IBM earnings slump as company shifts to cloud, mobile and analytics

Areas such as cloud services and mobile aren't growing fast enough to make up for declines in other areas

IBM is hitting a rough patch financially as it shifts its strategy from hardware to cloud, mobile and analytics technology.

The company, considered a technology bellwether for the scope of its product portfolio and geographical breadth, reported Monday that profit and revenue declined in the third quarter.

"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," CEO Ginni Rometty said in a statement.

IBM results indicate that the company is finding it tough to keep up with the change. Third-quarter net income was US$3.5 billion compared with $4.1 billion in the third quarter of 2013, a decrease of 17 percent. Revenue was down 4 percent year-on-year to $22.4 billion.

On a slightly more upbeat note, what IBM calls strategic growth areas -- including cloud, data and analytics, security, social and mobile -- performed well, the company said. The company did not break out numbers for all of these sectors, however. Like other tech vendors, IBM wants to shift its business to these areas. However, for the moment they aren't growing fast enough for the company to make up for shortfalls in other sectors.

The results are from continuing operations and exclude the discontinued microelectronics business, which chip manufacturer GlobalFoundries is taking over in a deal that was also announced on Monday. IBM is paying chipset manufacturer about US$1.3 billion to take two factories off its hands in a move to cut costs.

The loss from discontinued operations in the third quarter includes a pre-tax charge of $4.7 billion, IBM said.

IBM earlier this month closed a deal to sell its x86 server business to Lenovo for $2.1 billion.

Company shares dropped 7 percent to $169.30 in pre-market trading.

Send news tips and comments to mikael_ricknas@idg.com

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags business issuesIBMfinancial results

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Mikael Ricknäs

IDG News Service
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?