IBM misses revenue target for 4th consecutive quarter
Print Edition
IBM Corp missed revenue expectations for the fourth consecutive quarter as the world’s biggest technology services company grappled with weakening demand for its servers and storage equipment, particularly in growth markets like China.
As a result of the disappointing results, Chief Executive Ginni Rometty and her team will forego their annual incentive payments for 2013 as IBM’s total revenues fell 2 percent to US$99.8 billion for the year.
Total revenue for the quarter ended on December 31 fell 5 percent to US$27.7 billion, missing analysts expectation of US$28.25 billion, according to Thomson Reuters.
Hardware revenue fell 26 percent, leading to a US$750 million drop in profit for that segment.
IBM’s results are certain to accelerate the company’s restructuring.
“As we look forward to 2014, we will continue our transformation,” Martin Schroeter, IBM’s chief financial officer, told analysts. “We will acquire key capabilities, we will divest businesses, and we will rebalance our workforce as we continue to return value to shareholders.”
IBM, which has been expanding its higher-margin services and software businesses over the last decade, is expected to relinquish more of its lower-margin hardware business. Revenue in that business, which includes server and storage products, fell for the ninth straight quarter as more companies switched to the cloud.
Emerging market sales fell 6 percent, led by China, where IBM saw revenue fall 23 percent.
Schroeter said revenue in the world’s second-biggest economy, which accounts for about 5 percent of IBM’s sales, will take several quarters to recover.
“It’s not going to rebound immediately,” he said.
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