​Cloud turnaround can’t come quick enough as IBM decline enters 15th quarter

Big Blue's much publicised transformation continues at a slow pace...

Ginni Rometty - CEO and Chairman, IBM

Ginni Rometty - CEO and Chairman, IBM

IBM’s much publicised transformation continues at a slow pace, with the tech giant reporting its 15th consecutive quarter of decline.

Despite beating analyst revenue expectations, Big Blue lower earnings guidance for the full-fiscal 2016 year, dampening investors’ moods in the process, as shares dropped four percent following the release.

As the company shifts its focus from low-margin operations to strategic growth areas such as cloud computing and big data, it did manage to post better than expected financials, with quarterly earnings coming in at $US4.5 billion on revenue of $US22.1 billion.

But challenges remain, with fourth-quarter net income comparing with $US5.5 billion in the fourth quarter of 2014, down 19 percent and operating (non-GAAP) net income at $US4.7 billion compared with $US5.8 billion in the fourth quarter of 2014, down 19 percent.

“We continue to make significant progress in our transformation to higher value,” says Ginni Rometty, CEO and Chairman, IBM.

“We strengthened our existing portfolio while investing aggressively in new opportunities like Watson Health, Watson Internet of Things and hybrid cloud.

“As we transform to a cognitive solutions and cloud platform company, we are well positioned to continue delivering greater value to our clients and returning capital to our shareholders.”

Positive steps

On the plus side however, IBM’s investments continue to hold promise, with the company’s strategic imperatives - cloud, analytics and engagement - increasing 10 percent year to year (up 16 percent adjusting for currency).

For the full year, revenues from strategic imperatives increased 17 percent (up 26 percent adjusting for currency and the divested System x business) to $US28.9 billion, now representing 35 percent of total IBM consolidated revenue.

For the full year, total cloud revenues (public, private and hybrid) increased 43 percent (up 57 percent adjusting for currency and the divested System x business) to $US10.2 billion.

Revenues for cloud delivered as a service - a subset of the total cloud revenue - increased 50 percent to $US4.5 billion; and the annual as-a-service run rate increased to $US5.3 billion from $US3.5 billion in the fourth quarter of 2014.

Furthermore, revenues from business analytics increased seven percent (up 16 percent adjusting for currency) to $US17.9 billion - revenues from mobile more than tripled and from security increased five percent (up 12 percent adjusting for currency).

Geographically speaking, Asia-Pacific revenues decreased 10 percent (down three percent adjusting for currency) to $US4.4 billion.

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