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October 18, 2016

IBM Q3 revenue drops despite strong growth in cloud business

Revenue from cloud services surged 44% in the quarter.

By CBR Staff Writer

Technology giant IBM has reported a marginal revenue decline for the third quarter of this year, even as its cloud and analytics businesses witnessed significant growth.

The company’s revenue stood at $19.2bn in the July-September quarter, down $54m compared to the same period last year. The company however posted better revenue than analysts expected.

Its revenues from strategic imperatives such as cloud, analytics, mobility and security increased 16% to $8bn in the quarter.

IBM’s net income fell to $2.85bn from $2.95bn in the year-ago quarter.


Ginni Rometty, Chairwoman, President and CEO of IBM.

IBM chairman, president and chief executive officer Ginni Rometty said: “IBM’s third-quarter performance, led by continued double-digit growth in our strategic imperatives, is a testament to our leadership in cognitive solutions and cloud.

“Our ability to apply deep expertise and breakthrough technology, led by Watson and the IBM Cloud, to massive amounts of data is enabling us to build new markets and transform industries.”

While cloud revenue for the quarter increased 44%, revenue from analytics went up by 15%. Revenue from mobile and security segments grew 19% and 11%, respectively.

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The company ended the third-quarter with $10bn of cash on hand.

IBM senior vice president and chief financial officer Martin Schroeter said: “Throughout the year, we have continued to invest where we see the greatest opportunities to create new markets and strengthen our enterprise IT leadership position.”

Earlier this month, the company announced that it would invest $200m in the new global headquarters for its Watson IoT business in Munich.

The investment is part of its $3bn global investment aimed at bringing Watson cognitive computing to IoT.

Its revenue from Cognitive Solutions division, which includes solutions software and transaction processing software, was up 4.5% to $4.2bn.

Global Business Services revenue fell 0.4% to $4.2bn in the September quarter, while revenue from Technology Services & Cloud Platforms witnessed 2.4% increase $8.7bn.

The company said a growth of 45% in strategic imperatives revenue within the segment was driven by a strong hybrid cloud services performance.

IBM saw a 21% decline in its revenue from systems hardware and operating systems software, while Global Financing revenue was down 7.9%.

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