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IBM still on a (downward) roll with 15th consecutive quarterly revenue drop

Big Blue continues exciting transformation into a new, less profitable company

IBM continues to take a beating as it struggles to transition its business to a focus on cloud and analytics products.

The fourth quarter of 2015 brought the following returns:

  • Revenue was $22.1 billion, down 9 per cent from the previous year's quarter.
  • Net income was $4.5bn on the quarter, down 19 per cent.
  • Earnings per share were $4.84, slightly above analyst predictions of $4.81 but down 17 per cent on the year-ago quarter.
  • Software revenues were $6.8bn, down 6 per cent from last year's quarter. Business Services brought $4.3bn of revenues, down 4 per cent.
  • Systems Hardware revenues of $2.4bn were up 3 per cent, an increase IBM credited to a focus on running hybrid cloud and analytics tools on its server lines.
  • Revenues in the Americas were $10.3bn, down 4 per cent, while Europe/Middle East/Africa was up 1 per cent at $7.3bn. Asia-Pacific was down 3 per cent with $4.4bn.

Full-year numbers, of course, also showed a loss:

  • Revenues of $81.7bn were down 12 per cent compared to FY 2014.
  • Net income of $14.7bn, down 12 per cent.
  • Earnings per share of $14.92, down 10 per cent.
  • Analytics revenues were up 16 per cent at $17.9bn, while cloud revenues climbed to $10bn, up 57 per cent from last year.

This marks the fifteenth consecutive quarter in which IBM has reported a drop in revenues amidst a business shift that has seen its old core businesses vanish and forced IBM to remake itself from a focus on software and services to a shift toward providing analytics and cloud compute services.

"We continue to make significant progress in our transformation to higher value," offered IBM chairwoman and chief executive Ginni Rometty.

"In 2015, our strategic imperatives of cloud, analytics, mobile, social and security grew 26 per cent to $29bn and now represent 35 per cent of our total revenue."

Wall Street was not so enthused, as IBM shares were down 1.48 per cent in after-hours trading. And the drops in IBM Software and Global Business Services could be particularly alarming for IBM, say analysts with AB Bernstein.

"Software and Services are the most profitable segments of IBM," the analyst house noted. "Continued weakness in either or both of these segments would be incrementally worrisome." ®

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