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Your one-minute guide to IBM's financial future – or just imagine a skier tumbling down a slope

Strong dollar, System x sale blamed for glum third quarter

Today, IBM is said to be the biggest technology services biz on Earth – and the only way is down.

Big Blue's fortunes are continuing in a downward trend: its global revenue has fallen, profit is down, and its share price slipped five per cent in after-hours trading on Monday.

The company blamed the strong dollar for bruising its overseas sales as well as the fact that it has offloaded its System x business to Lenovo, which put a dent in its figures. More than half of New York-based Big Blue's sales come from outside the US, so rising dollar exchange rates are like a punch in the back of the head.

We're told IBM's "strategic imperatives revenue" – sales from "cloud, analytics, and engagement" – is up 17 per cent year-on-year, or 27 per cent if you take into account currency issues and the missing System x cash. In other words, Big Blue says its move to cloud and similar technologies away from its hardware roots is paying off.

Paying off, metaphorically speaking – revenue globally is down nearly nine per cent, or down one per cent if you adjust for currency.

This and more emerged from IBM's Q3 2015 financial results published on Monday after the New York stock exchanges closed. Here's your roundup of the GAAP stats and facts from the quarter, which ended September 30:

  • Net revenue was $19.3bn (£12.48bn), down one per cent from the year-ago quarter, or nine per cent if you don't adjust for currency changes.
  • The company made a net income of $3bn (£1.94bn), down 14 per cent from Q3 2014.
  • Earnings per share worked out to $3.34, down nine per cent from the $3.68 a year ago.
  • Analysts expected revenues of $19.64bn and $3.31 in earnings per share. Now IBM's downgraded its estimate of $14.75 to $15.75 per share from $15.75 to $16.50 for the full year – in other words, it's not going to make as much profit as it expected.
  • The annual run rate for cloud as-a-service increased to $4.5bn, up 45 per cent from $3.1bn in Q3 2014.
  • In the Americas, total revenue was $9.1bn, down 10 per cent year-on-year. Europe, the Middle East, and Africa brought in $6.1bn, down 16 per cent. In Asia-Pacific, revenue was $4.1bn, down 19 per cent on the year-ago quarter.
  • Sales from the Global Technology Services segment were down 10 per cent to $7.9bn. Global Business Services was down 13 per cent to $4.2bn.
  • The Software segment's revenue was down 10 per cent to $5.1bn.
  • The Systems Hardware segment banked $1.5bn in sales, down 39 per cent year-on-year, or down two per cent when you adjust for currency and the loss of the System x business. Revenue from z Systems mainframe servers jumped 15 per cent year-on-year.
  • The company's gross profit margin was 48.9 per cent in Q3 2015 versus 48.6 per cent in Q3 2014.

"We are continuing to make significant investments to build platforms around analytics, cloud, mobility and security that lay the foundation for a new era of cognitive business – where we see long-term value for our clients and shareholders," said Ginni Rometty, IBM chief exec. ®

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