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IBM sees revenue drop

by on17 April 2019

The cloud grows as people lose interest in mainframes again

IBM reported a bigger than expected drop in its first quarter revenue due to falling mainframe demand and a stronger dollar.

The technology giant’s revenue at all its main business units was down except cloud, which has been the centrepiece of its turnaround strategy.

IBM’s cloud and cognitive segment, which includes analytics, cybersecurity and artificial intelligence, fell 1.5 percent to $5.04 billion in the quarter but beat FactSet estimates of $4.18 billion.

Chief Financial Officer Jim Kavanaugh said: “We saw good acceleration in our cloud business... We now have an improving trajectory.”

Under Ginni Rometty’s stewardship, the company has shed many of its traditional hardware businesses and beefed up the growth areas through deals such as its $34 billion acquisition of Red Hat.

IBM returned to annual revenue growth in the last quarter of 2018, triggering expectations that its strategy was taking roots.

The company’s systems segment, which houses its mainframe computer business, fell 11.5 percent to $1.33 billion in the reported quarter missing estimates of $1.37 billion.

Its overall revenue slipped 4.7 percent to $18.18 billion in the first quarter ended March 31 and missed the average analyst estimate of $18.46 billion.

Its net income fell to $1.59 billion in the quarter ended March 31 from $1.68 billion a year earlier.

The company on Tuesday maintained its adjusted operating profit for 2019 to be “at least” $13.90 per share. Analysts on an average were expecting $13.91 per share.


Last modified on 17 April 2019
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