Warren Buffett has lost $2.5 billion only this week after a sharp decline in IBM and Coca-Cola shares.
IBM and Coke represent two of Berkshire Hathaway’s three biggest investments, but their operational missteps have already cost Warren Buffet $2.52 billion this week.
On October 20, Warren Buffett lost nearly $1 billion on his third-largest investment, IBM, after the company posted disappointing earnings.
Warren Buffett has lost $2.5 billion only this week after a sharp decline in IBM and Coca-Cola shares
On October 21, Coca-Cola did the same thing, posting Q3 2014 revenue that fell short of expectations and warning of currency headwinds.
The losses in IBM and Coke add to a recent rough patch for Warren Buffett, who slashed Berkshire Hathaway’s stake in British grocer Tesco earlier this month.
Warren Buffet has described buying into the stock as a “huge mistake”.
However, Warren Buffett’s favorite bank, Wells Fargo, is up more than $816 million since Monday morning.
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IBM is to pay $1.5 billion in cash to offload its loss-making chip manufacturing division to Abu Dhabi sovereign wealth fund GlobalFoundries.
IBM, which wanted to avoid the cost of upgrading the unit’s technology, said it would now focus on cloud computing, mobile and big data analytics.
The company will take a $4.7 billion charge in the third quarter as a result of the sale.
The sale came as IBM announced a 17% drop in third quarter profit.
IBM said it made $3.5 billion profit for the three months to the end of September, with revenues down 4% to $22.4 billion.
“We are disappointed in our performance,” chief executive Ginni Rometty said.
Ginni Rometty blamed a “marked slowdown” in client buying behavior for the drop in sales, which were lower than analysts had expected.
However, she said the results also reflected “the unprecedented pace of change in our industry.”
IBM is to pay $1.5 billion in cash to offload its loss-making chip manufacturing division to GlobalFoundries
IBM is trying to adapt to industry-wide changes and has been restructuring to focus on its software products.
The disposal of the unprofitable chip making business is the latest step by Ms Rometty to sharpen this focus.
IBM said the sale would enable it to “focus on fundamental semiconductor and material science research, development capabilities and commitment to delivering future semiconductor technologies”.
GlobalFoundries said it would offer jobs to all IBM employees affected.
IBM will spread the $1.5 billion payment to GlobalFoundries over the next three years.
Under the terms of the deal, GlobalFoundries will get intellectual property and technologies related to the chip business.
“IBM needs to find success and growth in the cloud through organic and acquisitive means in our opinion, otherwise there could be some darker days ahead for the tech giant,” said FBR Capital Markets analyst Daniel Ives.
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Lenovo shares have dropped by as much as 15% as investors question its recent acquisitions.
Last month, Lenovo, the world’s biggest PC maker, struck two major deals totaling about $5.2 billion.
It bought IBM’s low-end business server for $2.3 billion, and a week later purchased US mobile phone company Motorola Mobility from Google for $2.91 billion.
Google had paid $12.5 billion for the Motorola handset business less than two years ago.
Investors had started selling Lenovo shares last week on news of the Motorola deal, due to questions surrounding Motorola’s profitability.
Lenovo shares have dropped by as much as 15 percent as investors question its recent acquisitions
The firm’s shares fell 8% in Hong Kong on Thursday ahead of the market’s closure for the new year holiday. When the market reopened on Tuesday they dropped more than 15% at one point, before recovering slightly to stand at 8.62 Hong Kong dollars.
Questions have been raised as to how Lenovo will integrate the acquisitions into its overall corporate strategy.
The Chinese company turned around IBM’s ThinkPad brand, and that was seen as key to Lenovo overtaking Hewlett-Packard as the world’s top PC maker in 2012.
In addition to Lenovo’s recent deals, there has been a report that the PC maker is in talks with Japan’s Sony to acquire its Vaio laptop business.
In a statement, Sony said: “The press report on a possible PC business alliance between Sony and Lenovo is inaccurate.”
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IBM is developing a computer which will digest twice as much information every day as the entire internet, sifting through radio waves from space in an effort to unravel the origin of the universe.
The huge computer will be attached to a 1,900 square mile array of telescope antenna, and will be built to “suck in” in radio telescope data which will “see” 13 billion years into the past, back to the dawn of the universe and the Big Bang.
IBM machine will be millions of times more powerful than the fastest PCs today – and will deal with 100 times more information than the output of the Large Hadron Collider.
Ton Engbersen of IBM resarch said: “If you take the current global daily Internet traffic and multiply it by two, you are in the range of the data set that the Square Kilometre Array radio telescope will be collecting every day.”
Upon completion in 2024, the telescope will be used to explore evolving galaxies, dark matter and even the very origins of the universe dating back more than 13 billion years.
The IBM computer will be attached to a 1,900 square mile array of telescope antenna, and will be built to “suck in” in radio telescope data which will “see” 13 billion years into the past
IBM is to investigate using 3D “stacks” of computer chips to achieve the enormous computing power required by the Square Kilometre Array.
This extremely powerful survey telescope will have millions of antennas to collect radio signals, forming a collection area equivalent to one square kilometre but spanning a huge surface area – approximately the width of the continental United States.
The SKA will be 50 times more sensitive than any former radio device and more than 10,000 times faster than today’s instruments.
The SKA is expected to produce a few Exabytes of data per day for a single beam per one square kilometer. After processing this data the expectation is that per year between 300 and 1500 Petabytes of data need to be stored.
In comparison, the approximately 15 Petabytes produced by the large hadron collider at CERN per year of operation is approximately 10 to 100 times less than the envisioned capacity of SKA.
The directors of the SKA project are to meet in Amsterdam on 3 April to discuss the location of the huge telescope, scattered across 1,900 square miles of Earth’s surface.
It will start building in 2016.
“It will have a deep impact on the way we perceive our place in the universe and how we understand its history and its future,” said Michiel van Haarlem, interim director general of the SKA project.
“We know we are going to discover things.”
The SKA will consist of thousands of dishes across 1,900 miles, with a total surface area of one square kilometre, that will provide so much data that one astronomer has declared it will completely change our view of the universe.
The scientific community also believe that the SKA represents our best ever chance of finding out if there’s life beyond our solar system.
To do this will require ground-breaking technology. The SKA’s 15m-dishes, which will detect electromagnetic radiation emitted by objects in space, will be the most sensitive ever built – able to detect an airport radar on a planet 50 light years away.
These dishes will be complemented by low and medium frequency aperture arrays, which provide a large field of view and are capable of observing more than one part of the sky at once.
It will be carried on enough optical fibre cable of such quantity that it could be wrapped twice around the world.
As yet, a location for it hasn’t been decided, but Southern Africa and Australia are both n the reckoning.
They all offer areas with ideal conditions for telescopes, which must be well clear of electronic interference, such as that generated by mobile phones.
It’s hoped that construction will begin in 2016, with the dishes coming online eight years later.
A prototype of SKA called KAT-7, which consists of seven 16-metre dishes, is undergoing testing in South Africa’s Karoo desert.
IBM researchers have successfully stored a single data bit in only 12 atoms, as currently it takes about a million atoms to store a bit on a modern hard-disk.
The researchers believe this is the world’s smallest magnetic memory bit.
The new technique opens up the possibility of producing much denser forms of magnetic computer memory than today’s hard disk drives and solid state memory chips.
“Roughly every two years hard drives become denser,” research lead author Sebastian Loth said.
“The obvious question to ask is how long can we keep going. And the fundamental physical limit is the world of atoms.
“The approach that we used is to jump to the very end, check if we can store information in one atom, and if not one atom, how many do we need?”
IBM researchers have successfully stored a single data bit in only 12 atoms
Below 12 atoms the researchers found that the bits randomly lost information, owing to quantum effects.
A bit can have a value of 0 or 1 and is the most basic form of information in computation.
“We kept building larger structures until we emerged out of the quantum mechanical into the classical data storage regime and we reached this limit at 12 atoms.”
The groups of atoms, which were kept at a very low temperature, were arranged using a scanning tunnelling microscope. Researchers were subsequently able to form a byte made of eight of the 12-atom bits.
Central to the research has been the use of materials with different magnetic properties.
The magnetic fields of bits made from conventional ferromagnetic materials can affect neighbouring bits if they are packed too closely together.
“In conventional magnetic data storage the information is stored in ferromagnetic material,” said Dr. Sebastian Loth, who is now based at the Center for Free-Electron Laser Science in Germany.
“That adds up to a big magnetic field that can interfere with neighbours. That’s a big problem for further miniaturization.”
Other scientists thought that was an interesting result.
“Current magnetic memory architectures are fundamentally limited in how small they can go,” said Dr. Will Branford, of Imperial College London.
“This work shows that in principle data can be stored much more densely using antiferromagnetic bits.”
But the move from the lab to the production may be some time away.
“Even though I as a scientist would totally dig having a scanning tunnelling microscope in every household, I agree it’s a very experimental tool,” Dr. Sebastian Loth said.
Dr. Sebastian Loth believes that by increasing the number of atoms to between 150 to 200 the bits can be made stable at room temperature. That opens up the possibility of more practical applications.
“This is now a technological challenge to find out about new manufacturing techniques,” he said.