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Penske Automotive Reports Record Results

-- Most Profitable Quarter in Company History

BLOOMFIELD HILLS, Michigan, July 30, 2014 /PRNewswire/ --

Second Quarter 2014

Six Months 2014

  • Revenue Increases 21.4% to $4.4 Billion
  • Revenue Increases 21.1% to $8.5 Billion
  • Same-store Retail Revenue Increases 12.7%
  • Same-store Retail Revenue Increases 13.8%
  • Income from Continuing Operations Increases 27.5% to $80.3 Million
  • Income from Continuing Operations Increases 21.7% to $146.4 Million
  • Earnings Per Share from Continuing Operations Increases 27.1% to $0.89
  • Earnings Per Share from Continuing Operations Increases 21.8% to $1.62
  • EBITDA Increases 22.4% to $153 Million
  • EBITDA Increases 19.6% to $283 Million

Penske Automotive Group, Inc. (NYSE: PAG), an international transportation services company, announced today the most profitable quarter and first six months of income from continuing operations and related earnings per share in company history. For the second quarter of 2014, when compared to the same period last year, income from continuing operations attributable to common shareholders increased 27.5% to $80.3 million and related earnings per share increased 27.1% to $0.89 per share.

Total revenue increased 21.4% to $4.4 billion. The revenue increase was driven by a 10.4% increase in total retail unit sales, including a 5.3% increase on a same-store basis. Gross profit improved 19.2% to $666.9 million while operating income increased 21.5% to $136.2 million.

Commenting on the company's record results, Penske Automotive Group Chairman Roger S. Penske said, "Our business delivered another outstanding quarter, achieving over 20% growth in revenues, income from continuing operations and related earnings per share. I am particularly pleased with another quarter of double-digit, same-store retail revenue growth, further highlighting the benefit of our company's brand mix and geographic diversification. We remain confident in the strength of the auto retail market and our ability to continue growing the overall business."

Highlights of the Second Quarter

  • Total Retail Unit Sales Increased 10.4% to 101,422
    • +8.4% in the United States; +15.3% Internationally
    • New unit retail sales +10.5%
    • Used unit retail sales +10.4%

  • Same-store Retail Revenue Increased 12.7%
    • New +11.9%; Used +15.9%; Finance & Insurance +13.8%; Service and Parts +7.8%
    • +6.3% in the United States; +25.3% Internationally

  • Average Transaction Price Per Unit
    • New $40,318; +7.0%
    • Used $27,733; +8.6%

  • Average Gross Profit Per Unit
    • New $3,115, +$296/unit; Gross Margin 7.7%, +20 basis points
    • Used $1,966, +$50/unit; Gross Margin 7.1%, -40 basis points
    • Finance & Insurance $1,107, +$76/unit

For the six months ended June 30, 2014, total revenue increased 21.1% to $8.5 billion. The revenue increase was driven by an 11.7% increase in total retail unit sales, including 7.5% on a same-store basis. Same-store retail revenue growth was 13.8%. Income from continuing operations increased 21.7% to $146.4 million and related earnings per share increased 21.8% to $1.62 per share when compared to the same period last year.

Share Repurchases
For the six months ended June 30, 2014, the company has repurchased 335,350 shares of its common stock for approximately $15.5 million, or an average price of $46.20 per share. The company has a remaining share repurchase authorization of $77.6 million as of June 30, 2014.

Conference Call
Penske Automotive will host a conference call discussing financial results relating to the second quarter of 2014 on July 30, 2014, at 2:00 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230-1085 [International, please dial (612) 288-0340]. The call will also be simultaneously broadcast over the Internet through the Investors Relations section of the Penske Automotive Group website. Additionally, an investor presentation relating to the second quarter 2014 financial results has been posted to the company's website. To access the presentation or to listen to the company's webcast, please refer to www.penskeautomotive.com.

About Penske Automotive
Penske Automotive Group, Inc., (NYSE: PAG) headquartered in Bloomfield Hills, Michigan, is an international transportation services company, operating automotive dealerships, commercial vehicle distribution and car rental franchises principally in the United States, Western Europe, Australia and New Zealand, employs approximately 19,900 people worldwide and is a member of the Fortune 500 and Russell 2000. For additional information, visit the company's website at www.penskeautomotive.com.

Non-GAAP Financial Measures
This release contains certain non-GAAP financial measures as defined under SEC rules, such as earnings before interest, taxes, depreciation and amortization ("EBITDA"). The company has reconciled these measures to the most directly comparable GAAP measures in the release. The company believes that these widely accepted measures of operating profitability improve the transparency of the company's disclosures and provide a meaningful presentation of the company's results from its core business operations excluding the impact of items not related to the company's ongoing core business operations, and improve the period-to-period comparability of the company's results from its core business operations. These non-GAAP financial measures are not substitutes for GAAP financial results, and should only be considered in conjunction with the company's financial information that is presented in accordance with GAAP.

Caution Concerning Forward Looking Statements
Statements in this press release may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.'s future sales potential and potential earnings outlook. Actual results may vary materially because of risks and uncertainties that are difficult to predict. These risks and uncertainties include, among others: economic conditions generally, conditions in the credit markets and changes in interest rates, adverse conditions affecting a particular manufacturer, including the adverse impact to the vehicle and parts supply chain due to natural disasters or other disruptions that interrupt the supply of vehicles or parts to us; changes in consumer credit availability, the outcome of legal and administrative matters, and other factors over which management has limited control. These forward-looking statements should be evaluated together with additional information about Penske Automotive's business, markets, conditions and other uncertainties, which could affect Penske Automotive's future performance. These risks and uncertainties are addressed in Penske Automotive's Form 10-K for the year ended December 31, 2013, and its other filings with the Securities and Exchange Commission ("SEC"). This press release speaks only as of its date, and Penske Automotive disclaims any duty to update the information herein.

Find a vehicle: http://www.penskecars.com
Engage Penske Automotive: http://www.penskesocial.com
Like Penske Automotive on Facebook: https://facebook.com/PenskeCars
Follow Penske Automotive on Twitter: https://twitter.com/#!/Penskecarscorp
Visit Penske Automotive on YouTube: http://www.youtube.com/penskecars

Inquiries should contact:

David K. Jones
Executive Vice President and

Chief Financial Officer

Penske Automotive Group, Inc.
+1-248-648-2800
[email protected]

Anthony R. Pordon
Executive Vice President Investor Relations and Corporate Development

Penske Automotive Group, Inc.
+1-48-648-2540
[email protected]

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

(Amounts In Millions, Except Per Share Data)

(Unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,


2014


2013


%

Increase/

(Decrease)


2014


2013


%

Increase/

(Decrease)

Revenues:












New Vehicle

$ 2,238.1


$ 1,894.0


18.2%


$ 4,264.4


$ 3,610.8


18.1%

Used Vehicle

1,273.3


1,061.7


19.9%


2,474.9


2,049.9


20.7%

Finance and Insurance, Net

112.3


94.7


18.6%


217.2


180.6


20.3%

Service and Parts

435.7


384.9


13.2%


853.2


764.6


11.6%

Fleet and Wholesale

216.8


180.3


20.2%


404.7


352.2


14.9%

Commercial Vehicle, Car Rental and Other

130.5


15.0


nm


240.3


21.8


nm

Total Revenues

$ 4,406.7


$ 3,630.6


21.4%


$ 8,454.7


$ 6,979.9


21.1%

Cost of Sales:












New Vehicle

$ 2,065.2


$ 1,752.3


17.9%


$ 3,934.8


$ 3,335.4


18.0%

Used Vehicle

1,183.0


982.0


20.5%


2,297.6


1,892.9


21.4%

Service and Parts

175.6


153.7


14.2%


345.9


312.2


10.8%

Fleet and Wholesale

213.7


177.7


20.3%


397.2


345.4


15.0%

Commercial Vehicle, Car Rental and Other

102.3


5.4


nm


188.3


7.9


nm

Total Cost of Sales

$ 3,739.8


$ 3,071.1


21.8%


$ 7,163.8


$ 5,893.8


21.5%

Gross Profit

666.9


559.5


19.2%


1,290.9


1,086.1


18.9%

SG&A Expenses

513.2


432.7


18.6%


1,001.0


839.8


19.2%

Depreciation

17.5


14.7


19.0%


34.0


29.0


17.2%

Operating Income

136.2


112.1


21.5%


255.9


217.3


17.8%

Floor Plan Interest Expense

(11.6)


(10.7)


8.4%


(22.7)


(20.8)


9.1%

Other Interest Expense

(13.1)


(11.9)


10.1%


(26.2)


(23.4)


12.0%

Equity in Earnings of Affiliates

10.9


8.9


22.5%


16.0


11.2


42.9%

Income from Continuing Operations Before Income Taxes

122.4


98.4


24.4%


223.0


184.3


21.0%

Income Taxes

(41.1)


(34.9)


17.8%


(75.2)


(63.2)


19.0%

Income from Continuing Operations

81.3


63.5


28.0%


147.8


121.1


22.0%

Loss from Discontinued Operations, net of tax

(7.4)


(1.0)


nm


(6.0)


(0.6)


nm

Net Income

73.9


62.5


18.2%


141.8


120.5


17.7%

Less: Income Attributable to Non-Controlling Interests

1.0


0.5


100.0%


1.4


0.8


75.0%

Net Income Attributable to Common Shareholders

$ 72.9


$ 62.0


17.6%


$ 140.4


$ 119.7


17.3%

Income from Continuing Operations Per Share

$ 0.89


$ 0.70


27.1%


$ 1.62


$ 1.33


21.8%

Income Per Share

$ 0.81


$ 0.69


17.4%


$ 1.55


$ 1.32


17.4%

Weighted Average Shares Outstanding

90.4


90.3


0.1%


90.4


90.4


---

Amounts Attributable to Common Shareholders:












Reported Income from Continuing Operations

$ 81.3


$ 63.5


28.0%


$ 147.8


$ 121.1


22.0%

Less: Income Attributable to Non-Controlling Interests

1.0


0.5


100.0%


1.4


0.8


75.0%

Income from Continuing Operations, net of tax

$ 80.3


$ 63.0


27.5%


$ 146.4


$ 120.3


21.7%

Loss from Discontinued Operations, net of tax

(7.4)


(1.0)


nm


(6.0)


(0.6)


nm

Net Income Attributable to Common Shareholders

$ 72.9


$ 62.0


17.6%


$ 140.4


$ 119.7


17.3%













nm – not meaningful












PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Balance Sheets

(Amounts In Millions)

(Unaudited)






June 30,


December 31,


2014


2013

Assets




Cash and Cash Equivalents

$ 61.4


$ 49.8

Accounts Receivable, Net

641.2


600.8

Inventories

2,615.9


2,518.3

Other Current Assets

111.4


88.4

Assets Held for Sale

52.4


107.3

Total Current Assets

3,482.3


3,364.6

Property and Equipment, Net

1,367.8


1,232.2

Intangibles

1,518.4


1,439.9

Other Long-Term Assets

373.8


378.8

Total Assets

$ 6,742.3


$ 6,415.5





Liabilities and Equity




Floor Plan Notes Payable

$ 1,717.3


$ 1,685.1

Floor Plan Notes Payable – Non-Trade

934.0


901.6

Accounts Payable

435.1


373.3

Accrued Expenses

314.4


262.6

Current Portion Long-Term Debt

81.6


50.0

Liabilities Held for Sale

41.1


59.7

Total Current Liabilities

3,523.5


3,332.3

Long-Term Debt

1,006.8


1,033.2

Other Long-Term Liabilities

565.3


527.9

Total Liabilities

5,095.6


4,893.4

Equity

1,646.7


1,522.1

Total Liabilities and Equity

$ 6,742.3


$ 6,415.5

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Selected Data

(Unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,


2014


2013


2014


2013

Geographic Revenue Mix:








U.S.

61%


66%


59%


64%

U.K.

35%


34%


37%


35%

Other International

4%


---


4%


1%

Total

100%


100%


100%


100%









Revenue Mix:








Automotive Dealership

97%


100%


97%


100%

Commercial Vehicle, Car Rental and Other

3%


---


3%


---

Total

100%


100%


100%


100%









Automotive Dealership Revenue Mix:








Premium/Luxury:








BMW

26%


25%


26%


25%

Audi

13%


13%


13%


13%

Mercedes-Benz

10%


11%


10%


11%

Porsche

5%


5%


5%


5%

Land Rover

5%


4%


6%


4%

Lexus

4%


4%


4%


4%

Ferrari / Maserati

3%


2%


2%


2%

Bentley

2%


1%


2%


1%

Acura

1%


2%


1%


2%

Others

2%


2%


2%


2%

Total Premium/Luxury

71%


69%


71%


69%

Volume Non-U.S.:








Toyota

12%


12%


12%


12%

Honda

8%


10%


8%


10%

Volkswagen

2%


2%


2%


2%

Nissan

1%


1%


1%


1%

Others

2%


2%


2%


2%

Total Volume Non-U.S.

25%


27%


25%


27%

U.S.:








General Motors / Chrysler / Ford

4%


4%


4%


4%

Total Automotive Dealership Revenue

100%


100%


100%


100%









Gross Profit Mix:








New Vehicles

25.9%


25.3%


25.5%


25.3%

Used Vehicles

13.5%


14.2%


13.7%


14.5%

Finance and Insurance

16.8%


16.9%


16.8%


16.6%

Service and Parts

39.1%


41.4%


39.4%


41.7%

Fleet and Wholesale

0.5%


0.5%


0.6%


0.6%

Commercial Vehicle, Car Rental and Other

4.2%


1.7%


4.0%


1.3%

Total

100.0%


100.0%


100.0%


100.0%

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Selected Data

(Unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,


2014


2013


Increase/

(Decrease)


2014


2013


Increase/

(Decrease)


Operating items as a percentage of revenue:













Gross Profit:













New Vehicle

7.7%


7.5%


+20 bps


7.7%


7.6%


+10 bps


Used Vehicle

7.1%


7.5%


-40 bps


7.2%


7.7%


-50 bps


Service and Parts

59.7%


60.1%


-40 bps


59.5%


59.2%


+30 bps


Fleet and Wholesale

1.4%


1.4%


---


1.9%


1.9%


---


Commercial Vehicle, Car Rental and Other

21.6%


64.0%


nm


21.6%


63.8%


nm


Total Gross Profit

15.1%


15.4%


-30 bps


15.3%


15.6%


-30 bps


Selling, General and Administrative Expenses

11.6%


11.9%


-30 bps


11.8%


12.0%


-20 bps


Operating Income

3.1%


3.1%


---


3.0%


3.1%


-10 bps


Inc. From Cont. Ops. Before Inc. Taxes

2.8%


2.7%


+10 bps


2.6%


2.6%


---














Operating items as a percentage of total gross profit:












Selling, General and Administrative Expenses

77.0%


77.3%


-30 bps


77.5%


77.3%


+20 bps

Operating Income

20.4%


20.0%


+40 bps


19.8%


20.0%


-20 bps





























Three Months Ended


Six Months Ended


June 30,


June 30,


2014


2013


%

Increase/

(Decrease)


2014


2013


%

Increase/

(Decrease)

(Amounts in Millions):












EBITDA*

$ 153.0


$ 125.0


22.4%


$ 283.2


$ 236.7


19.6%

Rent Expense

49.7


43.9


13.2%


97.5


87.4


11.6%

Floorplan Credits

8.1


6.3


28.6%


14.2


12.3


15.4%













* See the following Non-GAAP reconciliation tables





















nm – not meaningful







 

PENSKE AUTOMOTIVE GROUP, INC.

Automotive Retail Operations Selected Data

(Unaudited)






Three Months Ended


Six Months Ended


June 30,


June 30,


2014


2013


%
Increase/
(Decrease)


2014


2013


%
Increase/
(Decrease)

Total Retail Units:












New Retail

55,510


50,246


10.5%


105,798


95,306


11.0%

Used Retail

45,912


41,587


10.4%


91,282


81,097


12.6%

Total Retail

101,422


91,833


10.4%


197,080


176,403


11.7%













Same-Store Retail Units:












New Same-Store Retail

52,537


50,201


4.7%


100,768


94,891


6.2%

Used Same-Store Retail

44,121


41,555


6.2%


87,744


80,419


9.1%

Total Same-Store Retail

96,658


91,756


5.3%


188,512


175,310


7.5%













Same-Store Retail Revenue: (Amounts in Millions)









New Vehicles

$ 2,117.3


$ 1,891.6


11.9%


$ 4,061.0


$ 3,593.8


13.0%

Used Vehicles

1,228.4


1,060.3


15.9%


2,388.9


2,038.0


17.2%

Finance and Insurance, Net

107.7


94.6


13.8%


209.4


180.3


16.1%

Service and Parts

414.7


384.6


7.8%


817.3


759.6


7.6%

Total Same-Store Retail

$ 3,868.1


$ 3,431.1


12.7%


$ 7,476.6


$ 6,571.7


13.8%













Retail Revenue Mix:












New Vehicles

55.1%


55.1%


---


54.6%


54.7%


-10 bps

Used Vehicles

31.4%


30.9%


+50 bps


31.7%


31.0%


+70 bps

Finance and Insurance, Net

2.8%


2.8%


---


2.8%


2.7%


+10 bps

Service and Parts

10.7%


11.2%


-50 bps


10.9%


11.6%


-70 bps













Average Revenue per Vehicle Retailed:











New Vehicles

$ 40,318


$ 37,694


7.0%


$ 40,306


$ 37,886


6.4%

Used Vehicles

27,733


25,529


8.6%


27,112


25,277


7.3%













Gross Profit per Vehicle Retailed:











New Vehicles

$ 3,115


$ 2,819


10.5%


$ 3,115


$ 2,888


7.9%

Used Vehicles

1,966


1,916


2.6%


1,942


1,936


0.3%

Finance and Insurance

1,107


1,031


7.4%


1,102


1,024


7.6%

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Non-GAAP Reconciliation

(Unaudited)





Reconciliation of reported net income to earnings before interest, taxes, depreciation and amortization ("EBITDA") for the three months and six months ended June 30, 2014 and 2013:






Three Months Ended


Six Months Ended


June 30,


June 30,

(Amounts in Millions)

2014


2013


%

Increase/

(Decrease)


2014


2013


%
Increase/
(Decrease)













Net Income

$ 73.9


$ 62.5


18.2%


$ 141.8


$ 120.5


17.7%

Depreciation

17.5


14.7


19.0%


34.0


29.0


17.2%

Other Interest Expense

13.1


11.9


10.1%


26.2


23.4


12.0%

Income Taxes

41.1


34.9


17.8%


75.2


63.2


19.0%

Loss from Discontinued
Operations, net of tax

7.4


1.0


nm


6.0


0.6


nm

EBITDA

$ 153.0


$ 125.0


22.4%


$ 283.2


$ 236.7


19.6%













nm – not meaningful









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The goal of Continuous Testing is to shift testing left to find defects earlier and release software faster. This can be achieved by integrating a set of open source functional and performance testing tools in the early stages of your software delivery lifecycle. There is one process that binds all application delivery stages together into one well-orchestrated machine: Continuous Testing. Continuous Testing is the conveyer belt between the Software Factory and production stages. Artifacts are m...
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
Cloud resources, although available in abundance, are inherently volatile. For transactional computing, like ERP and most enterprise software, this is a challenge as transactional integrity and data fidelity is paramount – making it a challenge to create cloud native applications while relying on RDBMS. In his session at 21st Cloud Expo, Claus Jepsen, Chief Architect and Head of Innovation Labs at Unit4, will explore that in order to create distributed and scalable solutions ensuring high availa...
An increasing number of companies are creating products that combine data with analytical capabilities. Running interactive queries on Big Data requires complex architectures to store and query data effectively, typically involving data streams, an choosing efficient file format/database and multiple independent systems that are tied together through custom-engineered pipelines. In his session at @BigDataExpo at @ThingsExpo, Tomer Levi, a senior software engineer at Intel’s Advanced Analytics ...
Internet-of-Things discussions can end up either going down the consumer gadget rabbit hole or focused on the sort of data logging that industrial manufacturers have been doing forever. However, in fact, companies today are already using IoT data both to optimize their operational technology and to improve the experience of customer interactions in novel ways. In his session at @ThingsExpo, Gordon Haff, Red Hat Technology Evangelist, shared examples from a wide range of industries – including en...
In IT, we sometimes coin terms for things before we know exactly what they are and how they’ll be used. The resulting terms may capture a common set of aspirations and goals – as “cloud” did broadly for on-demand, self-service, and flexible computing. But such a term can also lump together diverse and even competing practices, technologies, and priorities to the point where important distinctions are glossed over and lost.