IBM (NYSE: IBM) reached another stop on the road to reinvent itself. Like others, this one showed no sign of progress for the failing tech company. As a matter of fact, IBM continues to run in reverse, as revenue fails and forecasts are cut. The board of IBM must have run out of confidence in CEO Ginni Rometty. If not, its members have forgotten why public companies employ boards
IBM’s new earnings showed that the company continues to shrink, both on the top line, in net income, and across all four of its major divisions. Revenue fell 14% to $19.3 billion. Net income from continuing operations fell 14% to $2.9 billion. Revenue from Global Technology Systems fell 10% to $7.9 billion. Revenue from Global Business Services dropped 13% to $4.2 billion, Revenue from Software dropped 10% to $5.1 billion. And, revenue from Systems Hardware was down 39% to $1.5 billion.
IBM has staked its future on analytics and cloud computing. Management commented:
Revenues from the company’s strategic imperatives — cloud, analytics, and engagement — increased 17 percent year-to-year (up 27 percent adjusting for currency and the divested System x business); increased 20 percent year-to-date (up more than 30 percent adjusting for currency and the divested System x business). Total cloud revenues (public, private and hybrid) increased more than 45 percent (more than 65 percent adjusting for currency and the divested System x business) year-to-date, and is $9.4 billion over trailing 12 months.
The sum is very small for a company with an annual revenue run rate of $80 billion.
Altogether, the company presented the results as progress:
“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. “We are continuing to make significant investments to build platforms around analytics, cloud, mobility and security that lay the foundation for a new era of cognitive business — where we see long-term value for our clients and shareholders.”
The “higher value” was reflected in a drop off in the share price of 5% after hours to $142, close to its 52-week low of $140.56, and off 10% this year.
Rometty has had her chance. It is someone else’s turn