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The ambitious Big Blue --- Interview with Leonora Hoicka, associate general counsel of IBM
By Emily Tan, China IP Magazine
Updated: 2013-01-08

On October 16th, 2012, IBM announced a third-quarter 2012 diluted earnings of 3.33 U.S. dollars per share, a year-to-year increase of 4%, or 3.44 U.S. dollars per share, up 8% excluding the impact of the UK pension-related charges. Operating (non-GAAP) diluted earnings were 3.62 U.S. dollars per share, compared with operating diluted earnings of 3.28 U.S. dollars per share in the third quarter of 2011, an increase of 10%.

"In the second quarter, we delivered strong profits, earnings per share and free cash flow growth. This performance reflects continued strength in our growth initiatives and investments in higher value opportunities. These are fundamental elements to our long-term business model," said Virginia Rometty, IBM president and chief executive officer. The numbers were definitely related to ambitious serial acquisitions.

The Long-term scheme

As early as 2005, IBM acquired the data integration provider Ascential Software Corp., which strengthened its ability in providing better data integration, structuring and management service. The data integration department is one of the data management departments with great significance, and the acquisition expands IBM’s open information integration platform.

In 2007, IBM acquired Cognos Inc. for about 5 billion U.S. dollars, which revealed its strategic transformation. Cognos was an Ottawa Ontario-based company producing business intelligence (BI) and performance management (PM) software. BI and PM software are used to collect data, which help companies and organizations making better marketing strategies, thereby improving working and management efficiency.

September 2010 witnessed IBM’s busiest acquisition period. In one short month, IBM acquired the data warehouse appliance company Netezza, the internet technology company Blade, as well as the software provider Open Pages.

Last year, in order to upgrade its risk analysis ability and provide better financial services, IBM spent 387 million U.S. dollars to buy Algorithmics — a leading provider of risk solutions. The company strengthens enterprises’ analytic ability, helps financial organizations making riskaware business decisions and in turn benefits IBM in the long term. IBM’s 2012 financial report proved that its former serial acquisitions had already begun harvesting. The 2012 System z User Conference was held in Boao on October 26th and a new product was introduced. It is well known that all of the top 25 world banks run their businesses on System z mainframes. 71% of the global Fortune 500 companies are System z clients and 9 out of the top 10 global life and health insurance providers process their high-volume transactions on IBM mainframe. Over 80% of the world’s corporate and government data resides on IBM mainframes. The results of the second quarter earnings indicate that IBM’s mainframe server products earnings increased an average of 11%, though figures in Greater China exceeded 50%. These statistics indicate that an increasing number of enterprises are relying on servers which can provide high capacity and hybrid computing as well as high security and large-scale cloud computing. These are the sorts of challenges that these enterprises are facing and consequently IBM invested generously on computing research and development to meet those needs.

Unremitting changes

The generous investment enabled IBM to break the record for annual issuance of U.S. patents, with a total amount of 6,180 in 2011. IBM has maintained its position as the leading recipient of issued U.S. patents for 19 consecutive years. Therefore, IBM can drive revenue as well as prevent IP infringement through patent licensing. It does not waste any time in court compared with its competitors.

IBM released large amount of patents to the public in 2005, which represented a major shift in the way IBM manages and deploys its intellectual property portfolio. While many multinational corporations strengthened their patent protection, IBM gave free access of 500 patents to individuals and groups working on open source software. After that, it kept its principle of establishing a healthy patent and IP cooperation environment with other enterprises.

In addition, IBM can also influence science and technology trends through its patents. For example, IBM states that if it wants to promote particular standards, it can leverage the relevant patents in its portfolio by openly licensing or pledging them. IBM has also successfully attracted many clients who are keen on consulting IP management with IBM.

News related to IBM has consistently been in the headlines. Recent topics include the 6 billion U.S. dollars investment on R&D, series acquisitions, numerous patent licensing, etc. What will "Big Blue’s" next move be and what changes will be made to its current intellectual property strategies? To learn more about IBM’s intellectual property strategy, a China IP journalist interviewed Ms. Leonora Hoicka, Associate General Counsel of IBM Corporation for more information.

China IP: IBM has invested over 6 billion U.S. dollars annually on R&D. 20, 000 new innovations have been announced in the most fruitful year. In this new era of technology, how can IBM keep up its creativity and also maintain its leadership role?

Ms. Hoicka: I think there are two things here: first, obviously we are a technology company. We are constantly evaluating the direction of our businesses and looking for the next advancement in our core business. In that sense we stay ahead by looking forward, which keeps us creative and innovative. Secondly, IBM’s community of inventors all recognize the value of IP, and they are very willing to bring forward their innovations and file them to seek patent protection. The inventor population is responsive to that; they understand the direction of the company. The company communicates well with the inventor population. This keeps us very creative and helps us sustain our leadership role. We invested in the IP area and we are about to invest more. What we do is we look carefully at what we make our expenditures on and ensure that those expenditures are consistent with the core values of the company.


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