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It was the 11th straight quarter that the
Armonk, New York-based company has reported falling quarterly
revenue, including the effects of currency. It has seen
shrinking revenue for three years now as it sheds low-profit
businesses such as cash registers, low-end servers and
semiconductors and tries to focus on emerging areas such as
security software and cloud services.
But the new businesses have so far failed to make up for revenue
lost to divestitures. Annual revenue fell to $93 billion for
2014, from $107 billion in 2011. The company had no guarantee
that it would not fall further.
"We're not interested in revenue for revenue's sake," IBM Chief
Financial Officer Martin Schroeter told Reuters in a phone
interview. "We'll continue to divest if something doesn't fit
the model."
The struggle to make headway in the new Internet-based
technology industry is shared by other longstanding giants.
SAP SE, Europe's largest software group, on Tuesday cut key
profit forecasts and abandoned a target for higher margins.
"IBM as well as other tech stalwarts such as Oracle, SAP, HP and
Cisco face major headwinds as they adjust to this new cloud
paradigm shift, which coupled with a cloudy IT spending
environment have negatively impacted results," said Daniel Ives,
an analyst at FBR Capital Markets.
IBM last year withdrew its long-term plan to hit $20 per share
in operating earnings for 2015, as it recognized that its
transition was faltering.
On Tuesday, IBM forecast 2015 operating earnings of $15.75 to
$16.50 per share, just shy of analysts' average estimate of
$16.53, according to Thomson Reuters I/B/E/S.
For the fourth quarter, IBM's total revenue fell nearly 12
percent to $24.11 billion. Revenue from hardware fell 39 percent
to $2.41 billion.
On an adjusted basis, the company earned $5.81 per share.
Analysts on average were expecting a profit of $5.41 per share
on revenue of $24.77 billion. IBM shares closed at $156.95 on
the New York Stock Exchange on Tuesday.
(Reporting by Anya George Tharakan in Bengaluru and Bill Rigby
in Seattle; Editing by Savio D'Souza, Richard Chang, Bernard Orr
and Lisa Shumaker)
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