IBM revenues down again - for the 13th quarter in a row

Results "demonstrate that we continue to transform our business", claims CEO Ginni Rometty

IBM's revenue and profit decline has continued for the 13th quarter in a row, with total revenues down by 13 per cent to $20.8 billion, although the company attributes much of this quarter's revenue drop to currency fluctuations and, of course, the divestiture of its System x low-end server business to Lenovo.

CEO Ginni Rometty claimed that the results "demonstrate that we continue to transform our business to higher value and return value to shareholders. We expanded margins, continued to innovate across our portfolio and delivered strong growth in our strategic imperatives of cloud, analytics and engagement, which are becoming a significant part of our business".

Indeed, analysts TechMarketView pointed to the growth in cloud-derived revenues, up 70 per cent to $8.7 billion and "as a service" delivery up from $2.8 billion to $4.5 billion compared to the same quarter last year. And, while overall hardware revenues were down, a spike in mainframe sales took hardware revenues up five per cent, on a like-for-like basis, to $2.1bn.

"To give some context, IBM's services business performance is way off rival Accenture, which is growing in double-digits across the board," said TechMarketView Research Director John O'Brien.

"Accenture is investing heavily in digital design services and operations, which is helping to spear growth across the traditional business. Accenture has upgraded guidance for three consecutive quarters and now sees FY15 being up 9-10%. IBM by contrast is in continual decline.

He concluded: "IBM is, of course, a much bigger and broader animal, so the challenges re-focusing around high growth segments are considerably harder - and will not doubt take longer."

However, the headline figures were still poor, with Global Technology Services Revenues down by 10 per cent (although IBM claims the figure is only one per cent, adjusted for currency and the divested System x business), to $8.1 billion, with Global Business Services' revenues down 12 per cent to $4.3 billion. Software also fell by 10 per cent to $5.8 billion - with middleware products, including WebSphere, Tivoli systems management and Rational programming tools down by seven per cent to $4 billion.

The one bright spot in a sea of red, though, was a nine per cent increase in revenues for z Systems mainframe hardware, which still could not arrest an overal decline of 32 per cent in hardware sales to $2.1 billion, largely attributable to the sale of System x to Lenovo.

IBM has maintained shareholder interest with dividends of $2.4 billion and share re-purchases - which help to uphold a stock price that would otherwise be declining, and earnings per share metrics - of $2.3 billion. That exceeds the $4.5 billion free cashflow generated in the quarter by $200 million.