IBM Q4 revenues down 12pc, but discovers silver lining in the cloud

21 Jan 2015

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IBM CEO and chairman Ginni Rometty at last year's Mobile World Congress in Barcelona, Spain

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While tech giant IBM navigates choppy financial waters – fourth-quarter revenues were down 12pc to US$24.1bn – it has discovered a silver lining in the cloud, where revenues from cloud were up 60pc from last year.

Fourth-quarter net income from operations totalled US$5.5bn, down 11pc on last year’s US$6.2bn.

“We are making significant progress in our transformation, continuing to shift IBM’s business to higher value, and investing and positioning ourselves for the longer term,” said Ginni Rometty, IBM chairman, president and chief executive officer.

“In 2014, we repositioned our hardware portfolio for higher value, maintained a services backlog of US$128bn and achieved strong revenue growth across cloud, analytics, mobile, social and security. Together these strategic imperatives grew 16pc in 2014 and now represent US$25bn and 27pc of our revenue.”

This is IBM’s 11th straight quarter without a year-over-year increase and revenues were down in most divisions: Global Services (-8pc), software (-7pc) and hardware (-39pc). Revenue in financing increased 5pc.

Cloud looms high on Big Blue’s horizon

However, IBM is in the middle of a major transition that has seen it sell off its commodity server business to Lenovo and its manufacturing operations to Globalfoundries.

The company is taking a major bet on mobile (through an alliance with Apple), as well as cloud. Proof of this is that for the full-year 2014, revenue from Strategic Initiatives grew 16pc to US$25bn.

In fact, cloud has been a particular boon for IBM in 2014, with cloud revenues of US$7bn up 60pc and cloud services revenue increased 75pc to US$3bn.

Business analytics revenues increased 7pc to US$17bn and mobile revenue tripled.

“In 2014, we repositioned our hardware portfolio for higher value, maintained a services backlog of US$128bn and achieved strong revenue growth across cloud, analytics, mobile, social and security. Together these strategic imperatives grew 16pc in 2014 and now represent US$25bn and 27pc of our revenue,” IBM said.

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com