IBM's Q2 sales slide 13 per cent on sale of low-end server unit

Mainframe sales lifted otherwise weak hardware results

IBM has reported another quarter of declining revenue and profit, though sales of its new mainframe gave it a lift.

Revenue for its second quarter was $US20.8 billion, down from $US24 billion a year earlier, IBM announced Monday.

The big drop is partly from IBM selling its x86 server business to Lenovo, as well as the impact of the strong US dollar. Without those factors, revenue would have declined one percent, IBM said.

Net income was $US3.45 billion, down 16.6 per cent.

Revenue from IBM's giant Global Technology Services segment were down 10 per cent to $US8.1 billion. Factoring out the currency effect and the sale of the x86 server business, revenues were up one percent, IBM said.

Hardware revenue slumped 32 per cent to $US2.06 billion, though without the x86 declines and the currency impact, hardware sales were up 5 per cent.

They were helped by IBM's mainframe business, which had been expected to be do well because IBM released the new z13 mainframe just a few months ago. Mainframe sales were up 9 per cent last quarter, IBM said, and would have been up 15 percent less the currency impact.

Revenue from what IBM calls its "strategic imperatives," or areas it has identified as critical to growth, were up more than 20 per cent from last year. Those areas are Cloud, analytics and "engagement" products.

Most big US multinationals have seen their sales crimped this year by the strong dollar, which can make products more expensive to customers paying with relatively weaker currencies.

James Niccolai covers data centers and general technology news for IDG News Service. Follow James on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com

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James Niccolai

IDG News Service
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