IBM's revenue deflated in 2013's first quarter

The company said it wasn't able to close several crucial deals by the end of the quarter

Unable to close a number of large mainframe and software deals by the end of the quarter, IBM has reported a 5 percent decline in revenue to US$23.4 billion for the first quarter of 2013.

Net income for the quarter ending March 31 also shrank for IBM, by 1 percent, compared with the same quarter a year earlier. First-quarter net income was US$3 billion.

"Despite a solid start and good client demand we did not close a number of software and mainframe transactions that have moved into the second quarter," said Ginni Rometty, IBM chairman, president and chief executive officer, in a statement. 

Despite sluggish revenue across all of IBM's sectors, company executives pointed to its failure to close a number of multimillion-dollar deals as the reason for the company's lackluster financial performance.

"We thought we had those deals [closed] right up to the end," said Mark Loughridge, IBM chief financial officer and senior vice president, in an investor webcast. He estimated that IBM had about $400 million in deals it was unable to book by March 31. He remained confident that these deals will be signed, however. "The rollover of these deals positions us for a strong start in our next quarter," he said.

Despite the slump in revenue, the company was able to increase earnings per share to $2.70 this quarter, up 3 percent from a year earlier. And Loughridge reiterated that IBM remains on course to fulfill its promise to earn at least $16.70 per share for the full year. 

IBM hardware was hit particularly hard this quarter. Revenue from the company's systems and technology group declined by 17 percent, to $3.1 billion. "This was not the quarter we were expecting from systems and technology," Loughridge said.

By sector, the software unit fared the best, despite its failure to close a number of critical deals. It reported flat revenue of $5.6 billion. Services saw some decline in revenue. The global technology services segment's revenue fell 4 percent to $9.6 billion, and the global business services segment revenue was down 3 percent to $4.5 billion. 

Geographically speaking, first-quarter revenue was down 4 percent, to $10 billion, in the Americas. Revenue from Europe, Middle East and Africa totaled $7.3 billion, down 4 percent. Revenue from the Asia-Pacific region decreased by 7 percent to $5.7 billion, though it fell only 1 percent after adjustments for currency fluctuations. 

Various IBM initiatives have helped the company. Business analytics revenue went up by 7 percent. Revenue from the company's Smarter Planet initiatives went up by more than 25 percent, and revenue from cloud services surged by more than 70 percent. However, IBM did not break out specific revenue figures for any of these areas.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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Joab Jackson

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