IBM revenues buoyed by cloud services, but down again

IBM Corp. reported first quarter earnings Monday that beat industry expectations, helped by a 34-percent growth in revenue from its cloud services division.

But, the company still recorded its 16th consecutive quarter in which year-over-year revenues declined, as Big Blue continues to shift its focus away from hardware services — which saw a decline this quarter — to cloud computing and data analytics and software security — all of which reported big gains.

“We’ve made a lot of progress in transforming our business,” Martin Schroeter, IBM senior vice president and chief financial officer, said.

Big Blue released its first quarter earnings after the markets closed Monday. The global tech giant reported earnings per share of $2.35 on $18.68 billion in revenue, down 4.6 percent from last year. The stock price opened at $151.75 and closed at $152.53.

Wall Street analysts had predicted IBM's earnings to be $2.09 a share on $18.29 billion in sales.

During the quarter, IBM debuted the Z13s mainframe, designed and built in Poughkeepsie, which increases the security and speed of processing mobile transactions.

With the increase in total cloud earnings, the division represented 37 percent of the company's total revenue and totaled $10.8 billion for the past 12 months. Revenues from analytics increased 7 percent. Revenues from mobile increased 88 percent and security increased 18 percent.

“We will continue to invest as we transform our operations, expanding our industry expertise and our cognitive and cloud capabilities,” Schroeter, said.

IBM reports another drop in revenue, growth in cloud

Sales of mainframe computers were down by about 40 percent in the first quarter. But Schroeter said sales typically decline a year after the new line of mainframes is released. Sales of mainframes, the latest of which is the z13, were up by 130 percent in 2015, he said.

Although its first quarter earnings were better than analysts predicted, the company has now posted revenue declines for four years straight with CEO Ginni Rometty at the helm.

Some revenues are dropping faster than its new businesses are growing. For instance, systems hardware was down by 20 percent, reporting $1.7 billion in revenue for the first quarter. IBM has sold off business units that produced microprocessors and computer servers, which contributed revenue but had struggled for growth and profit in recent years. In East Fishkill, the former IBM semiconductor plant is one of those areas that was costing too much for executives to justify. The chip-making business was transferred to GlobalFoundries, workforce and all, in July.

IBM debuts new mainframe, generated in Poughkeepsie

IBM announced Monday its Global Business Services and Cognitive Solutions departments will now be known as Cognitive Solutions and Industry Services. Technology Services and Cloud Platforms, Systems and Global Financing departments remain unaffected.

“We are pleased with the progress we have made helping our clients apply new cognitive solutions and hybrid cloud platforms,” Rometty said. “IBM has established itself as the industry leader in total cloud, analytics and cognitive, all of which helped drive our strategic imperatives revenue growth at a strong double-digit rate, substantially faster than the market.”

In terms of jobs, Schroeter did not specifically discuss potential cuts or transitions from earlier this year as a result of the changes, but said the company has about 10,000 open positions. IBM does not release employment numbers.

Amanda J. Purcell: apurcell@poughkeepsiejournal.com; 845-437-4807; Twitter: @amandajpurcell