In the season of quarterly earnings reports, the International Business Machines Corp, IBM, has sent shockwaves with its worst quarterly revenue in 14 years. According to reports, revenue of IBM fell 4.6 percent to $18.68 billion in the first quarter though it surpassed analysts’ estimate of $18.29 billion. The quarterly profit was down by a steeper 13.5 percent.
For IBM, this was the 16th straight decline in revenue on a quarterly basis. The Monday blues also left IBM shares tumbling nearly 5 percent after finishing at $152.53 at 4 p.m. as on Monday, reports Reuters.
According to analysts, despite the much hyped new business of Cloud Computing and Mobile Computing having grown marginally, compared to the same quarter in 2015, they are not adequate enough to offset the downside in traditional businesses.
The predicament in IBM sparks an analogy between two CEOs. One is Yahoo’s embattled CEO Marissa Meyer and that of IBM’s Virginia Rometty. Both have the same mandate of making a magical turnaround for their respective companies.
Since Rometty took over in January 2012, IBM’s stock dropped 17 percent. Rometty’s leadership marked a conspicuous shift of IBM towards high cloud computing and data analytics.
The high focus on “cognitive solutions” such as analytics, transaction processing, artificial intelligence, and cloud have not solved the problem of halting the shrinking old businesses at IBM.
In the results, cloud computing fared better with revenues up by 34 percent vis a vis the quarter last year, including Bluemix, SoftLayer cloud services and hardware to cloud computing services, reports The Wall Street Journal.
“If the strategic imperatives are really working, then the company’s growth rate should be improving,” said Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co., ahead of Monday’s earnings.
“The evidence so far has suggested that has not happened.”
But IBM is showing a brave face as CFO Martin Schroeter choosing to focus on the positives of the results. He drew attention to the overhaul it made in financial reporting and IBM’s upcoming areas of dominance such as cloud computing and data analytics, reports Fortune.