IBM. Sigh. Revenues. Sigh. Down. Sigh. For the 20th quarter in a row

Sigh


IBM says it is right on track for the coming fiscal year: everything is going to plan and its sales are falling just as expected. Hurrah for Big Blue!

For its first quarter of 2017, which ended on March 31, Indian Business Machines' "strategic imperatives" core of divisions were up 12 per cent, even as other areas of the corporation continue to wither. Here's the breakdown:

  • Revenues of $18.2bn were down 20 quarters in a row, falling from $18.7bn in the year-ago period. Analysts expected sales to be about $200m higher, too, so that's a double let down.
  • Net income of $1.8bn, down 13 per cent over the previous year.
  • Earnings per share (non-GAAP) of $2.38, which were slightly above analysts estimates of $2.35.
  • Systems revenue was $1.4 billion, down 16.8 per cent on the 2016 quarter.
  • Cognitive solutions, the unit that includes Watson, reported revenues of $4.1bn, up 2.1 per cent.
  • Global business services revenues were $4bn, a 3 per cent drop.
  • Technical services and cloud revenues were $8.2bn, down 2.5 per cent.
  • Global financing revenues of $401m was a 1.2 per cent decrease on the year-ago quarter.

Strategic Imperatives – the security, cloud, analytics, mobile and social businesses that make up IBM's future plans – accounted for $7.8bn of Big Blue's sales on the quarter. Getting these units to take over the bulk of the revenue haul is vital if IBM wants to offset the losses in its systems division and other shrinking markets.

IBM execs noted the ongoing efforts to "shift resources" (read: cut jobs) away from the money-losing parts of its business and into the higher-growth parts, a strategy that has irked many of its employees.

"In the first quarter, both the IBM Cloud and our cognitive solutions again grew strongly, which fueled robust performance in our strategic imperatives," said chairman and CEO Ginni Rometty in a statement. "In addition, we are developing and bringing to market emerging technologies such as blockchain and quantum, revolutionizing how enterprises will tackle complex business problems in the years ahead."

Rometty, as usual, did not take a conference call with analysts after the quarter's financial data was released. That task was left to Patricia Murphy, veep of investor relations, and chief financial officer Martin Schroeter.

"[IBM's] legacy core is a business that we're confidently reinventing, it's not something that we are underinvesting, it's not something that we don’t like, we really like this business, it is very high value and some of that content sure fits in a declining market," Schroeter rambled on the call.

"So it has declining opportunity, but that’s high value. Some of those businesses, like the web application server, is growing, it's in a growing market and we grow.

"I just want to make sure everyone's clear, [the core] is made up of lot of different things. And included in that core, if you will, is – we've got part of our Power business, we got some of our mainframe business, we're just not in the time of the cycle for the core part – for those parts of the core to grow. We will get to that part of the cycle when it grows."

While IBM maintains it is right on course to meet its year-end earnings expectations, investors were less impressed with the first quarter returns. Following the release of the financial figures, shares were down more than five per cent in after-hours trading. ®


Other stories you might like

  • Talos names eight deadly sins in widely used industrial software
    Entire swaths of gear relies on vulnerability-laden Open Automation Software (OAS)

    A researcher at Cisco's Talos threat intelligence team found eight vulnerabilities in the Open Automation Software (OAS) platform that, if exploited, could enable a bad actor to access a device and run code on a targeted system.

    The OAS platform is widely used by a range of industrial enterprises, essentially facilitating the transfer of data within an IT environment between hardware and software and playing a central role in organizations' industrial Internet of Things (IIoT) efforts. It touches a range of devices, including PLCs and OPCs and IoT devices, as well as custom applications and APIs, databases and edge systems.

    Companies like Volvo, General Dynamics, JBT Aerotech and wind-turbine maker AES are among the users of the OAS platform.

    Continue reading
  • Despite global uncertainty, $500m hit doesn't rattle Nvidia execs
    CEO acknowledges impact of war, pandemic but says fundamentals ‘are really good’

    Nvidia is expecting a $500 million hit to its global datacenter and consumer business in the second quarter due to COVID lockdowns in China and Russia's invasion of Ukraine. Despite those and other macroeconomic concerns, executives are still optimistic about future prospects.

    "The full impact and duration of the war in Ukraine and COVID lockdowns in China is difficult to predict. However, the impact of our technology and our market opportunities remain unchanged," said Jensen Huang, Nvidia's CEO and co-founder, during the company's first-quarter earnings call.

    Those two statements might sound a little contradictory, including to some investors, particularly following the stock selloff yesterday after concerns over Russia and China prompted Nvidia to issue lower-than-expected guidance for second-quarter revenue.

    Continue reading
  • Another AI supercomputer from HPE: Champollion lands in France
    That's the second in a week following similar system in Munich also aimed at researchers

    HPE is lifting the lid on a new AI supercomputer – the second this week – aimed at building and training larger machine learning models to underpin research.

    Based at HPE's Center of Excellence in Grenoble, France, the new supercomputer is to be named Champollion after the French scholar who made advances in deciphering Egyptian hieroglyphs in the 19th century. It was built in partnership with Nvidia using AMD-based Apollo computer nodes fitted with Nvidia's A100 GPUs.

    Champollion brings together HPC and purpose-built AI technologies to train machine learning models at scale and unlock results faster, HPE said. HPE already provides HPC and AI resources from its Grenoble facilities for customers, and the broader research community to access, and said it plans to provide access to Champollion for scientists and engineers globally to accelerate testing of their AI models and research.

    Continue reading

Biting the hand that feeds IT © 1998–2022