IBM's Financial Struggles Continue in Q3 2014
Revenues fell in hardware, software and services, and the company is working to reinvent itself by focusing on higher-value business and divesting other segments.IBM continued on its course of trying to move to higher-value business as its sales in more traditional sectors continue to drop. On its third-quarter earnings call, IBM spoke in terms of "continuing operations," meaning operations of the parts of the company not being divested. Third-quarter net income from continuing operations was $3.5 billion, compared with $4.1 billion in the third-quarter of 2013, a decrease of 17 percent. Meanwhile, total third-quarter revenues from continuing operations of $22.4 billion were down 4 percent from the third-quarter of 2013. The company also announced the divestiture of its semiconductor business to GlobalFoundries, a deal that will have IBM paying GlobalFoundries $1.5 billion over three years as Big Blue also continues its previously announced $3 billion investment over five years for semiconductor technology research to lead in the next generation of computing. The agreement with GlobalFoundries will enable IBM to further focus on fundamental semiconductor research and the development of future cloud, mobile, big data analytics and secure transaction-optimized systems.
"We are disappointed in our performance," Ginni Rometty, IBM chairman, president and CEO, said in a statement. "We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry. While we did not produce the results we expected to achieve, we again performed well in our strategic growth areas—cloud, data and analytics, security, social and mobile—where we continue to shift our business. We will accelerate this transformation.