Get the lowest-cost and the best server colocation service in the business. Learn more.
Information Technology News.

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!

Click here to order the best deal on a HP enterprise dedicated server and at a great price.

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 percent sequentially.

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.

IT News Archives | Site Search | Advertise on IT Direction | Contact | Home

All logos, trade marks or service marks on this site are the property of their respective owners.

Sponsored by Sure Mail™, Avantex and
by Montreal Server Colocation.

       © IT Direction. All rights reserved.