IBM posts 19th consecutive quarter of revenue decline amid transformation

Technology - Himanshu Gill - Jan 20,2017

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ibm posts 19th consecutive quarter of revenue decline amid transformation

International Business Machines (IBM) registered its 19th straight quarter of revenue decline, adding another year to its long string of short earnings from 2011 to 2015.

The tech giant posted adjusted earnings of $5.01 per share, excluding items, and revenues of $21.77 billion. Wall Street had anticipated IBM to report earnings of $4.88 per share and revenue of $21.64 billion in the fiscal fourth quarter.

According to reports, investments will drive growth in the company’s cloud business. Its shift to a subscription based service model hit its operating gross margin by 1.8 percent points to 51 percent in the fourth quarter of 2016. IBM's shares were down by 2.5 percent at $162.70 after rising briefly in extended trading.

IBM’s earnings in 2016 rose 4 percent from a year ago, but revenues were down by 1 percent, the company said. IBM's revenue has declined continuously since April 2012, when sales were nearly flat.

The company has been driving an uneasy transition - from operating systems and equipment towards "strategic imperatives" like artificial intelligence, business services and cloud computing.

Such incomes include cloud and mobile computing, data analytics, social and security software. These increased by 11 percent to $9.5 billion in the fourth quarter, from a year earlier, contributing 41 percent to IBM's total revenue of 2016.

Cloud computing income in IBM's various segments jumped by 33 percent. This business includes services such as SoftLayer, which provides online storage space to companies on lease as well as the BlueMix cloud platform.

IBM’s net income rose to $4.50 billion at the rate of $4.72 per share, from $4.46 billion ($4.59 per share), helped partly by a lower tax rate. IBM's shares rose by 30.2 percent in the last 12 months, outperforming the 23.2 percent gain in the broader Dow Jones Industrial Average.