news


IBM gets currency favours as modest growth continues

IBM

IBM has reported a second-consecutive quarter of yearly growth with its Strategic Imperatives outperforming declining legacy units once again, with a little bit of help from currency fluctuations.

Looking at the top-line figures, the business is heading in the right direction. Few would complain with another quarter of year-on-year growth, reversing five years of decline for a second-consecutive quarter, but when you dig a little deeper perhaps all is not as rosy as Big Blue executives would have you believe.

Total revenues were recorded at $19.1 billion, up 5% year-on-year. The cognitive solutions unit brought in $4.3 billion, up 6% year-on-year (2% when adjusted for constant currencies), Global Business Services had revenues of $4.2 billion, up 4% (down 1% when adjusted), Technology Services & Cloud Platforms accounted for $8.6 billion, up 5% (down 1% when adjusted), Systems made $1.5 billion, up 8% (4% when adjusted), while Global Financing had revenues of $405 million, which was flat year-on-year growth (down 4% when adjusted).

In each of these business units, where relevant, the strategic imperatives unit demonstrated growth which outperformed the group on the whole, but without the assistance of fluctuating currencies the picture would not have been anywhere near as pleasant. The future-proofed aspects of the Big Blue machine are outweighing the negative from the legacy business unit, however after five years of finding itself, some in the market would have been hoping the impact might have been a bit more substantial.

Last quarter, the first which IBM turned around the year-on-year decline, offered a glimpse of potential for IBM. It might be too early to expect great things, but the potential has been there for what seems like years now. Executives have been promising the strategic imperatives would save Big Blue, and there have been gradual improvements, but gradual improvements cannot be seen as satisfactory anymore, not when the rest of the industry is plundering cloud golds.

IBM would consider itself one of the world’s leading IT companies, certainly ahead of the curve, but these figures do not add up. Gartner forecasts global IT spend will increase by 6.2% across the next 12 months, with enterprise software spending is forecast to experience the highest growth in 2018 with an 11.1% and IT services expecting a 7.4% boost. These forecasts could act as a good average for the industry on the whole, the better performers growing above and the lesser ones below it. IBM is currently below it.

When compared to competitors the picture is also a bit gloomier. Consultancy rival Accenture grew 15% in the last quarter (though this is down to 10% when adjusted for constant currencies), HPE, which competes with IBM in the storage space, was up 11% year-on-year, while cloud competitor AWS demonstrated a 45% boost in revenues. Microsoft is a company which is a good comparison for IBM considering it has also recently redefined the direction of the business, demonstrated 12% growth in its most recent financial results. This 12% also includes the Microsoft legacy business which is weighing it down heavily.

IBM is heading the right direction, but at a slower pace than everyone else. The firm might want to reclaim its lofty spot at the top of the technology world, but at this rate it will end up being relegated to the ‘also ran’ category.

  • TechXLR8

  • Cloud and DevOpsWorld


Leave a comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Polls

Should privacy be treated as a right to protect stringently, or a commodity for users to trade for benefits?

Loading ... Loading ...