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IBM Q4 Revenue fell, but Cloud computing expands

International Business Machines Corp (IBM) struggled reinventing for its cloud computing era, however, it remained a question if the company will be able to bring a much-needed turnaround for this year as the global economic climate continue to weaken. 

The 104-year-old company spent much of 2015 to ease investor’s expectations, and the tech giant announced on Tuesday that an anticipated earnings for the coming year will post lower. 

According to IBM, the expected earnings per share (EPS) for the current year settled at $13.50, despite a strengthening U.S. dollar would take a $1.3 billion in pretax profit. Meanwhile, analysts anticipate the giant tech to post an EPS of $15.

Its fourth quarter revenue declined by 8.5%, making 15 consecutive quarter slides in sales. 


On the other hand, the top line made its way better compared to the $22.02 billion analysts’ expectations. IBM’s cloud computing, along with their security and mobile computing products grew at a strong pace. The IBM Chief Financial Officer Martin Schroeter said that those businesses were accounted by 35% of the company’s full-year 2015 revenue, or $28.9 billion.

Mr. Schroeter stated, “We’re transforming a big company,” He added, “We’ve always said that this was going to take time.”

The emerging cloud computing appears to be the company’s main threat, as Inc.’s Amazon Web Services division along with other is taking their market share from IBM’s software, services and hardware businesses. 

The solution of the Chief Executive Ginni Rometty to this dilemma claimed a major corporate reinvention. The IBM’s Intel-based server businesses were sold to Lenovo Group Ltd. and in order to run the IBM’s chip-making business, she paid for the Globalfoundries Inc. 

Ms. Rometty is able to double down a new set of business line, which comprise of the company’s own Bluemix cloud computing services and its Watson artificial intelligence software. 

IBM said on Tuesday that the difficulty in cloud computing made numbers of contract signed in 2015 increased by 40% and each settled more than $100 million. Its revenue for the cloud rallied to $10 billion for the year, up by 43% and its hardware and professional services revenue were included.  

With overall declined sales, investors on the other hand, are expecting when this awkward transition will end as well as when will IBM’s new lines of business generate revenue.  

An analyst with Barclays PLC said that figures of the cloud service of the giant tech is making a progress, but is not sufficient to offset their overall decline in IBM’s hardware, software and services business. 


Mr. Moskowitz said, “Until we see the day when they can stop the damage…it doesn’t matter what they say about Watson or Bluemix or other types of buzzwords.”

IBM two-third sales were led mostly by outside U.S. Therefore, as the U.S. dollar strengthens, the company’s results continue to get dragged. The giant tech mentioned, that its revenue for the fourth-quarter dropped 2% brought by adjustments in currency fluctuations. 

Revenues were down as Russia and China weakens, but IBM shares of China rallied compared to Intel Corp., which was warned last week due to lower sales in PC. 

Mr. Schroeter said, “I don’t think we’re seeing anything different in China than what we’ve seen all year.”

The company’s earnings settled at $4.46 billion, or $4.59 a share, compared to last year’s $5.48 billion, or $5.51 a share. Based on its operating business, it posted an earnings of $4.84 a share, topping the expected share of $4.81.

Global technology revenue decreased about 7.1% to $8.13 billion, software segment revenue decline as well by 11% to $6.77 billion. Systems hardware revenue plunge 1.4% to $2.37 billion, while its global business services revenue lost 9.9% to $4.3 billion.

About 3% of shares weakens after trading hours.

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