IBM net income falls

This and more emerged from IBM’s Q3 2015 financial results published on Monday after the New York stock exchanges closed.

First, the bad news.

Revenue fell 14 percent to $19.3 billion, marking the 14th straight period of declines. Analysts forecast about $15.68 a share.

Net income for the quarter was down 11% on the prior year at US$3.3bn.

The results were better than Wall Street expected for earnings, but revenue missed estimates. Business analytics was also up 19%, adjusted.

“In the third quarter we again made progress in the transformation of our business to higher value, with strong growth in our strategic imperatives and expanded operating margins”, said Ginni Rometty, IBM chairman, president and chief executive officer.

The company also indicated that more layoffs are comings as Schoeter said the company will continue to “remix its skills” as it moves into cloud and mobile computing and away from the legacy hardware business on which it built its reputation.

Sales from the Global Technology Services segment were down 10 per cent to $7.9bn. Software was down 10% to $5.1 billion.

Revenues came in at $19.3 billion, down 14% as reported, but down only 4 points if the impact of the divested System x business is taken into the calculation. Sales of the mainframe z System hardware, though, was up by 15 per cent.

IBM CEO Virginia Rometty has been working to shift the company’s focus from traditional commercial computing to what she calls “high value” strategic priorities, including cloud computing, data analytics and cyber-security.

IBM’s Global Business Services (BGS), which posted a 5% drop in revenues down to $4.2 billion, is seen as one channel to deliver IBM’s “strategic imperatives”.

In the three months ending September, IBM returnedcash to shareholders by paying out $1.3 billion in dividends and repurchasing $1.5 billion in stock.

Indeed, IBM is not the only major technology vendor that is now struggling as organisations look to cloud as a way to cut capital spending, and open source for many areas where they once would have automatically bought proprietary software, such as in databases.

Not booked yet was the billion purchase of Merge Healthcare, which provides medical imaging, handling and processing.

The strong U.S. dollar will be a “headwind” dampening IBM’s earnings from foreign sales for the next several quarters, Schroeter continued.