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​Rometty sticks to her guns as IBM reports 14th quarter of declining sales

​Rometty sticks to her guns as IBM reports 14th quarter of declining sales

CEO refuses to change tack on plans to turn around IBM’s fortunes.

Ginni Rometty - CEO and Chairman, IBM

Ginni Rometty - CEO and Chairman, IBM

Ginni Rometty has refused to change tack on plans to turn around IBM’s fortunes, despite reporting the company’s 14th successive quarter of declining sales.

Revealed to the market overnight, the IBM chairman, president and chief executive officer Ginni Rometty published figures that miss even the most pessimistic of analyst earning forecasts.

Big Blue reported earnings of $US3.34 per share on $US19.28 billion in revenue, missing market expectations of around $US3.30 a share on $US19.62 billion in revenue.

As reported by CNBC, the company’s revenue figure came in below the Wall Street low, with the lowest revenue estimate of 17 analysts for the quarter standing at $US19.292 billion.

Yet despite the continued slump, Rometty refused to budge on the company’s plan to strategically alter its direction.

“In the third quarter we again made progress in the transformation of our business to higher value, with strong growth in our strategic imperatives and expanded operating margins,” Rometty says.

“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.”

Rometty’s stance was backed by IBM CFO Martin Schroeter, who in a conference call to analysts, claimed “the aggressive investments” made today, would pay dividends in the future.

“We are investing heavily into Watson, we are investing heavily into Watson Health,” Schroeter told analysts.

“But they are the right things to do because those have tremendous futures to them.”

Strategic imperatives

Revenues from the company’s strategic imperatives - cloud, analytics, and engagement - increased 17 percent year-to-year and increased 20 percent year-to-date.

Total cloud revenues (public, private and hybrid) increased more than 45 percent (more than 65 percent adjusting for currency and the divested System x business) year-to-date, and is $US9.4 billion over trailing 12 months.

The annual run rate for cloud delivered as a service - a subset of the total cloud revenue - increased to $4.5 billion from $3.1 billion in the third quarter of 2014.

Meanwhile, revenues from business analytics increased 9 percent year-to-date (19 percent adjusting for currency).

In addition, revenues year-to-date from mobile more than quadrupled, from security increased 6 percent (12 percent adjusting for currency) and from social increased 32 percent (about 40 percent adjusting for currency).

Services

As revealed in the financial report, Global Technology Services segment revenues were down 10 percent (up 1 percent adjusting for currency and the divested System x business) to $US7.9 billion.

Meanwhile, Global Business Services segment revenues were down 13 percent (down 5 percent adjusting for currency) to $US4.2 billion.

IBM reports that the estimated services backlog as of September 30 was $US118 billion, up 1 percent year-to-year adjusting for currency.

Software

Revenues from the Software segment were down 10 percent to $US5.1 billion (down 3 percent adjusting for currency) compared with the third quarter of 2014.

Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were $US3.4 billion, down 7 percent (down 1 percent adjusting for currency) year-to-year.

Operating systems revenues of $US0.4 billion were down 14 percent (down 7 percent adjusting for currency) year-to-year.

Hardware

Revenues from the Systems Hardware segment totalled $US1.5 billion for the quarter, down 39 percent (down 2 percent adjusting for currency and the divested System x business) year-to-year.

Revenues from z Systems mainframe server products increased 15 percent compared with the year-ago period (up 20 percent adjusting for currency).

Total delivery of z Systems computing power, as measured in MIPS (millions of instructions per second), increased 18 percent.

Revenues from Power Systems were down 3 percent compared with the 2014 period (up 2 percent adjusting for currency).

Revenues from System Storage decreased 19 percent (down 14 percent adjusting for currency).

Geographically speaking, Asia-Pacific revenues decreased 19 percent (down 1 percent adjusting for currency and the divested System x business) to $US4.1 billion.

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