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136 posts categorized "Science"

April 08, 2014

Mayo Clinic's Nobel Prize work at heart of $5.6B drug deal

So Questcor Pharmaceuticals announced Monday that Ireland-based Mallinckrodt Pharmaceuticals is buying it for a whopping $5.6 BILLION.

A little research into Questcor shows that it has followed an interesting path starting with its $100,000 purchase of rights to H.P. Acthar Gel from Aventis in 2001. The FDA then approved labeling Acthar as "an orphan drug," which opened up the company's options for pricing Acthar.

The New York Times says the price per vial climbed from $40 to an incredible $28,000 within 10 years.

CortisoneA95D4FE2FBE5At the core of Questcor's story is one of Mayo Clinic's most famous research successes.

In 1948, Dr. Philip S. Hench and Dr. Edward C. Kendall were studying the effects of a hormone on inflammination related to rheumatoid arthritis. They had success with cortisone, but it was difficult to synthesize.

Hench then injected adrenocorticotropic hormone, or ACTH to cause the patient's body to produce their own cortisone and other steroid hormones. The ACTH came from pigs from Armour meatpacking.

In 1950, Hench and Kendall won the Nobel Pirze in medicine for their research. Unfortunately, they didn't patent it. The FDA approved H.P. Acthar Gel to treat a variety of diseases and conditions. It was then owned by the meatpacker Armour.

In recent years, Questcor has been criticized for its dramatic price hikes and for vauge allusions to "a secret sauce" in their drug that improves its effectiveness.

Some question if it is effective at all.

Mayo Clinic's Dr. Eric Matteson, the chairman of rheumatology, has been quoted about the use of Achtar in rheumatolgy.

• “Limited to no attractiveness in rheumatology”

• “Enthusiasm is low”

• "Very little if any role for an ACTH product in rheumotatic diseases, I don't see it."

March 21, 2014

Med City tech quiz - Do you remember… ?

Looking through some old pics the other day, I came across some pieces of Rochester's techno past.

These were all once hot topics in the Rochester area. Some were even snapped up by early adapters. And then things changed.

While some of these still exist on the market in some form, a couple never made it beyond prototypes or early generations.

A couple of these are easy, but I wonder if anyone out there can correctly identify all of them.

Post your answers in the comments section to claim the fame of being Rochester's top tech historian.

DSCN0694 1.

 

 

 

 

 

IMG_1047

2.

 

 

 

 

DSCN0097

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IMG_2005

4.

March 03, 2014

Mayo Clinic to expand Superior Drive Support Center

Mayo Clinic is planning to expand its Superior Drive Support Center, which houses Mayo Medical Laboratories.

The clinic submitted plans on Feb. 14 to build a proposed 66,000-square-foot, two-story addition on the south side of the complex at 3050 Superior Drive N.W. 

03032014mayomedlabsMML conducts a wide variety of medical tests for hospitals worldwide. According to its website,
it performs nearly 20 million tests for more than 4,000 hospitals annually. The testing division overall has more than 3,200 employees, including more than 160 physicians and scientists. It has 58 laboratories that perform testing with support from Mayo Clinic physicians.

03032014SDSCplansWhile Mayo Clinic spokesperson confirmed the existence of site development application, officials there say it's too early to discuss specifics such as the timeline for the project or estimated cost. However, the plans designed by Flad Architects offer general details.

The expansion will more than double the lab space in the complex. It currently has 30,854 square feet of labs. The plans show that 34,000 square feet of laboratory area in the proposed addition to bring the total lab space to a total of 65,000 square feet.

Office space in the SDSC is slated to grow by 5,472 square feet, for a total of 137,000 square feet of space, following the expansion.

The remainder of the 26,000 square feet in the proposed expansion is described only as "Other." The first floor of the addition will have 28,533 square feet, and the second level will have 27,842.

Mayo Clinic moved into the 13-year-old complex in 2004. By 2011, approximately 800 employees worked at the facility. It was originally built by electronics manufacturer Celestica Inc. in 2001. When that company closed its Rochester operation, the building was left empty.

While Mayo Clinic leased the property for eight years, it purchased it for $18.5 million in August of 2012. Prior to that it was owned by 17 national investors through Triple Net Properties of Santa Ana, Calif. until they defaulted on the mortgage in 2012.  The investors bought the property for $36.8 million in 2006

When the mortgage defaulted, HSBC Bank USA took over the property. HSCB then sold it to Mayo Clinic.

While it was was originally under construction, New York City-based W. P. Carey & Co. LLC bought the complex from Celestica, which leased it back. W.P. Carey later sold it for about 70 percent more than the $21.6 million it paid for it.

December 05, 2013

Breast cancer scanner maker, once linked to Mayo Clinic, sold to Mexican company

Qg3q4q112233Here's a potentially interesting nugget of news about San Diego-based Naviscan Inc., which was at one pointed linked with Mayo Clinic through intellectual property licenses as well as direct investment by Mayo Medical Ventures.

"… Certain Naviscan Inc. assets including intellectual property and the Naviscan Trademark" have been aquired by a Mexican medical scanner company called Compañía Mexicana de Radiología or CMR.

Not sure what that means exactly, but my guess is that CMR is now behind the steering wheel at Naviscan.

Now I don't know if Mayo Clinic still has any links with Naviscan, but it certainly did at one time. I've got calls into Mayo and Naviscan to check on that.

I wrote the Mayo Clinic-Naviscan relationship back in 2005 through 2007 or so. Sheesh, I've been doing this for a long time.

From back in November 2005:

Naviscan “entered into an agreement with Mayo Foundation for Medical Education and Research (Mayo Clinic) to clinically validate and commercialize a dynamic patented molecular imaging agent for use with Positron Emission Tomography (PET) and other imaging modalities. … Mayo Clinic has licensed the vitamin B-12 molecular imaging agent technology invented by Dr. Douglas A.Collins to Naviscan PET Systems, Inc and will receive royalties from this license. Researchers at the Mayo Clinic have published studies that cancers have high uptake of radioactive B-12, especially in breast tumors."

    --------------------
"The combination of the Mayo Clinic’s patented Vitamin B-12 molecular imaging agent and Naviscan’s high-resolution PET scanner holds great promise for the future in terms of early detection of breast cancers,” said Paul Grayson, newly-appointed CEO of Naviscan PET Systems, Inc. and a Managing Director of Sanderling Ventures. “We sought out Naviscan’s technology to strategically invest in this important imaging technology platform.” Naviscan is planning clinical trial work with Mayo Clinic and other luminary sites in the U.S. to prove the value of the PEM Flex in breast cancer patients, as well as for evaluating PEM’s role with high-risk patients.”

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From the same date in 2005:

“Naviscan PET Systems has raised a $6.5 million in Series B funding for its high resolution positron emission tomography (PET) products. The firm said that it raised the round from Sanderling Ventures, with participation from Mayo Medical Ventures."

FYI, Sanderling Ventures now leases a space in the Mayo Clinic Business Accelerator.

November 26, 2013

Mayo Clinic-linked Cardio3 part of Europe group awarded $6M research grant

C3bs_logoCardio3 BioSciences, the biotechnology firm based on Mayo Clinic research, is part of a European research consortium that recently snagged a four-year research grant for $4.5 million euros or $6 million U.S. dollars to develop "a bioresorbable polymeric valve tube for the treatment of patient suffering congenital heart defects." 

Cardio3 licensed Mayo Clinic's research back in 2007. That research is led by Mayo Clinic's Dr. Andre Terzic and Dr. Atta Behfar. The therapy uses stem cells from a patient's  bone marrow. Through a proprietary process called Cardiopoiesis, Cardio3 re-programs those cells to become heart cells. The cells are then injected back into the patient's heart to repair damaged tissue.
 
Here's some from the announcement of this latest project:

Cardio3 BioSciences…  is part of a consortium which has been awarded a highly competitive European Union Seventh Framework Programme for Research and Innovation (FP7) research grant from the European Union to support the development of a bioresorbable polymeric valve tube for the treatment of patient suffering congenital heart defects.

The project, titled "Tissue engineering of the right heart outflow tract by biofunctionalized bioresorbable polymeric valved tube", or "TEH-TUBE", is a four year project and will start on 1st January 2014.

Dorv4C3BS is part of a first-in-class, pan-European consortium composed of seven companies and universities, led by the "Assistance Publique Hopitaux de Paris (APHP)" and the team of Professor David Kalfa and Philippe Menasché.

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C3BS is the exploitation manager of the consortium and as such is in charge of exploiting the outcome of the research project. Within the consortium, Cardio3 is also in charge of the production of the mesenchymal stem cells and the definition and the implementation of the regulatory strategy.

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"We are delighted to be part of a project which represents a potential paradigm shift in the treatment of congenital cardiac diseases," said Dr. Christian Homsy, CEO of Cardio3 BioSciences. "We are also honored to be chosen by our partners to exploit the outcome of this program. It demonstrates the confidence and the recognition of our peers in the expertise we have built over the past years. FP7 grants are awarded on the basis of a highly competitive, two-stage, peer-review process, therefore this award serves as recognition of our cell production, regulatory and clinical expertise."


This wraps up a big year for Cardio3 BioSciences. It released an IPO in July on NYSE Euronext stock exchanges in Brussels and Paris that raised $29.6 million, or 23 million Euros.

November 15, 2013

Mayo Clinic to be at center of LifeScience Alley conference

This is kind of interesting. LifeScience Alley, Minnesota's medical device and bioscience industry group, is hosting its 2013 conference in Minneapolis next week.

And Mayo Clinic will be the centerpiece. If I register by midnight, it will only cost me $495 to attend. If I don't hit the button by midnight, it'll cost me $750.

Hhhhmm.... I think I'll stay in Rochester and confer with inside sources here. Maybe with the bosses gone, folks will feel more chatty than usual. Heh.

Here's some from the conference pitch:

On Wednesday, at the LifeScience Alley 2013 Conference in Minneapolis, leaders from world-class life science and healthcare organizations will discuss how changes in healthcare policy and delivery are rewriting the way our community innovates, operates and delivers value to patients.  

New-Technology-Showcase-Logo-2012-ConfOne of these organizations is this year's New Technology Showcase Partner, Mayo Clinic.  As a global leader in healthcare innovation and delivery, Mayo Clinic will be introducing several cutting-edge life science technologies, two of which originate from research conducted at Mayo.   

During the Morning Keynote, "Controlling Costs in the New Healthcare Environment - Effectively Managing the Global Supply Chain", Mayo Clinic's Karen Wolfe will highlight how the organization manages logistics and its global supply chain to minimize healthcare costs while delivering more value to its patients.   

In addition, representatives from Mayo Clinic Ventures, Mayo Clinic Research and Destination Medical Center (DMC) will be at their booths to discuss all that Mayo Clinic and the city of Rochester have to offer life science companies and entrepreneurs.

November 11, 2013

Mayo Clinic, U of M startup ready for software rollout

Rochester's Evidentia Health got some press last week about its impending rollout at Fairview Health Systems.

Evidentia Health was one of the first tenants of Mayo Clinic Business Accelerator when it opened early this year.

Its billed as a health care IT company with licensed expe02272013mayoaccelerator1rtise and medical content from both Mayo Clinic and the University of Minnesota

It was co-founded by Mayo Clinic's Dr. Jeremy Friese in early 2012.Friese, an interventional radiologist, is the medical director for new ventures and business development in the Mayo Clinic's Center for Individualized Medicine.

Evidentia was profiled on Wednesday by TechdotMN, a non-profit business media group. Here's some from that piece by Yael Grauer:

As new provisions from the Affordable Healthcare Act take effect, Minnesota startup Evidentia Health is poised to help patients better understand their electronic health records (EHRs) while helping physicians meet criteria for “meaningful use” of EHR technology to improve patient care.

To receive EHR incentive pay under Medicare and Medicaid EHR Incentive Programs, healthcare providers must show they are meaningfully using EHRs by meeting various objectives.  Patients are required to be able to access their medical information within three days of when it’s created, and in 2014, this will be within one day.

The problem is that viewing EHR material and doing research online can be confusing to patients. They can jump to the wrong conclusions, worry unnecessarily and often have questions for their care team that may not be applicable.

Evidentia provides reports to both patients and physicians. The reports for patients include the most important sources of information, as well as secondary information for those interested in even more. In addition to the material in patient reports, physicians also receive recent medical research for evidence-based medicine studies.

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Founded in October 2012, Evidentia is funded by Mayo Clinic Ventures and the University of Minnesota. A pilot program is taking place at the Family Practice Internal Medicine groups in Rochester, and Evidentia is prepared to deploy within Fairview at University Hospital.

As new provisions from the Affordable Healthcare Act take effect, Minnesota startup Evidentia Health is poised to help patients better understand their electronic health records (EHRs) while helping physicians meet criteria for “meaningful use” of EHR technology to improve patient care.

To receive EHR incentive pay under Medicare and Medicaid EHR Incentive Programs, healthcare providers must show they are meaningfully using EHRs by meeting various objectives.  Patients are required to be able to access their medical information within three days of when it’s created, and in 2014, this will be within one day.

The problem is that viewing EHR material and doing research online can be confusing to patients. They can jump to the wrong conclusions, worry unnecessarily and often have questions for their care team that may not be applicable.

Evidentia provides reports to both patients and physicians. The reports for patients include the most important sources of information, as well as secondary information for those interested in even more. In addition to the material in patient reports, physicians also receive recent medical research for evidence-based medicine studies.

“Evidentia brings together all of the information that you need to know and get it in your hands in a way that’s both credible and trustworthy, has been reviewed by physicians, and is applicable to your situation,” says CTO Brent Backhaus.

When patients access their electronic medical records, they’ve often confused about certain key phrases or conditions. Evidentia looks at the text of the reports, highlights key phrases, and presents individualized information to the patient. The information selected is both algorithmically selected and reviewed by a physician.

“We pick information to present to both to the patient and the physician that make the most sense for them to see at that point in time about their specific condition,” Backhaus says.

In addition to Backhaus, who was the founding CTO of Virtual Radiologic, Evidentia’s team includes CEO Jeremy Friese, a Harvard MBA and Associate Chair of Radiology at Mayo Clinic, and chief product officer Dan Steinberger, a U of M physician and technology leader, and founder of ProVation Medical (which had a $100m exit in 2006).

Founded in October 2012, Evidentia is funded by Mayo Clinic Ventures and the University of Minnesota. A pilot program is taking place at the Family Practice Internal Medicine groups in Rochester, and Evidentia is prepared to deploy within Fairview at University Hospital.

- See more at: http://tech.mn/news/2013/11/06/evidentia-health-mayo-clinic-ventures/#sthash.tL8tSBOX.dpuf
Yael Grauer
Yael Grauer
Yael Grauer
Yael Grauer

As new provisions from the Affordable Healthcare Act take effect, Minnesota startup Evidentia Health is poised to help patients better understand their electronic health records (EHRs) while helping physicians meet criteria for “meaningful use” of EHR technology to improve patient care.

To receive EHR incentive pay under Medicare and Medicaid EHR Incentive Programs, healthcare providers must show they are meaningfully using EHRs by meeting various objectives.  Patients are required to be able to access their medical information within three days of when it’s created, and in 2014, this will be within one day.

The problem is that viewing EHR material and doing research online can be confusing to patients. They can jump to the wrong conclusions, worry unnecessarily and often have questions for their care team that may not be applicable.

Evidentia provides reports to both patients and physicians. The reports for patients include the most important sources of information, as well as secondary information for those interested in even more. In addition to the material in patient reports, physicians also receive recent medical research for evidence-based medicine studies.

“Evidentia brings together all of the information that you need to know and get it in your hands in a way that’s both credible and trustworthy, has been reviewed by physicians, and is applicable to your situation,” says CTO Brent Backhaus.

When patients access their electronic medical records, they’ve often confused about certain key phrases or conditions. Evidentia looks at the text of the reports, highlights key phrases, and presents individualized information to the patient. The information selected is both algorithmically selected and reviewed by a physician.

“We pick information to present to both to the patient and the physician that make the most sense for them to see at that point in time about their specific condition,” Backhaus says.

In addition to Backhaus, who was the founding CTO of Virtual Radiologic, Evidentia’s team includes CEO Jeremy Friese, a Harvard MBA and Associate Chair of Radiology at Mayo Clinic, and chief product officer Dan Steinberger, a U of M physician and technology leader, and founder of ProVation Medical (which had a $100m exit in 2006).

Founded in October 2012, Evidentia is funded by Mayo Clinic Ventures and the University of Minnesota. A pilot program is taking place at the Family Practice Internal Medicine groups in Rochester, and Evidentia is prepared to deploy within Fairview at University Hospital.

- See more at: http://tech.mn/news/2013/11/06/evidentia-health-mayo-clinic-ventures/#sthash.tL8tSBOX.dpufis it will roll out its technology this year.

November 06, 2013

Mayo Clinic-linked Cardio3 Biosciences stock surges

On the record, everybody always says that competition is good. I actually suspect many of the businesses that say that don't really believe that. However, here's a concrete example of competition directly bringing in money for a company.
Cardio3 BioSciences, the Belgium biotech firm based on Mayo Clinic research, saw its stock on the NYSE Euronext stock exchanges in Brussels and Paris spike this week after a competitor, Mesoblast, got the greenlight from the FDA to start clinical trials of its C3bs_logosimiliar regenerative treatment.
Cardio3's therapy uses stem cells from a patient's  bone marrow. Through a proprietary process called Cardiopoiesis, Cardio3 re-programs those cells to become heart cells. The cells are then injected back into the patient's heart to repair damaged tissue.
As a shareholder, Mayo Clinic controls 10.44 percent of Cardio3's stock, according to Cardio3.
Here's some from a Tuesday piece by Simeon Bennett of Reuters about this week's bump.

Cardio3 advanced 50 cents to 24.50 euros at the 5:35 p.m. close of trading on Euronext Brussels, giving the Mont-Saint-Guibert-based company a market value of 155.2 million euros ($209.1 million). More than 544,000 shares were traded, 38 times the three-month daily average. The stock has surged 78 percent in the past eight trading days.

Mesoblast Ltd., an Australian company that’s using similar technology, rose to an eight-month high on Nov. 1 after saying it gained Food and Drug Administration approval to start a late-stage study with its partner, Teva Pharmaceutical Industries, of its stem cell in patients with heart failure.

That development “makes us quite confident in seeing the technology as an emerging one, and more than that, an approvable one,” Arnaud Guerin, an analyst with Portzamparc Societe de Bourse in Nantes, France, said by phone today.

October 17, 2013

IBM's Watson + Cleve Clinic and Mayo + Optum

Improving healthcare is an ongoing project, particularly here in Rochester.

Here are a couple locally linked tidbits I came across this week about efforts that are using technology to attack this issue.

IBM-Watson-Jeopardy-500x285First, everyone remembers IBM's Jeopardy-playing supercomputer Watson. Much of its development occured here in Rochester. I remember the UMR hosting a big viewing session for local business leaders and Mayo Clinic execs, so everyone could watch the celebrity computer answer Alex Trebec.

These days Watson is specializing in helping doctors at the Cleveland Clinic. They announced some developments this week.
Ibm-watson-david-ferrucci-2IBM Research unveiled two new Watson-related cognitive technologies that are expected to help physicians make more informed and accurate decisions faster and to cull new insights from electronic medical records (EMR).

The projects known as "WatsonPaths" and "Watson EMR Assistant" are the result of a year-long research collaboration with fa culty, physicians and students at Cleveland Clinic Lerner College of Medicine of Case Western Reserve University. Both are key projects that will create technologies that can be leveraged by Watson to advance the technology in the domain of medicine.

• WatsonPaths explores a complex scenario and draws conclusions much like people do in real life. When presented with a medical case, WatsonPaths extracts statements based on the knowledge it has learned as a result of being trained by medical doctors and from medical literature.

WatsonPaths can use Watson's question-answering abilities to examine the scenario from many angles. The system w Watson2orks its way through chains of evidence -- pulling from reference materials, clinical guidelines and medical journals in real-time -- and draws inferences to support or refute a set of hypotheses. This ability to map medical evidence allows medical professionals to consider new factors that may help them to create additional differential diagnosis and treatment options.

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Of course, Mayo Clinic's involved in many projects to improve medical treatments and healthcare in general.

One such project is the "strategic research alliance" Mayo Clinic formed in January with OptumHealth, a technology and consulting division of the Minnetonka, Minn.-based health insurer UnitedHealth Group.

Together they launched Optum Labs in Cambridge, Mass. Optum Labs CEO Paul Bleicher spoke about what they are doing at a conference this week.

Mayo_optum_690Optum Labs will use claims and clinical data to answer pressing health questions. It will use a database that includes 149 million patient records from UNH, electronic medical records covering 5 million lives from Mayo Clinic, and 12 million electronic medical records from Humedica.

Speaking at the recent StrataRx conference in Boston, Optum Labs CEO Paul Bleicher, M.D., Ph.D., said Cambridge, Mass.-based Optum will use advanced analytics and data visualization techniques to support research and innovation projects that will improve patient care and lower cost.

The new partnership of Mayo Clinic and OptumHealth also represents a source of new opportunities for healthcare entrepreneurs, said Bleicher, who expects new health IT companies to emerge from this effort. "That is one of the goals," Bleicher said. "We want to develop technologies and innovations that could be spun off into companies, in collaboration with venture capitalists."

He said Optum Labs is actively seeking other partners and "accepting applications from anybody doing research who is willing to do so with complete transparency, in a non-commercial fashion." The mission is "very public, publication research that will advance the cause of healthcare and anyone who participates." Influencing healthcare policymakers is also one of the goals, he said.

ViewMediaAnother priority of Optum Labs is enlisting "new partners who will bring additional data of high value," Bleicher said. "We want other payers - and everybody - to be in the tent, because if all of the data is in one place, there is opportunity to dive deep into it." It will also be important that "the findings don't stay stuck in 'silos' but are distributed widely, so they become valuable for more than just a few organizations."

The cost of some of the projects Optum Labs undertakes could be shared by National Institutes of Health grants or by partnering with life sciences or IT companies, Bleicher added.

Mark Hayward, administrator of Mayo Clinic's Center for the Science of Health Care Delivery, said there will be "information technology that will come out of our labs that will spin off new technologies and methodologies."

August 26, 2013

Fool speculates on IBM's end being nigh

The MoUrltley Fool financial services firm posted an interesting take about IBM and its possible future on its website today.

Analyst Adrian Campos wrote an article called, "Why IBM's End Could Be Near." Kind of scary sounding. I'm sure Big Blue and investors aren't too worried since it was written by a card-carrying Fool.

FYI, here's why the firm uses the Motley Fool name:

The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Here's some from Campos' article:

IBM is having a rough year, producing a negative 6% return so far. The company had a wonderful come-back in the 90s thanks to its cost reductions and shift toward software and consulting, wh130110ibmwalljan10jkich led to amazing financial performance for a decade.  And since 2002, revenue, gross profit, and operating profit have compounded at annual rates of 3%, 6%, and 12%.

However, the current situation is totally different. IBM may need a transformation and re-engineering of its business. According to many IBM fans, that shouldn't be a big problem because IBM has been able to change several times in the past: this is just another time. Bears, on the other hand, keep reminding us that this time is different. What kind of future awaits IBM shareholders in the short and long run?  

Is IBM's end near?

In the first quarter of 2013, for the first time in 8 years IBM missed earnings expectations: sales declined 5%, posing a strong risk to IBM's long-term business, as two-thirds of its revenue base is recurring.

Full-year earnings guidance of $16.70 were just $0.07 below the consensus. But these $0.07  reflected long-term changes in the main markets IBM addresses: a contraction in global demand for IBM's high-end systems & hardware, and growth limits in the private cloud computing segment. These long-term trends started hurting IBM's cash flow already in 2009 and the $0.07  should have been seen as the beginning of a series of disappointments and pain for shareholders. 

Unfortunately, the second quarter results did not show the kind of substantive change that investors were looking forward to. IBM did beat the consensus by a tiny margin.

That was just not enough.

Ibm-logoAnalysts had kept estimates low but their expectations were actually higher: they tacitly were expecting a major change in business focus, which did not seem to happen. As a result, institutions from Credit Suisse to UBS downgraded the stock. It's simple to understand the downgrades: margins were down 3% from last year. The elephant is spending the same or more money, but making much less than before. 

Now, similar results coming from other companies in the software and services sector, like Oracle, show that the whole industry is in trouble. But to make matters worse, IBM still has 34% (hardware + System Z server sales) of its revenue coming from the commodity-like hardware segment, which is even riskier than the services segment, because of increasing competition from Intel's cheap machines.

Wrong focus?

In "IBM: The End is Near,  investor Arne Alsin identified a massive paradigm shift as the root of all of IBM's problems. The industry is moving to the public cloud: low-cost yet powerful computing architecture. IBM's main products (e.g. System Z and private cloud solutions), on the other hand, depend on the old paradigm--the private cloud, a soon-to-be legacy business.

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Final foolish thoughts

I agree with Alsin in the sense that the demand for expensive, multi-million dollar systems (let them be private clouds or something else) is contracting. Companies are moving to the public cloud instead. Expensive frameworks and commodity-like x86 servers are becoming endangered species.

That being said, I also don't want to underestimate the ability of IBM to change its business radically. Big Blue has done it several times. The latest time was when it exited the PC business in 2004 by divesting its PC unit to Lenovo. This was done 2 years after HPQ acquired Compaq and at a moment where the PC business was still strong. The elephant prioritized the sustainability of the business rather than meeting the street consensus for the next quarter.

A similar strategy and radical changes of focus are in great need again. This goes beyond acquiring companies with strong exposure to the public cloud (IBM recently acquired SoftLayer for $2 billion, 5 times revenue).

Finally, there will always be demand for expensive private clouds, for institutions willing to pay 100% more in price for an additional 5% safety improvement. What IBM needs to do is to reduce the exposure to such business, as soon as possible. In the meanwhile, the safety of having institutional clients and its vast resources will allow Big Blue to survive, but don't expect superb returns during the transition. It's gonna take a while, since it's just starting!