Breathe in hardware, and exhale cloud: IBM stretches its revenues, profits... in the downward dog position

So tonight I'm gonna party like it's, er, two thousand sixteen

IBM is attributing another slow quarter to currency headwinds and purchase cycles, as Big Blue logged a dip in revenues for the third consecutive quarter. That means it's back into its old groove of shrinking sales.

The enterprise compute giant saw its systems and services operations take a hit in particular during its first 2019 fiscal quarter, ended March 31. Here's a summary of the figures, released on Tuesday this week:

• Revenues of $18.2bn were down 4.7 per cent from $19.1bn in last year's Q1, and also below Wall St's expectations.
• Net income of $1.6bn was down 5 per cent from $1.68bn in Q1 2018.
• Earnings per share (non-GAAP) of $2.25 was ahead of analyst estimates of $2.24.
• Global Technology Services revenues were $6.9bn, down 7 per cent from the year-ago quarter.
• Cloud and Cognitive Services revenue of $5bn was down 2 per cent.
• Global Business Services revenue of $4.1bn was flat.
• Systems revenue was 1.3bn, down 11 per cent. IBM Z revenue was down 38 per cent, something execs attributed to down period of the mainframe buying cycle.
• Global Financing revenues were $406m, flat year-to-year.

"Our results reflect the fundamental changes we have made to our business, allowing us to generate greater operating leverage. In the first quarter, we significantly expanded profit margins, led by our services businesses," IBM chief financial officer James Kavanaugh said.

"Our focus on prioritizing our investments in the emerging high-value segments of our industry has enabled us to drive higher profitability and strong cash generation."

Speaking to financial analysts about the quarterly report, Kavanaugh pointed to Big Blue's cloud operation and its hybrid offerings as particularly strong markets where the company wanted to focus.

He also pointed to a strong dollar (which drags down conversion rates) and a solid sales quarter at the end of 2018 as factors that kept IBM's financials seemingly down on paper, along with changes to the Global Technology Services operation.

"We embarked on a strategy around exiting low value third party OEM content," Kavanaugh noted.

"We said it was going to depress value in the short term but better position us in the long term."

Investors didn't seem so sure, as IBM shares were trading at $141 apiece, down 2.7 per cent, in after-hours. Big Blue employs 380,000 people worldwide. ®