IBM suffers from dip in sales, revenues and profits in 2013 - top execs to forgo bonuses

By Sooraj Shah
22 Jan 2014 View Comments
IBM logo in black with white text

Technology giant IBM suffered a 5 per cent decrease in sales and a 1 per cent drop in net profit in 2013, leading CEO Ginni Rometty and her team to forgo their bonuses for the year.

The company had hoped to have a growing presence in the emerging markets of China, India, Russia and Brazil during 2013. However, it suffered a 9 per cent fall in revenues compared to 2012, compounded by a dismal third quarter in which it registered a surprise 15 per cent decline in sales to those areas, after increasing sales by a robust 7.4 per cent during 2012.

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IBM's total revenues in 2013 fell by 2 per cent to $99.8bn for the year, with hardware revenue continuing to plummet – in its most recent quarter sales dropped 26 per cent.

Analysts had expected revenues for the fourth quarter to be $6m higher than the $27.7bn announced.

Businesses are increasingly storing their data, applications and other software in cloud environments, an area which is not traditionally IBM's strength. However, the company's fourth-quarter earnings were better than expected. There was a 6 per cent increase year on year in sales of software in which cloud is an integral component.

The firm has tried to keep up with demand for cloud computing services with its acquisition of SoftLayer Technologies last year, in a deal worth about $2bn. This has enabled the firm to add 2,400 new clients to its customer base. Cloud revenue rose by almost 70 per cent last year, and the company intends to continue to invest in the cloud services segment of the business, and is due to invest $1.2bn into the area in 2014.

Despite encouraging signs in the cloud computing area, the company's senior executives and CEO will not be getting their bonuses for 2013.

"While we made solid progress in businesses that are powering our future, in view of the company's overall full year results, my senior team and I have recommended that we forgo our personal annual incentive payments for 2013," Rometty said in a statement.

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