IBM’s Q2 net down 16.6% at $3.45 bn as sales slump extends to 13th quarter

Technology giant International Business Machines (IBM) Corporation saw its revenue decline for the 13th consecutive quarter as the company entered a phase of deep transition and continued to shed low-margin businesses to focus on high-growth areas such as cloud-computing, security software and data analytics.

IBM on Monday said its second-quarter (April-June 2015) profit slipped 16.6 per cent to $3.45 billion, weighed down by acquisition-related charges.

Revenue for the quarter fell 13.5 per cent, largely under the impact of a strong US dollar amidst a continuing decline in revenues covering 13 consecutive quarters.

Overall revenue fell to $20.81 billion from $24.05 billion a year ago. Excluding the currency changes, revenue fell 1%, below Wall Street's expectations.

IBM has been making efforts to scale back on its legacy hardware and push into cloud-based software and services.

IBM, once the world's largest technology services provider, is trying regain lost momentum and reinvent itself as a modern technology innovator, an act that is proving to be a tough for the century-old company.

The company trimmed itself over the past year, exiting unprofitable server and chip-making businesses to focus instead on data analytics and security software as well as cloud and mobile computing products.

The newer businesses are growing, but IBM saw an year-over-year decline in all of its major lines.

Technology services revenue was down 10 per cent while business services fell 12 per cent, software dropped 10 per cent and overall hardware revenue sank 32 per cent.

IBM said its cloud-computing revenue rose 50 per cent from a year ago and accounted for $8.7 billion over the past 12 months, but investors are still not convinced that IBM can successfully transition to the cloud.

IBM's profit margins in its services and software businesses also appear to be shrinking, according to analysts.

Shares of the world's largest technology services company fell about 5 per cent in after-market trading on Monday.

IBM is deep in transition, and has been selling businesses such as low-end servers, cash registers, and semiconductors to focus on high-growth areas like security software, cloud services and data analytics.