Menu
IBM eyes more Cloud acquisitions to find a path to growth

IBM eyes more Cloud acquisitions to find a path to growth

Future deals will focus on 'as a service' companies, IBM's CFO says

IBM will favour buyouts that strengthen its Cloud services, the company's CFO said, as it looks for ways to expand its business after 11 straight quarters of declining revenue.

"Most of our acquisitions will probably be on an 'as a service' basis, as opposed to an on-premise model," CFO Martin Schroeter said during IBM's quarterly earnings call, in response to a question.

"That's the nature of the market and where we have a lot of opportunity, because we don't play in some of those areas today," he said.

IBM could use the growth. It said revenue for the last quarter declined across all major segments - hardware, software and services. Profits were down as well, though they beat the forecast of financial analysts polled by Thomson Reuters.

IBM sees Cloud services as one of its best chances for growth, as sales of its more traditional products, including mainframes and Unix servers, continue to decline.

Two years ago it bought SoftLayer to help it compete with Amazon Web Services, and last year it bought Cloudant, which provides a database as a service, and Light House Security, another cloud provider. This year, it looks like more cloud deals will be in the works.

Meanwhile, CEO Ginni Rometty has been selling off businesses that produce little or no profit. In October, she announced a plan to sell IBM's chip manufacturing business for $US1.3 billion to Global Foundries, and before that she sold its x86 server business to Lenovo.

So IBM's revenue is shrinking in part by design, but it needs to expand its other, more profitable businesses to compensate for the losses. And that isn't yet happening at a fast enough rate.

Revenue for the quarter ended in December was $US24.1 billion, IBM said, down 12 per cent from a year earlier and less than the $US24.77 billion analysts had expected. Net income was $US5.5 billion, a decline of 11 per cent.

IBM issued a new profit forecast for 2015, predicting between $US15.75 and $US16.50 per share. That's much lower than the $US20 per share IBM had been aiming for until last October, when it dropped the prediction.

It says its growth in future will come from cloud, analytics, mobile, social and security. Those businesses generated more than a quarter of its revenue last quarter, at $US25 billion, Schroeter said, though he didn't explain how he arrived at that number.

James Niccolai covers data centers and general technology news for IDG News Service. Follow James on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags databasesbusiness issuesserversIBMsoftwareapplicationsfinancial resultshardware systems

Featured

Slideshows

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Reseller News has honoured the leading female front runners of the New Zealand ICT industry at the 2019 Women in ICT Awards (WIICTA) in Auckland. The awards recognised standout individuals across six categories, spanning Entrepreneur, Rising Star, Shining Star, Community, Technical and Achievement. Photos by Gino Demeer.

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA
Reseller News kicks off awards season in 2019 with Judges' Lunch

Reseller News kicks off awards season in 2019 with Judges' Lunch

The 2019 Reseller News Innovation Awards has kicked off with the Judges Lunch in Auckland with 70 judges in the voting panel. The awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors. Photos by Christine Wong.

Reseller News kicks off awards season in 2019 with Judges' Lunch
Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomed 2018 inductees - Chris Simpson, Kendra Ross and Phill Patton - to the third running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing landscape of the technology industry in New Zealand, while outlining ways to attract a new breed of players to the ecosystem. Photos by Gino Demeer.

Reseller News welcomes industry figures for 2019 Hall of Fame lunch
Show Comments