IBM's storage revenues continue to drop
Share on Twitter.
Get the most reliable SMTP service for your business. You wished you got it sooner!
October 20, 2014
The latest numbers from IBM reveal that its storage revenues are continuing to drop. Big Blue's
overall revenues for its third quarter were $22.4 billion, down six percent year-on-year and down 8.2
Net income was $3.5 billion, while it was $4.1 billion in the previous quarter and the same a year
ago, meaning a 14.6 percent decline.
Those numbers are not good, with IBM CEO Ginny Rometty saying-- "We are disappointed in our performance.
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. 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."
Additionally, all global regions were down, not just a few. All of IBM's business units were down
with software revenues below expectations and insufficient productivity in services.
The System and Technologies Group also had a 15 percent revenue decline. Within that, storage
revenues were down six percent year-on-year.
There was no visibility into individual storage product sales, with no particular products singled
out as performing either better or worse than the average.
IBM is divesting itself of under-performing businesses it can't turn around into growth operations, and
storage may now be in that category, it would appear.
Big Blue paid Global Foundries $1.5 billion to take the Microelectronics business. Could storage
be disposed of in a similar way, with a cash sweetener?
Analysts on IBM's earnings call asked if these results represented a crisis at IBM. That point
wasn't answered directly, but the implication was that it was not. Rometty, who was on the call after
not being present on previous ones, said IBM was already investing in higher-growth areas, such as
the cloud and software-defined systems, and growth in these areas was fairly good.
Rometty added that she decided to join the call because IBM was abandoning its long-held 2015 EPS
goal of $20/share and, secondly, because of the Global Foundries deal.
Another analyst asked if IBM should split up. No need, was the reply, as IBM itself is divesting
under-performing businesses like the microelectronics unit, which is being passed over to Global Foundries.
IBM says it is still acquisitive and is not being managed for decline. Rometty said her message
to investors is that "we are re-inventing the business and managing the company for the long term. Our
company is fundamentally better positioned than it was a few years ago."
Source: IBM Corp.
Get the most dependable SMTP server for your company. You will congratulate yourself!
Share on Twitter.