Declines in quarterly profit and revenue were the main talking points of IBM’s Q4 and full-year results, highlighting that troubled waters may lay ahead for the tech giant.
The Q4 results, released yesterday, revealed that net income had decreased 11% to $5.5bn, while revenue also saw a fall of 12% – signalling the 11th consecutive quarter that IBM has failed to report a revenue increase.
"We are making significant progress in our transformation, continuing to shift IBM’s business to higher value, and investing and positioning ourselves for the longer term," said Ginni Rometty, IBM chairman, president and chief executive officer.
"In 2014, we repositioned our hardware portfolio for higher value, maintained a services backlog of $128 billion and achieved strong revenue growth across cloud, analytics, mobile, social and security. Together these strategic imperatives grew 16 percent in 2014 and now represent $25 billion and 27 percent of our revenue."
Let’s hope that IBM’s new z13, apparently the ‘most sophisticated computer system ever made’, will boost the company’s hardware sector – a segment which reported a 13% decline in Q4, while mainframes dropped 26%.
Software also reported a decline, down 6.9% to $7.58bn, while the tech company’s global technology services segment fell 7.6% from the year-earlier period to $9.17 billion.
Looking at the bigger picture did not yield more positive results – IBM’s earnings of $5.48bn were down from last year’s reported $6.19bn, while total revenue fell from $27.39bn to $24.11bn.
2015 forecast earnings were also bleak, with the company expecting $15.75 to $16.50 per share, below the Wall Street estimate of $16.51 per share average. This forecast resulted in a 2% drop in stock in after-hours trading.