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As it has had to do for 21 straight quarters, IBM on July 18 reported declining revenue in its earnings performance. Like several other longtime IT product and service providers, the venerable company continues to take sharp financial hits in making the switchover to software and cloud services from its traditional IT hardware businesses.
On the bright side, the earnings report again beat Wall Street projections for the quarter ($2.97 vs. $2.74 per share, as per Thomson Reuters analysts), but there was no ignoring the fact that Big Blue’s revenue has decreased each quarter since April 2012.
Overall revenue in Q1 2017 was down 4 percent and totaled $19.29 billion, coming in shy of the $19.46 billion projected by Thomson Reuters analysts.
The stock closed July 18 at $154, up a percentage point, but in after-hours trading it took a 3 percent dive to $149.12 within two hours after the bell. Overall, IBM stock has seen a 7 percent deterioration since the beginning of the year.
On the plus side, income the company earned from its self-described “strategic imperatives” amounted to $8.8 billion in the quarter, up a full $1 billion over last quarter.
Strategic imperatives now comprise 45 percent of IBM’s total revenue, up from 42.8 percent in the first quarter, the company said. Cloud revenue, including cloud software delivered as a service, for the quarter was $3.9 billion, up 15 percent from last year. Analytics revenue of $5.1 billion was up 4 percent.
For IBM, strategic imperatives include businesses such as cloud, analytics, mobility and security. The company seems to be holding its own in those areas, in which there is a lot of international competition from younger and less-expensive vendors.
IBM’s financial growth problems are clearly in its conventional IT businesses. For example, IBM’s Global Business Services group did $4.1 billion in revenue and was down 3.7 percent, while the Systems division reported $1.7 billion in revenue, down a worrisome 10.4 percent.
Big Blue’s Technology Services and Cloud Platforms division reported $8.4 billion in revenue, down 5.1 percent from a year ago. The Cognitive Solutions business produced $4.6 billion in revenue, also down a bit (2.5 percent).
A major IBM news item was announced July 17, when the company unveiled its newest Z system mainframe, which encrypts data workloads at all times as a background process.
In its corporate statement, IBM published the following quote from Chairman, President and CEO Ginni Rometty: “In the second quarter, we strengthened our position as the enterprise cloud leader and added more of the world’s leading companies to the IBM Cloud. We continue to innovate, adding regtech capabilities to our portfolio of Watson offerings; developing solutions based on emerging technologies such as Blockchain; and reinventing the IBM mainframe by enabling clients to encrypt all data, all the time.”