IBM Software, Hardware Down as Big Blue Misses Q1 Mark

By Darryl K. Taft  |  Posted 2013-04-18 Print this article Print

“The task for IBM Software through 2013 will be to shift gears to drive revenue and profit growth to deliver on 2015 financial goals,” said Matthew Casey, a software analyst with Technology Business Research, in a report on the IBM Q1 earnings. “Leading growth during 1Q13 was IBM’s Social Workforce Solutions business (formerly Lotus) which grew 8 percent year-to-year. Although growth initiatives including business analytics, cloud, Smarter Planet and growth markets will be key focal points to achieve growth, underlying trends like software-defined environments, open-source based platforms, and targeted strategies with line-of-business focused solutions will be essential to the success of these initiatives.”

“In software, we had good performance in several key areas such as smarter commerce, social business, security, and storage management, but our growth rate was impacted by the inability to close some large transactions at the end of the quarter,” Loughridge said. “In Systems and Technology, while we’re delivering good performance in System z mainframe despite the slipped deals, and in our PureSystems offerings, weakness in Power, System x and storage resulted in overall declines.”

Revenues from IBM’s Systems and Technology segment totaled $3.1 billion for the quarter, down 17 percent from the first quarter of 2012. Excluding Retail Store Solutions (RSS), revenues were down 14 percent. Total systems revenues, excluding RSS, decreased 13 percent. Revenues from System z mainframe server products increased 7 percent compared with the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), increased 27 percent. However, revenues from Power Systems were down 32 percent compared with the 2012 period. Revenues from System x were down 9 percent. Revenues from System Storage decreased 11 percent. And revenues from Microelectronics OEM decreased 16 percent.

Meanwhile, IBM’s Global Technology Services segment revenues decreased 4 percent to $9.6 billion, while Global Business Services segment revenues were down 3 percent to $4.5 billion.

“Looking ahead, in addition to closing those transactions, we expect to benefit from investments we are making in our growth initiatives and from the actions we are taking to improve under-performing parts of the business,” Rometty said in a statement. “We remain confident in this model of continuous transformation and in our ability to deliver our full-year 2013 operating earnings per share expectation of at least $16.70.”


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