlin noted.
McLaughlin, in his current position for about six months, handled R&D strategies for the insurance industry at IBM before that. Going back further, he’s a 15-year veteran of IBM’s insurance practice.
McLaughlin noted that many insurers still use mainframes and have huge investments in their core operational systems, while others are looking at cloud-based applications and trying to figure out how to customize that technology to their needs. Still others are trying to partner with insurtechs to take advantage of their distribution, digital capabilities, models and newer sources of data. IBM, he said, works in all scenarios.
“We catalyze [products and services] across that,” McLaughlin said. “IBM is really investing a great deal of money to provide the sort of connective glue that helps connect the legacy systems that you might still need, and also modernize the systems that you decide you don’t need.”
The goal, he said is to connect those technology pieces to data in the insurtech “layer.”
IBM also helps insurance companies automate, he said.
“I’ve got automation tools, AI models, I’ve got different AI capabilities, but I have to deploy those across an average of 14 policy administration systems that insurance companies carry,” McLaughlin said.
IBM has long provided business consulting to insurance companies, via its database tools, to help them with challenges such as pricing more efficiently. The emergence of insurtechs has led IBM to expand its focus toward helping clients partner with startups. Insurers have plenty in this area with which they need help, McLaughlin explained.
“People think the insurtechs are trying to displace the insurers … but most of them, honestly, just want to partner with the insurer and build a better mousetrap and do claims faster or market better,” McLaughlin said. “We are about, how do you connect with [them] quickly. The number one thing that insurers complain to us about is speed to market. They know they have to roll-out value added services. They know they have to have a mobile experience that connects with insurers. Doing that and the sprawl of IT that insurers have today –it’s really hard and takes a long time.”
In the insurtech age, some insurers are getting rid of their old legacy systems and replacing them with cloud-based platforms that are easier to adapt and modernize. Insurtechs, in turn, often pronounce those older networks as outdated and unnecessary in today’s market. According to McLaughlin, it’s not as simple as getting rid of an older system and replacing it with something new.
“You have to think about ‘what are the characteristics of your insurance workload’ and ‘where is the best place to run that workload?’ In that world, theirs is going to be a mix of public cloud, private cloud, mainframe and specialized data appliances in … an existing data center,” McLaughlin said. “Most insurers report that as the future.”
At the same time, McLaughlin declined to advocate for a specific must-have technology for insurers in the insurtech age. Instead, he urges insurers to avoid “locking” themselves into a rigid technology option.
“If you are stuck on one core, if you are stuck with one cloud, you are limited in your ability to compete relative to insurance companies,” McLaughlin said.
AI and in-depth data analytics are also particularly useful these days toward helping insurers strengthen their customer base, he added.
“We have to know our customers better [and] we have to know our risks better,” McLaughlin said. “We have to be able to deploy those insights in ways that help insurance and healthcare distributors serve insurance more effectively.”
President Biden is heading to an IBM manufacturing plant in Poughkeepsie, N.Y., on Thursday to tout a new $20 billion investment the company is making in semiconductor research and development as well as other advanced technologies.
It's the second big tech manufacturing announcement this week, following news from Micron that it will spend $100 billion on a new computer chip plant in upstate New York.
The White House says the announcements are part of "a manufacturing boom" fueled by the CHIPS and Science Act, which Biden signed into law in August — a law that includes more than $52 billion in federal subsidies.
While Biden is traveling to New York, a high-powered group will gather at the White House for its first meeting on how best to get that money out the door.
"We need a whole-of-government approach, and we need to get everyone on the same page to figure out how we're going to deploy that $52.5 billion," said Ronnie Chatterji, who is coordinating the implementation of the CHIPS act.
Semiconductors are needed to run almost everything that has any electronic component, from cars to the weapons the U.S. is sending to Ukraine.
But they are in short supply in the United States and around the globe due to supply chain disruptions exacerbated by the global pandemic.
The Biden administration is desperate to address the domestic shortage of chips — and also wants to counter the rising power of China.
The White House says that the U.S. produces only about 10% to 12% of the world's supply of semiconductors, and none of the advanced chips, whereas East Asia accounts for 75% of global production.
The White House wants to reverse that. "We invented this industry in the United States. I mean, there's a reason it's called Silicon Valley," said Chatterji, who was chief economist at the Commerce Department, and was part of former President Barack Obama's Council of Economic Advisers.
Chatterji's team holds its first meeting with top White House officials and cabinet members on Thursday, including representatives from the Commerce, Defense and State departments. Chatterji said the goal is to "get everybody on the same page about our objectives and our metrics."
In an interview with NPR, Chatterji said surging car prices last year revealed the urgency and importance of his team's work.
"That was one of the biggest drivers of inflation," Chatterji said. "Probably one-third of the inflation increase in 2021 was because of cars ... We couldn't get the chips we needed to build the cars. And when you can't get the chips you need to build the cars, workers get furloughed and prices go up."
Concerns about China's economic, technological and military ambitions also fueled bipartisan interest to invest in semiconductor manufacturing in America.
But the subsidies represent a significant shift in thinking for Washington. Republicans and some Democrats have long opposed government interference in free markets. And there are concerns about wasteful spending.
In the past, U.S. government investments in private sector companies haven't always gone smoothly. The government has a bad track record for "trying to pick the winners, and avoiding the losers," said Scott Lincicome, a trade economist at the libertarian-leaning Cato Institute.
Lincicome says too often, the subsidies go to those who spend the most money lobbying — or sometimes projects end up in politically important regions instead of the places where they make the most sense.
"Time and time again with U.S. industrial policy projects, the government has good intentions, but ends up actually backing the wrong horse," Lincicome said.
And he says there's no certain bringing semiconductor makers back to the United States will prevent shortages, noting as an example the latest shortages of baby formula despite large production capacity in the country.
Lincicome favors more trade agreements and reduced trade barriers to allow global markets to react more quickly to domestic and global supply shocks.
Chatterji is aware of the pitfalls associated with industrial policy. He said transparency, governance to avoid conflicts of interest and "rigorous measurement of outcomes" are key.
But he said he's confident the administration can reach its goals if all stakeholders work together: governments, private companies and labor.
"We have to keep our eye on the ball of setting a foundation for all of industry to survive, including small- and medium-sized enterprises," he said. "That's the way we avoid that critique about picking winners that's plagued industrial policy in the past."
Copyright 2022 NPR. To see more, visit https://www.npr.org.
POUGHKEEPSIE, N.Y., Oct 6 (Reuters) - President Joe Biden on Thursday championed his administration's push to subsidize U.S. semiconductor chip manufacturing and boost blue-collar jobs at a visit to an IBM Corp (IBM.N) facility in New York.
IBM plans to invest $20 billion in New York's Hudson Valley region, once a manufacturing powerhouse, over the next decade to make and develop semiconductors, mainframe technology, artificial intelligence and quantum computing.
"Where is it written that we can’t lead manufacturing in the world?” Biden said. "The supply chain is going to start here and end here, in the United States."
Government funding is essential to boost manufacturing and ensure U.S. national security by producing critical goods now made abroad, Biden said. His administration and fellow Democrats have directed billions in federal funding to encourage private- sector spending and create jobs.
IBM's announcement is the latest in a string of investments unveiled since Biden signed the Chips and Science bill in August which funded $52 billion to subsidize semiconductor chips manufacturing and research.
"America invented these chips," Biden said.
Hefty subsidies for private businesses are necessary because China and the European Union had been awarding billions in incentives to chip companies, the White House says.
Biden has sought to capitalize on the investment announcements ahead of next month's midterm congressional elections. Last month, he traveled to Ohio to speak at the site of Intel Corp's (INTC.O) planned $20 billion semiconductor manufacturing facility.
The Hudson Valley, home of IBM's Poughkeepsie site, was an economic powerhouse during America's Industrial Revolution, but regional jobs dried up during the second half of the last century, as companies fled to lower-cost locations.
IBM, which laid off thousands of people in the region in the 1990s when it moved chip and other manufacturing, said it now plans to make the site "a global hub of the company's quantum computing development, just as it is today for mainframes."
IBM did not provide a detailed breakdown of its $20 billion investment plans.
The White House said it was sparked by Biden's economic policies.
"The industrial strategy is really helping to drive a renaissance in American manufacturing, and domestic investment ... that we haven’t seen in generations," White House National Economic Director Brian Deese told reporters en route to the IBM site.
On Tuesday, Micron Technology (MU.O) said it would invest up to $100 billion over the next 20-plus years to build a semiconductor fabrication facility in New York that is expected to create nearly 50,000 jobs, with the first phase investment of $20 billion planned this decade.
Biden was joined by IBM Chief Executive Arvind Krishna.
Reporting by Nandita Bose in Poughkeepsie, N.Y., and David Shepardson in Washington Editing by Heather Timmons and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
WASHINGTON (AP) — President Joe Biden is working to create a manufacturing revival — even helping to put factory jobs in Republican territory under the belief it can restore faith in U.S. democracy.
The Micron investment announcement represented a commitment in a Republican congressional district that Biden and the company credited to the recently enacted $280 billion CHIPS and Science Act.
“Today is another win for America, and another massive new investment in America spurred by my economic plan,” Biden said in a statement, of the Micron investment. “Together, we are building an economy from the bottom up and the middle out, where we lower costs for our families and make it right here in America.”
Biden traveled to Poughkeepsie, N.Y., to herald the IBM commitment, whose focuses are to include semiconductors, computers, hybrid cloud, artificial intelligence and quantum computers. The company said its projects would directly benefit from Biden’s CHIPS and Science Act.
Biden has staked his presidency on what he has called “a historic manufacturing boom,” hoping to succeed where past presidents, governors and hordes of other politicians have struggled for a half-century. His goal is to keep opening new factories in states such as Ohio, Idaho, North Carolina and Georgia — where Democrats’ footholds are shaky at best. Administration officials say they want to spread the prosperity across the entire country, rather than let it cluster in centers of extreme wealth, in a bid to renew the middle class and a sense of national pride.
The push comes at a precarious moment for the global economy. Consumer-price inflation has hurt Biden’s popularity, despite some latest apparent improvement on both scores, and prompted recession concerns. Much of Europe faces a possible downturn due to the jump in energy prices after Russia’s invasion of Ukraine, while the International Monetary Fund just downgraded growth in China. The world economy is defined by uncertainty just as Biden has called for investments in clean energy and technology that could take years to pay off.
The president is hopeful that whatever good manufacturing can do for the U.S. economy also turns out to yield political benefits for himself and other Democrats in 2022 and beyond. He told Democratic donors late last month that the manufacturing and technology investments mean “we have an opportunity” to strengthen the U.S. if Democratic governors and lawmakers are elected this year.
Washington Watch (September 2022): ‘More work still to do’: Biden celebrates Inflation Reduction Act, but latest CPI report tops forecasts, sparking fresh worries
Going into the midterm elections, Biden is telling voters that a factory renaissance has already started. The administration sees its infrastructure spending, computer-chip investments and clean-energy incentives as helping domestic manufacturing in unprecedented ways.
Best New Ideas in Money podcast: Making chips at home again
Recent academic studies suggest that decades of layoffs due to offshoring contributed to the rise of Republican Donald Trump, with his opposition to immigration and global trade. But many of the authors of the studies doubt that Biden can make these demographic trends disappear through the promise of jobs for skilled workers.
Democratic Rep. Ro Khanna of California would like to see the president make a national tour of factory openings, so that his policies could stick better in voters’ minds. Khanna recently attended the groundbreaking of a $20 billion Intel plant in Ohio and laid out his belief that factory job losses helped cause today’s political schisms.
The Silicon Valley congressman reasons that too many Americans have lost faith in a government that seemed indifferent to their own well-being, leading them to embrace hucksters and authoritarians who thrive by exploiting and widening divisions in society.
“How do you get rid of people’s jobs and expect them to believe in democracy?” Khanna asks.
Factory jobs have risen during Biden’s tenure to the most since 2008 at 12.85 million, yet the task of steadying the country’s middle class and its democratic institutions is far from complete. The industrial Midwest has yet to recover the factory jobs shed in the pandemic, let alone decades of layoffs in which the economic challenges evolved into political tensions.
Labor Department data show that Ohio is still 10,000 factory jobs shy of its pre-pandemic level and 350,000 jobs below its total in 2000. The numbers are similar in Michigan, Pennsylvania and Wisconsin — three states that were key to Biden’s 2020 victory and could help decide control of Congress in November’s elections.
The White House says Biden eschews thinking about Americans as consumers interested only in the cheapest prices and thus promoting outsourcing. Instead, his speeches are woven with talk about people as workers and the identity that working gives them.
What Biden can show with this year’s factory groundbreakings is progress, even if the total number of manufacturing jobs is unlikely to return to the 1979 peak of 19.55 million. Intel’s computer-chip plant being built in New Albany, Ohio, would add 3,000 jobs. Hyundai would add 8,100 jobs with its electric-vehicle plant in Georgia. Wolfspeed with plans to produce silicon carbide wafers in North Carolina, would add 1,800 jobs.
Jay Timmons, CEO of the National Association of Manufacturers, said the gains in factory jobs reflect five years of effort, starting with the 2017 tax overhaul by congressional Republicans and including Biden’s investments in infrastructure and computer chips as well as efforts to return jobs to the U.S. after global supply-chain disruptions caused by the pandemic.
“There’s a commitment by government at all levels to do more here and a desire by manufacturers to do more here,” Timmons said.
Massachusetts Institute of Technology economist Daron Acemoglu applauded Biden’s plans for spreading factory work across the country. It’s too soon to tell if the administration is succeeding, he said, but Biden is challenging what was once conventional wisdom among economists that little could be done to expand factory work in the U.S.
“I believe the president is right,” said Acemoglu, the co-author of the book “Why Nations Fail.” “‘Good jobs,’ which pay decent wages, have job stability, offer career-addressing opportunities, and endow a sense of accomplishment and dignity, are important for the middle class and social cohesion.”
New academic research released in September suggests that the offshoring of factory jobs led white men to feel like victims and gave way to the rise of grievance politics that helped fuel Trump’s ascendancy among Republican voters. That movement in turn spawned election denialism and political violence that Biden has repeatedly said is “a dagger to the throat of our democracy.”
The research covering 3,500 U.S. citizens finds that factory job losses due to automation are less controversial among voters than the offshoring, which triggered a “self-victimization bias” for whites who were more likely to “view offshoring as leading to greater total harm to the American economy, and to the U.S. position in the world.”
One of the study’s authors, Leonardo Baccini of McGill University in Montreal, still expects factory-job totals to shrink, though a decline primarily due to automation would be less harmful to Democratic candidates. He still anticipates factory-job losses over the long term as advanced economies focus more on productive services to sustain growth.
“From an economic standpoint, the decline of U.S. manufacturing is inevitable and it is actually a good thing,” Baccini said. “Any attempt to stop this structural transformation with protectionism and government subsidies is likely to backfire.”
J. Lawrence Broz, a political scientist at the University of California San Diego, co-wrote a 2019 research paper that found populist support was strongest in communities that endured long-term economic and social decline, a contrast to the superstar cities where technology, finance and a highly educated workforce were magnets for wealth.
“It is unlikely that latest efforts to re-shore manufacturing jobs will produce the intended effects, either economically or politically,” Broz said. “The new factories won’t employ large numbers of less-skilled workers, leaving white industrial workers just as angry as they are now.”
That means the underlying test of Biden’s agenda might be whether enough workers can be educated to meet the needs of a manufacturing sector with higher standards than during the heights of its dominance in the 20th century.
It’s been a tough year for almost all sectors of the market, but this bear has been particularly brutal for tech stocks, which have suffered big losses on concerns about rising interest rates. The Nasdaq Composite just hit a fresh two-year low following news that the Biden administration will require U.S. firms selling advanced semiconductors and related manufacturing equipment to China to apply for a license. Year to date, the index is down 32.6%. The silver lining is there are many cheap tech stocks on sale. Furthermore, there are signs that a rebound could come sooner than some anticipate.
While the Federal Reserve has remained resolute that it will continue to hike interest rates to get inflation under control, there are signs previous rate hikes are starting to have the desired effect. The market is eagerly awaiting another Consumer Price Index reading this week. If future data supports cooling inflation, the Fed may slow the pace of its rate increases, providing the market with a boost.
When this happens, whether it’s next month or next year, hard-hit tech stocks are likely to lead the way higher. Therefore, investors should consider the cheap tech stocks on today’s list as buy-and-hold candidates in anticipation of an eventual tech breakout.AVGO Broadcom $437.70 GOOG,GOOGL Alphabet $98.71 MU Micron Technology $51.38 AMAT Applied Materials $79.19 IBM International Business Machines $117.78 TEAM Atlassian $220.27 AYX Alteryx $52.14
Chipmaker Broadcom (NASDAQ:AVGO) fell nearly 5% today, bringing its year-to-date loss to 34%. On the bright side, shares look cheap, with a P/E ratio of 18.93, near the stock’s three-year low and significantly lower than the 30.95 median P/E ratio over the past 10 years. That means investors can purchase approximately 50% more earnings relative to price right now.
For 2023, analysts expect Broadcom to grow earnings by nearly 34% to $37.42 per share on a 21% revenue increase to $33.2 billion.
Where AVGO really stands out among its peers, though, is its return on invested capital to the weighted average cost of capital, or the ROIC versus WACC comparison. It costs the company 8.39% to borrow capital and the return on invested capital is 18.91%. That’s value creation in simple terms. In other words, Broadcom is a company that turns capital into more capital.
The upper-echelon tech companies have not been spared by the bear, and that includes Alphabet (NASDAQ:GOOG,GOOGL), which is down 32% year to date. The company saw revenue growth slow in the first quarter. This was followed by another slowdown in Q2, as the company reported lower-than-expected sales and earnings. Investors weren’t pleased.
The company also had more employees yet generated lower net income in Q2. The number of Albabet’s employees increased from around 144,000 in the second quarter of 2021 to around 174,000 at the end of this year’s second quarter. Meanwhile, net income declined from $18.5 billion to $16 billion during the same period. So, it’s not surprising CEO Sundar Pichai recently became more vocal about potential layoffs and other cost-reduction efforts.
This is obviously bad news for employees, but it represents an opportunity for investors. Alphabet is getting leaner and meaner, which will drive greater efficiency in the coming quarters.
Idaho-based chipmaker Micron Technology (NASDAQ:MU) makes memory and storage products. Shares are down 45% so far this year, more than the Nasdaq and the semiconductor sector. What landed MU a spot on today’s list of cheap tech stocks to buy, though, is that the gap between the stock’s P/E ratio and its forward P/E ratio implies the market expects great things from the firm.
Micron’s P/E ratio is currently 6.62. That makes MU stock among the cheapest 20% of semiconductor stocks. However, its forward P/E ratio is above 45. That makes it more expensive than roughly 93% of industry competitors. In other words, the market thinks investors will pay significantly more for $1 of Micron’s earnings in the future.
This is likely due in part to the fact that the company is spending heavily to satisfy the push to boost domestic chip production. The company recently announced it will spend up to $100 billion to build a semiconductor manufacturing campus in upstate New York. It will take some time for the plan to be fruitful, but it should translate into higher prices for MU shareholders long term.
Applied Materials (NASDAQ:AMAT) is a cheap tech stock with traditional value stock characteristics. AMAT stock carries an average target price of $123.44 but trades for around $79 following a 50% year-to-date drop. That target implies upside of more than 55%.
In November 2021, Applied Materials started paying a dividend, something more commonly associated with mature, value stocks than semiconductor firms. Shares currently yield 1.3%. While this yield isn’t likely to wow hardcore income investors, it is a positive in an industry known for growth reinvestment rather than dividend payouts.
Another reason investors should consider AMAT stock is that the company managed to increase EPS even as operating costs and margins increased. In its most recently reported quarter, net income fell 6% year over year. However, non-GAAP adjusted diluted EPS increased by 2% during the same period. In other words, Applied Materials is finding efficiencies for investors despite rising external cost pressures.
International Business Machines’ (NYSE:IBM) bullish narrative is similar to that of Applied Materials. Both are cheap tech stocks with value characteristics, including a dividend payment. In the case of IBM, shares yield 5.4% following an 8.6% year-to-date decline in the stock. That’s an impressive yield even by non-tech standards.
IBM’s Q2 earnings were impressive in many respects. Revenue and profits bested Wall Street’s expectations. However, given its large international base, IBM is particularly susceptible to the strong U.S. dollar. The revenue earned in those locations must be exchanged for U.S. dollars prior to being repatriated and accounted for. This is a drag on the company’s financials.
There’s little indication the dollar will weaken soon. But when it does, IBM’s results will get an immediate boost. In the meantime, shareholders have the dividend to tide them over.
Shares of Australian software company Atlassian (NASDAQ:TEAM) have lost 42% year to date. I think the selling is overdone based on the company’s strong fundamentals.
In its most recently reported quarter, revenue increased 36% year over year to $759.8 million. As investors are all too aware recently, growth alone can’t substantiate increasing share prices in the current macro environment. The bottom line has become much more relevant than the top line. Yet, there too, Atlassian showed drastic improvement, cutting its net loss by more than half to $105.5 million.
Analysts’ average target price is $320.45, implying upside of more than 45% from the current level. Investors who believe Atlassian’s assertion that its products are mission-critical to IT firms while also being relatively small-line items on their budgets, get it. Atlassian is doing a lot of things correctly and quickly improving fundamentals.
Analytics automation firm Alteryx (NASDAQ:AYX) is down 24% year to date, yet the growth-oriented firm has a number of tailwinds. According to the company, analytics spending is expected to outpace other tech spending over the next 12-18 months.
In Q2, revenue increased by 50% year over year, reaching $180.6 million. Furthermore, annual recurring revenue was up 33% from a year ago to $727 million.
Annual recurring revenue, or ARR, is particularly important to tech firms because it represents subscription-based revenues. Those subscriptions often come from large enterprises, which contribute in an outsized manner to overall revenue. ARR is also used as a generalized indicator of overall health and in strategic planning.
AYX stock has 47% upside based on analysts’ average target price of $76.47. However, the high analyst price of $127 implies upside of 147%.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks.Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
The post 7 Cheap Tech Stocks to Buy Before the Next Breakout appeared first on InvestorPlace.
IBM on Thursday will announce plans to invest $20 billion over the next 10 years on research and development initiatives and semiconductor manufacturing as President Biden visits the company’s campus in New York.
Biden will travel to Poughkeepsie to speak about his economic plan and meet with workers, a White House official said. The president will highlight IBM’s announcement, which comes on the heels of another investment from chip manufacturer Micron in upstate New York.
IBM said its vision for the Poughkeepsie campus is to become “a global hub of the company’s quantum computing development.”
Biden will be joined during the visit by Reps. Sean Patrick Maloney (D-N.Y.), Paul Tonko (D-N.Y.) and Pat Ryan (D-N.Y.).
Biden will also attend fundraisers in New York City and Red Bank, N.J., during Thursday’s trip.
The IBM announcement is the latest economic win for the White House since the passage of the CHIPS and Science Act, which passed with bipartisan support and included more than $50 billion in incentives for manufacturers to build domestic semiconductor plants. It also included more than $80 billion for the National Science Foundation authorized over five years to support innovation and research.
Biden administration officials had for months warned of supply chain and national security risks if Congress did not invest in domestic manufacturing of chips that are used to power computers, cars and major home appliances, arguing the U.S. would become too reliant on China and others for the semiconductors.
Brain-computer interface technology is advancing rapidly, to the point where consumers could someday soon talk to Amazon Alexa using only their mind. As exciting as this possibility may seem, particularly for people with communication and physical disabilities, it also raises some serious questions about privacy, according to a new whitepaper published by IBM and the Future of Privacy Forum.
The whitepaper titled “Privacy and the Connected Mind: Understanding the Data Flows and Privacy Risks of Brain-Computer Interfaces” explores both the medical benefits and the difficult questions brain-computer interface technology poses around privacy and consumer welfare.
"Policymakers, researchers, and other stakeholders should seek to proactively understand the risks posed by neurotechnology and develop technological and policy safeguards that precisely target these risks," the authors write.
The IBM Policy and Future of Privacy Forum authors also note that it is important to understand the differences between current and likely future users of these technologies versus far-off notions depicted in science fiction in order to better identify concerns and prioritize meaningful technological and policy initiatives
"While the potential uses of BCIs are numerous, BCIs cannot at present or in the near future 'read a person’s complete thoughts,' serve as an accurate lie detector, or pump information directly into the brain," the authors write.
As for solutions to the challenges posed by brain-computer interface technologies, the experts at IBM's think tank and the Future of Privacy Forum note that many of these concerns can be addressed by technical safegaurds such as providing on/off controls and hardware switches; providing users with granular controls on devices and in companion apps for managing the collection, use, and sharing of personal neurodata; and providing heightened transparency and control for brain-computer interface technologies that specifically send signals to the brain, rather than merely receive neurodata.
The paper also points to policy and governance mechanisms that could minimize the risks posed by brain-computer interface devices and other neurotechnologies. These include ensuring that brain-computer interface derived inferences ar not allowed for uses to influence decisions about individuals that have legal effects, livelihood effects, or similar significant impacts such as assessing the truthfulness of statements in legal proceedings, inferring a person's thoughts, emotions, psychological state, personality attributes as part of hiring or school admissions decisions, or assessing individuals’ eligibility for legal benefits.
We’re 32 days from Election Day, and pollsters agree on one thing: Contests across the country look like nail-biters, tight until the end.
While Democrats reported new levels of optimism in August and September, it’s Republicans who are now feeling hopeful about taking over the Senate as well as the House, The Hill’s Alexander Bolton reports.
In Pennsylvania, Mehmet Oz is starting to close the gap with Lt. Gov. John Fetterman (D) while former state Attorney General Adam Laxalt has a lead in the polls in Nevada. J.D. Vance, meanwhile, is gathering strength in Ohio, a state that has turned decisively Republican in latest election cycles.
▪ CNN: Fetterman raises $22 million in third quarter in contentious Pennsylvania Senate race.
▪ The Hill: Sen. Catherine Cortez Masto (D-Nev.) trails in poll of key Nevada Senate race.
▪ The Columbus Dispatch: Donald Trump Jr. visits Ohio to rally GOP voters behind J.D. Vance in the Senate race.
In Arizona, the National Republican Senatorial Committee announced Thursday that it is adding a “seven-figure” spending bump to support Republican Blake Masters, Politico reports. Weeks ago, the super PAC cut its advertising dollars in the state in light of Masters’ struggling campaign. But now, Republicans see a promising path to the majority, helped in no small part by a deluge of spending by outside groups, including the Senate Leadership Fund, to whittle away Democratic candidates’ fundraising advantage.
Masters on Thursday debated Sen. Mark Kelly (D), trying to put the incumbent on defense. He sought to disrupt Kelly’s image as an independent moderate who’s willing to work across the aisle, tying him to President Biden and saying the Democrats had done little to secure the southern border. Masters tried to position himself as a pragmatist, while also invoking the culture wars and suggesting tech companies and news outlets could have impacted the 2020 election (12News Phoenix and The Hill).
“Two years ago, Mark Kelly stood right there and he promised to be independent,” Masters said in his opening statement. “But he broke that promise.”
Georgia is looking more uncertain for Republicans. Facing bombshell allegations that he paid for an ex-girlfriend’s abortion more than a decade ago and accusations of violence from his own son, Republican Herschel Walker’s Senate campaign has been thrown into turmoil.
Walker — who has positioned himself as staunchly anti-abortion — has denied the allegations, including further reports that the ex-girlfriend is also the mother of one of his children. But speaking to conservative radio host Hugh Hewitt on Thursday, Walker denied knowing the woman (The Hill).
He also appeared to contradict his own views on abortion, saying: “Had that happened, I would have said it, because it’s nothing to be ashamed of there.”
“You know, people have done that, but I know nothing about it,” Walker continued. “And if I knew about it, I would be honest and talk about it, but I know nothing about that… I’ve already been forgiven, and if I’ve been forgiven, why in the world would I not be forgiven for something like this?”
A new poll by SurveyUSA, released Wednesday, shows incumbent Sen. Raphael Warnock (D-Ga.) opened up a 12-point lead against Walker, 50 percent to 38 percent (Forbes).
PULL QUOTE IN BOLD HERE “I am not deterred,” Walker told reporters at a Thursday event, where he again denied the allegations. “I am not backing down. The stakes are too high.”
▪ The New York Times: Christian Walker, warrior for the right, now battles his father.
▪ The Daily Beast: Walker’s latest abortion denial still makes no sense.
▪ Politico: Walker’s Christian fans unfazed by abortion revelations.
▪ NPR: Republicans continue to support Walker even after abortion report.
▪ The Washington Post: GOP crisis in Herschel Walker race was nearly two years in the making.
Another busload of migrants from South America ended up in front of Vice President Harris’s official residence in Washington early Thursday. The bus, which had a Texas license plate, transported about 50 men, women and children.
Within minutes of the bus’s arrival, volunteers from SAMU First Response, a D.C.-based group that assists asylum-seekers, shuttled the migrants to nearby accommodations. Texas Gov. Greg Abbott (R) in September said he was “sending a direct message” to Harris by sending two buses of migrants to her official residence (WTOP).
Bloomberg News: Democratic Senate candidate Beto O’Rourke’s hopes in Texas run through the GOP’s last urban stronghold.
In Wisconsin, Democrats worry GOP ads are taking hold as Mandela Barnes, the party’s Senate candidate, is wobbling in his race against Sen. Ron Johnson (R), The New York Times Reports.
Florida, meanwhile, is still reeling from the effects of Hurricane Ian, which hit the state’s southwest coast last week and caused widespread destruction, leaving thousands with flooded homes and no electricity. By Thursday, the death toll in the state had risen to 118 (The Tallahassee Democrat).
Four Republican Florida counties sustained much of Hurricane Ian’s damage and they happen to be essential to the GOP’s playbook for winning statewide races next month. The Tallahassee Democrat reports that Gov. Ron DeSantis (R) is now “weighing what kind of emergency elections accommodations to make for this region, a move that could impact his own chances for reelection and is likely to be highly scrutinized after he spent the last two years tightening voting rules.”
But DeSantis said Wednesday he wants to limit changes for voters to avoid confusion.
“I want to keep it as normal as humanly possible,” he said. “I think the more you depart… it just creates problems.”
His own debate against Democratic challenger Charlie Crist has been postponed because of the storm (The Orlando Sentinel).
The Sunshine State will soon get another politically minded resident. The University of Florida on Thursday said Sen. Ben Sasse (R-Neb.) is the sole candidate in a selection process to become university president (CNN).
The junior senator, 50, who was reelected in 2020, confirmed to The National Review that he plans to resign from the Senate at the end of this year. Earlier in his career, he served as president of Midland University in Nebraska.
“Nebraskans have well understood that I didn’t expect to be in politics as a lifelong calling,” Sasse said.
“The Senate is a very important institution, and I’m incredibly grateful for a lot of the people that I get to serve alongside here,” he added. “But frankly, I think one of the most basic things we can do to reinvigorate this place is to say that people ought to only be here for a time and then get back to building stuff.”
Sasse’s successor to the Senate would be selected by the governor under provisions of Nebraska law (The Omaha World-Herald).
The Tampa Bay Times: University of Florida’s finalist for president is Sasse. The nationally known lawmaker called UF “the most interesting university in the country.”
▪ The Washington Post: A majority of GOP nominees — 299 in all — have denied or questioned the 2020 election results.
▪ The Hill: Ahead of November, Democrats look to keep abortion front and center.
▪ The Hill: Republicans are gaining some traction with accusations that Democrats are soft on crime.
▪ NBC News: In key battlegrounds, GOP onslaught of crime ads tightens Senate races.
▪ The Washington Post: Federal agents see chargeable tax, gun-purchase case against Hunter Biden.
▪ CNN: January 6 committee announces Oct. 13 public hearing, rescheduled after Hurricane Ian.
▪ The New York Times: The Justice Department is said to believe Trump has more documents,
LEADING THE DAY
Biden and his economic team want a strong labor market and growth, confident consumers, abundant commodity supplies and cheaper gasoline. What the Federal Reserve wants is less demand in the economy, wages that begin to cool and prices that edge lower as output slows.
The White House and the central bank this morning will search for clues in the government’s employment report covering September, each eager to promote a narrative that allays economic anxieties and fortifies confidence. They are unlikely to locate the same script.
As CNBC put it, “Friday’s jobs report could be a case where good news isn’t really good.”
In most any circumstance, strong job gains and rising wages would be a plus. But these days, they’re exactly what the U.S. economy doesn’t need as policymakers try to beat back an inflation problem.
“Bad news equals good news, good news equals bad news,” Vincent Reinhart, chief economist at Dreyfus-Mellon, told CNBC in describing investor sentiment. “Pretty much uniformly what is dominant in investors’ concerns is the Fed tightening. When they get bad news on the economy, that means the Fed is going to tighten less.”
Investors may cheer a slower economy if it means the Fed ends rate hikes, but the West Wing does not favor contraction, particularly as voters cast ballots that could knock Democrats into the minority in one or both chambers in Congress next year.
On Thursday, Biden conceded his “disappointment” that the Organization of Petroleum Exporting Countries decided this week to lower the cartel’s oil production, which will reduce supply and likely trigger higher prices for gasoline and heating fuel this winter. Saudi Arabia’s shadow over OPEC and its oil alliance with Russia prompt new reservations about a Washington-Riyadh alliance the president sought to forge during a July visit he continues to defend (The Hill).
▪ Bloomberg News: Members of Congress demand retaliation against Saudi Arabia.
▪ The New York Times, Peter Baker: Biden’s choice after OPEC cuts: woo Saudi Arabia or retaliate?
Saudi Crown Prince Mohammed bin Salman has made clear with explicit moves toward China and Russia that he does not take direction from the United States. The countries in OPEC in addition to Saudi Arabia are Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the United Arab Emirates and Venezuela.
The OPEC plan to lower oil targets by 2 million barrels per day is expected to increase gasoline prices in some East Coast and Midwest regions by about 15 cents to 20 cents per gallon, said Andrew Lipow, president of Lipow Oil Associates (The Hill).
The president and fellow Democrats have blamed global events, such as Russia’s war in Ukraine, for high-priced energy but U.S. voters are famously impatient about rising gasoline prices at the same time Republicans insist Democrats are harming the domestic oil industry with a focus on green energy policies.
“There’s a lot of alternatives. We haven’t made up our mind yet,” Biden told reporters when asked about next steps (The Hill).
White House energy adviser Amos Hochstein, speaking Thursday to Bloomberg TV, said the administration wants to incentivize domestic supply, and the government “intends” to replenish the Strategic Petroleum Reserve (SPR) “when prices come down” even as it releases more oil from the reserve next month.
“We’re going to take a multitude of steps with the private sector in the United States, with our allies, with the SPR, and we’re going to talk to Congress about what kind of tools we may need,” he said. “We’re not quite sure what we need, but we’re going to have that conversation to make sure we have every tool available to us.”
CNN: White House left looking for answers after OPEC announces oil production cuts.
Separately, Biden visited a New York State IBM facility on Thursday to tout his administration’s efforts to boost blue-collar jobs with federal backing for U.S. semiconductor chip manufacturing. The president signed the CHIPS and Science Act into law in August — legislation that includes more than $52 billion in federal subsidies to boost production of the technology (Poughkeepsie Journal).
IBM has pledged to invest $20 billion into the state’s Hudson Valley region over the next decade to develop, among other things, semiconductors, mainframe technology, artificial intelligence and quantum computing. During his Poughkeepsie address, Biden said, “It’s here at this factory and the factories of other companies across America where America’s future is literally being built.”
▪ Reuters: Biden hails IBM’s $20 billion New York manufacturing deal.
▪ NPR: Biden has $52 billion for semiconductors. Today, work begins to spend that windfall.
IN FOCUS/SHARP TAKES
A month ahead of midterm elections, Biden demonstrated a powerful form of mercy by pardoning 6,500 people who have federal conviction records for marijuana possession. The move is a nod to racial justice and equity, a Biden campaign promise, and seen as a step toward the decriminalization of marijuana endorsed by some Democrats. The move will clear those charged federally with simple pot possession and benefit thousands more individuals convicted of marijuana possession in the District of Columbia (The New York Times).
The recreational use of cannabis is legal in 19 states and the nation’s capital (U.S. News).
Biden is urging governors to similarly pardon those with state marijuana convictions. The administration will consider easing the drug classification of cannabis under the Drug Enforcement Agency schedule of controlled substances (CNBC).
“Just as no one should be in a federal prison solely due to the possession of marijuana, no one should be in a local jail or state prison for that reason, either,” Biden said in a statement.
🚀 They docked! NASA and SpaceX partnered to successfully transport a fresh and multinational foursome of space scientists and experts to the International Space Station on Thursday with plans to eventually rotate some of the current crew back to Earth. The new arrivals are astronauts Nicole Mann and Josh Cassada of NASA; astronaut Koichi Wakata of JAXA, or Japan Aerospace Exploration Agency; and cosmonaut Anna Kikina of Russia’s Roscosmos space agency. The United States and Russia may be at odds on terra firma, but inside the space station, the two governments boast they are partners (CNN).
■ Have you seen the latest polls? Now forget them. Here’s why, by Jonathan Bernstein, columnist, Bloomberg Opinion. https://bloom.bg/3CbMmBX
■ How the Supreme Court could change social media as we know it, by Paul M. Barrett, opinion contributor, The Hill. https://bit.ly/3T4H02c
WHERE AND WHEN
The House meets at 1:30 p.m. for a pro forma session. Members are scheduled to return to the Capitol on Nov. 14.
The Senate convenes at 10 a.m. for a pro forma session. Senators also are scheduled to return for work on Nov. 14.
The president will depart the White House for Hagerstown, Md., for a 1:35 p.m. speech about the economy at Volvo Group Powertrain Operations. He will fly from Maryland to Philadelphia in the afternoon to continue to Wilmington, Del., at 4:10 p.m., where he plans to spend the weekend.
The vice president will ceremonially swear in Shefali Razdan Duggal at 2:15 p.m. to be U.S. ambassador to the Netherlands. On Saturday, Harris will be in Austin, Texas, to be the keynote speaker at the Texas Democratic Party Johnson-Jordan Reception. The vice president will also meet on Saturday with reproductive rights advocates in Austin.
Secretary of State Antony Blinken is in Lima, Peru, and this morning participates in a sustainable fishing event at Chorrillos Fish Market. An hour later, he meets with employees from the U.S. Embassy and then visits a Lima fair with a focus on Peruvean entrepreneurs.
First lady Jill Biden is in San Francisco to visit the University of California’s Helen Diller Family Comprehensive Cancer Center this morning to talk about the administration’s Cancer Moonshot initiative and advances in treatment and prevention of breast cancer. She will speak at midday at a Democratic Congressional Campaign Committee lunch and conference for women. The first lady will depart San Francisco in the afternoon to travel to Tacoma, Wash., and Bates Technical College to discuss job training programs and technical careers aimed at high school and postsecondary students.
Economic indicator: The Labor Department at 8:30 a.m. will report on U.S. employment in September.
🍁 The National Park Service and the White House host the annual fall White House garden tours this Saturday and Sunday. The Park Service will distribute free, timed tickets for entry on both weekend days beginning at 8:30 a.m. ET. Information is HERE and HERE.
🖥 Hill.TV’s “Rising” program features news and interviews at http://thehill.com/hilltv, on YouTube and on Facebook at 10:30 a.m. ET. Also, check out the “Rising” podcast here.
Two Russian nationals fleeing President Vladimir Putin’s conscription of military reservists reached a remote Alaskan island in the Bering Sea by boat, officials said Thursday. They are seeking asylum in the U.S. (The Washington Post).
“We are actively engaged with federal officials and residents in Gambell to determine who these individuals are, but right now, we already know that the federal response was lacking,” Sen. Lisa Murkowski (R-Alaska) said Thursday, emphasizing a greater need for security in the Arctic. “Only local officials and state law enforcement had the capability to immediately respond to the asylum seekers.”
The risky boat journey shows the lengths to which some Russians are going to avoid Putin’s draft as the Russian president seeks to bolster forces for the war in Ukraine.
Experts warn that nuclear threats by Putin, who marks his 70th birthday today, mean the world is the closest it has been to nuclear confrontation since the Cold War (The Hill).
Putin is “not joking when he talks about potential use of tactical nuclear weapons or biological or chemical weapons, because his military, you might say, is significantly underperforming,” Biden said Thursday at a New York event for Democratic donors (Reuters). “We have not faced the prospect of Armageddon since Kennedy and the Cuban missile crisis,” he added. “For the first time since the Cuban Missile Crisis, we have a direct threat to the use of nuclear weapons, if in fact things continue down the path they’d been going.”
The president told his audience he is trying to gauge “Putin’s off-ramp” (The Hill).
🕊 This morning, the 2022 Nobel Peace Prize went to human rights campaigners in Russia, Ukraine and Belarus. Winners announced in Oslo are Ales Bialiatski from Belarus, a 60-year-old human rights advocate imprisoned since 2021; Russian human rights organization Memorial; and the Center for Civil Liberties, a Ukrainian human rights organization founded in 2007 (NBC News and CNBC).
▪ The New York Times: She’s a doctor. He was a limo driver. They pitched a $30 million arms deal.
▪ The Washington Post: Putin confronted by insider over Ukraine war, U.S. intelligence finds.
➤ PANDEMIC & HEALTH
A wave of anti-vaccine legislation sweeping the country is worrying public health leaders, who are battling apathy and skepticism toward vaccines and fear that the backlash surrounding COVID-19 vaccines will extend to routine immunizations. As Vox reports, more than 80 anti-vaccine bills have been introduced in state legislatures, according to academics tracking the trend.
During the 2020-21 school year, childhood vaccination rates fell, to the equivalent of 35,000 children not being up to date on their immunizations. While irregular checkups at the doctor may have contributed, experts worry that these numbers don’t just signify a pandemic-era blip, but a trend that’s only accelerating.
▪ Reuters: COVID wave looms in Europe as booster campaign makes slow start.
▪ Kaiser Family Foundation: Deaths among older adults due to COVID-19 jumped during the summer of 2022 before falling somewhat in September.
▪ CBS News: The Centers for Disease Control and Prevention has ended daily reporting of COVID-19 case and death data, in a shift to weekly updates.
▪ The New York Times: Flying to the United States from Uganda? Expect Ebola screenings as a precaution.
Total U.S. coronavirus deaths reported as of this morning, according to Johns Hopkins University (trackers all vary slightly): 1,062,130. Current average U.S. COVID-19 daily deaths are 323, according to the Centers for Disease Control and Prevention.
And finally … 👏👏👏 Congratulations to expert puzzlers who knew their way around the Supreme Court and its new term to win this week’s Morning Report Quiz!
Here’s who successfully filed trivia petitions: Stanley Wasser, Ki Harvey, Barton Schoenfeld, Jon Berck, Patricia Swank, Paul Harris, Patrick Kavanagh, Shin Inouye, Richard Baznik, Barbara Golian, Eliza Walker, Randall Patrick, Len Jones, Nicholas Genimatas, Jaina Mehta, Annette Kuz, DKS Cohen, Pam Manges, Gretchen O’Brien, Bob Everhart, Peter Sprofera, Harry Strulovici, Terry Pflaumer, Robert Bradley, Tom Werkema, Stephen Delano and Steve James.
They knew that Justice Ketanji Brown Jackson, making her debut on Monday, posed pointed questions about Congress’s intent during oral arguments about a wetlands case. She was quick and confident, journalists reported.
The Onion filed a seriously amusing 23-page petition to the Supreme Court in a particular case on behalf of parody (and humorists).
News reports this week recounted Chief Justice John Roberts’s comment last month that seeing barricades when arriving at the court was “gut-wrenching every morning.” The security fencing had disappeared by the time the court’s term began Monday with a welcome for in-person public visitors.
Gallup reported last week that Americans’ opinions of the Supreme Court are the worst they’ve been in 50 years.
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Kyndryl claims to be the world’s largest IT infrastructure provider. A division of IBM until November 2021, it is now a separate company. Initially, little changed for customers — except perhaps the logo on their invoice — but with time, Kyndryl is taking advantage of its freedom from IBM to introduce new services and work with new partners.
Essentially, Kyndryl does exactly what the managed infrastructure services unit of IBM’s Global Technology Services segment did: outsource the management of enterprises’ IT infrastructure, whether it came from IBM or another vendor.
Under IBM’s stewardship, the activities since moved to Kyndryl were in slow decline, from $21.8 billion in annual revenue in 2018 down 7% to $20.28 billion in 2019, and down 4.6% to $19.35 billion in 2020, according to IBM filings with the SEC. That hasn’t changed since the split: Kyndryl’s first full-year filing as an independent company, barely two months after the separation, showed 2021 revenue down a further 4%, to $18.66 billion. The decline continued into 2022, with first quarter revenue down 7% year on year, and the second quarter down 10%.
However, Kyndryl is beginning to develop new services, and is forming partnerships in a bid to grow its revenue. It estimates that the $415 billion market opportunity it addresses is growing at 7% a year, with some areas it is targeting (including security, intelligent automation and public cloud managed services) growing even faster.
Kyndryl has organized itself into six global managed services practices, each of which manages a different aspect of technology. These are:
There is also a customer advisory practice that combines managed services, advisory services, and implantation.
In September 2022, Kyndryl also launched two new branded services, Bridge and Vital. The company calls Kyndryl Bridge an open integration platform, an operational monitoring system, somewhat like HPE GreenLake or IBM vCenter, that Kyndryl staff will connect to an enterprise’s existing IT infrastructure to help CIOs keep ahead of problems. Kyndryl Vital is essentially a design workshop, during which Kyndryl consultants work alongside an enterprise’s employees to prototype applications.
At the moment of their split, Kyndryl and IBM were one another’s biggest suppliers, and that will remain true for the time being. But Kyndryl is free to independently explore, with no preference for IBM’s software and services.
Kyndryl named Microsoft its first cloud infrastructure partner in November 2021, announcing a similar partnership with Google the following month. But it took it until February 2022 to form a pact with Amazon Web Services.
IBM had partnerships with numerous software providers, and Kyndryl inherited or expanded some of those, including with Elastic, Lenovo, SAP, ServiceNow, and VMware.
Kyndryl has also formed new partnerships, including with Cisco Systems, Citrix, Cloudera, Dynatrace, EY, Field Safe Solutions, NetApp, Nokia, Oracle, Pure Storage, IBM subsidiary Red Hat, Teradata and Veritas Technologies. These partnerships expand Kyndryl’s repertoire when it comes to integrating products and services into Bridge, or incorporating them into co-creations with Vital.
Kyndryl started with 4,600 customers (including 75 of the Fortune 100), over a quarter of IBM’s 350,000 staff, activities generating around $19 billion in annual revenue and an order backlog (or long-term maintenance contracts from all those customers) of around $62 billion. Where that puts Kyndryl in the rankings depends on what you’re measuring. Kyndryl says it’s the world’s largest IT infrastructure provider, although IT channel publication CRN says it’s only the fifth-largest solutions provider, a much broader category, behind Accenture, what’s left of IBM, DXC Technology, and Tata Consulting Services.
Like crazy! Kyndryl hired over a dozen top executives in 2021, and by the end of the year had 88,683 employees. Although its hiring in the US has slowed, it had 1,141 lower-level job openings posted at press time, over half of them in the EU, with other significant concentrations in India and Japan. Half the openings are for technical specialists, with more than 100 openings in systems architecture and an emphasis on automation.
Most staff at Kyndryl simply changed email addresses, carrying on doing the same work for clients as they did at IBM before the split. Indeed, Kyndryl went out of its way to reassure customers that their key points of contact and support, and the other team members they work with, would not change, and that the company continues to work with experts in other divisions of IBM as it did before.
But the company brought in new blood for many of the most senior roles, either hiring in from other companies, or poaching from other divisions of IBM. CEO Martin Schroeter is ex-IBM, in fact. He left the company in June 2020, before the spin-off was announced, and came back to lead Kyndryl, then known as NewCo, in January 2021. He was previously SVP of global markets at IBM, and before that its CFO.
The next senior appointments, in March 2021, were chief marketing officer Maria Bartolome Winans, who came to the spin-off directly from her role as CMO for IBM Americas, and group president Elly Keinan, another former IBMer who took time out to work in venture capital after 33 years at the company.
Global head of corporate affairs Una Pulizzi was also a new hire in April 2021, previously in a similar role at GE, while general counsel Edward Sebold was chief legal officer for IBM’s Watson Health division.
Poaching of more senior IBMers continued in early May 2021. Chief transformation officer Nelly Akoth was previously with IBM Global Business Services; Leigh Price moved from one leadership role in strategy and corporate development to another; and Vineet Khurana became controller at Kyndryl after five years in three different CFO roles at IBM. Kyndryl’s global alliances and partnerships leader Stephen Leonard held a number of positions at IBM, most recently as general manager of the Power Systems division.
It wasn’t until the second half of May 2021 that Kyndryl began to name its top technical staff: CIO Michael Bradshaw is new to IBM, having previously served as CIO at NBC/Universal and as CIO for Mission Systems and Training at Lockheed Martin. CTO Antoine Shagoury is a former CIO of US bank State Street and of stock exchanges in London and the US. Most recently, he worked at strategic advisory partnership Ridge-Lane.
Other senior Kyndryl hires from outside IBM include Vic Bhagat, a former CIO for Verizon Enterprise Solutions, EMC, and several units of GE as the head of its customer advisory practice, and COO Harsh Chugh, most recently CFO at SaaS provider PlanSource.
To provide the new company with more stability, Kyndryl’s board of directors will serve overlapping three-year terms through 2027, so it’ll take at least two elections for an outside group to take control of the board.
Kyndryl’s first 10 directors are:
IBM is still one of the biggest technology businesses in the world. Its separation from Kyndryl freed it from a legacy business that wasn’t growing, and enabled it to reorganize into three main operating segments now called Software, Consulting (formerly Global Business Services), and Infrastructure. It’s doing well post-split: For the full year 2021 revenue from Software rose 5.3% to $24.1 billion, and Consulting made $17.8 billion, up 9.8%, although revenue from Infrastructure, the segment Kyndryl was spun out of, fell 2.4% to $14.2 billion. Those trends, both positive and negative, continued through the first half of 2022.
Customer needs for application services and infrastructure services are diverging, and so spinning off Kyndryl will allow IBM to focus on growing its open hybrid cloud platform and AI capabilities, IBM CEO Arvind Krishna said in October 2020. The split turns IBM from a services-led company to one making more than half its revenue from software and solutions.
But until that growth takes hold, Kyndryl and IBM remain close, as they began their separate lives as one another’s largest customers.