IBM Q4 net down 19% at $4.46 bn as revenue falls for 15th straight quarter

International Business Machines Corp (IBM) has reported a 19-per cent drop in fourth quarter net income, which fell to $4.46 billion, or $4.59 per share, from $5.48 billion, or $5.51 per share a year earlier.

Revenue for the September-December 2015 quarter dropped 8.5 per cent to $22.06 billion, from $24.11 billion in the previous-year quarter. Revenue adjusted for currency fell 2 per cent as a strong dollar and tepid IT spending weighed on the Big Blue's results.

IBM said operating earnings fell 17 per cent to $4.84 a share.

IBM's chief financial officer Martin Schroeter said the company expected to make about $13.50 a share for the full-year 2016.

For the full year, revenues from strategic imperatives increased 17 per cent (up 26 per cent adjusting for currency and the divested system business) to $28.9 billion and now represent 35 per cent of total IBM consolidated revenue.

Total cloud revenues (public, private and hybrid) for the full year increased 43 per cent (up 57 per cent adjusting for currency and the divested system business) to $10.2 billion. Revenues for cloud delivered as a service increased 50 per cent to $4.5 billion; and the annual as-a-service run rate increased to $5.3 billion from $3.5 billion in the fourth quarter of 2014. 

Revenues from business analytics increased 7 per cent (up 16 per cent adjusting for currency) to $17.9 billion. Revenues from mobile more than tripled and from security increased 5 per cent (up 12 per cent adjusting for currency).

Fourth-quarter revenues from the Americas stood at $10.3 billion, a decrease of 8 per cent (down 4 per cent adjusting for currency) from the 2014 period. 

Revenues from Europe/Middle East/Africa were $7.3 billion, down 9 per cent (up 1 per cent adjusting for currency). 

Asia-Pacific revenues decreased 10 per cent (down 3 per cent adjusting for currency) to $4.4 billion. Revenues from the BRIC countries were down 21 per cent as reported (down 11 per cent adjusting for currency).

Global technology services segment revenues were down 7 per cent (up 1 per cent adjusting for currency) to $8.1 billion. Global business services segment revenues were down 10 per cent (down 4 per cent adjusting for currency) at $4.3 billion.

The estimated services backlog as of 31 December was $121 billion, up 1 per cent year-on-year adjusting for currency.

Revenues from the software segment were down 11 per cent at $6.8 billion (down 6 per cent adjusting for currency) compared with the fourth quarter of 2014.

Revenues from IBM's key middle-ware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were $4.9 billion, down 10 per cent (down 6 per cent adjusting for currency) year-on- year. Operating systems revenues of $0.5 billion were down 12 percent (down 7 percent adjusting for currency) year to year.

Revenues from the systems hardware segment for the quarter totaled $2.4 billion, down 1 per cent (up 3 per cent after adjusting for currency) year-on-year.     

Revenues from z systems mainframe server products increased 16 per cent compared with the year-ago period (up 21 per cent adjusting for currency).

Revenues from Power Systems were up 4 per cent compared with 8 per cent in 2014 period (up 8 per cent adjusting for currency). Revenues from System Storage decreased 11 per cent (down 7 per cent adjusting for currency).

Although IBM continues to make a profit the declining trend in profitability points to the tech giant's inability to navigate the difficult transition to a new technology businesses.

IBM is struggling as its new growth areas like data analytics and cloud computing are not yet big enough to overcome the slippage in its traditional hardware, software and services businesses.

Virginia M Rometty, chief executive of IBM, at the International CES this month in Las Vegas. Under her leadership, IBM has invested aggressively in new fields.