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IBM Strives to Protect Trade Secrets

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Apr. 5 2018, Published 12:08 p.m. ET

IBM worried about trade secrets leaking

IBM (IBM) sparred and then quickly settled with its former chief of diversity, Lindsay-Rae McIntyre, who has accepted a similar job at Microsoft (MSFT). IBM sued McIntyre for allegedly violating a one-year non-competition agreement. McIntyre worked for IBM for over two decades and was most recently IBM’s human resources vice president and chief diversity officer. In its court filings, IBM said that McIntyre was in possession of highly confidential information about its diversity strategies.

IBM feared that McIntyre could disclose this confidential and sensitive information to Microsoft, its competitor. IBM and Microsoft compete in many areas, including cloud computing, where Microsoft and Amazon (AMZN) are market leaders.

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IBM settled before court hearing began

Before a court hearing on IBM’s lawsuit against McIntyre could begin on March 12, IBM said it had settled the dispute with McIntyre. Details of the settlement were not disclosed. The settlement paves the way for McIntyre to start working at Microsoft, but at a later date than planned, in July 2018.

IBM recorded a 4.0% YoY (year-over-year) increase in revenue in 4Q17. Revenue increased 12% YoY at Microsoft and 38% YoY at Amazon in 4Q17. Alibaba’s (BABA) revenue rose 56% in 4Q17, while Google parent Alphabet (GOOGL) registered a 24% YoY increase in revenue.

IBM stock rattled by fears over US-China trade war

In the week ended March 23, IBM stock fell 7.1%, more than the broader market. The Dow Jones Industrial Average fell 5.7%. Stocks fell amid investor fear over a potential US-China trade war. China is a big market for many American technology companies, including IBM.

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