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October 20, 2014

IBM sees 4% drop in Q3 revenue

Transformation to cloud and data to accelerate as it suffers in September.

By Ben Sullivan

IBM promised to accelerate its transformation as its Q3 saw a 4% drop in revenue.

This was blamed on weaker sales because of a ‘marked slowdown’ in buying behaviour in September.

The results show that total revenue fell to $22.4bn for Q3 2014, ended September 30, down from $23.4bn for the same period last year.

Net profit fell to $3.46bn, down from $4.14bn. IBM said that it was ‘disappointed’ with performance.

IBM’s software segment reported revenues of $5.7bn, down 2% from Q3 2013.

IBM CEO Ginni Rometty said in a statement: "We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry.

"While we did not produce the results we expected to achieve, we again performed well in our strategic growth areas — cloud, data and analytics, security, social and mobile – where we continue to shift our business. We will accelerate this transformation."

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IBM also said it experienced a market slow down in September.

Analyst estimates had expected IBM to post earnings, excluding items, of $4.31 a share on revenue of $23.37 billion, but IBM instead reached $3.68 a share on revenue of $22.4bn.

Revenues from IBM’s hardware Systems and Technology segment were down 15%, totalling $2.4bn. Revenues from its Power Systems segment were down 12% compared to Q3 2013.

IBM said that it witness declines in all markets, with EMEA falling 2%, the Americas’ revenue falling 2%, and Asia-Pacific falling 9%.

More bad news was found in the supposedly ‘growth’ markets with Russia, India and China revenues dropping up to 7%.

Early trading saw IBM shares down by 8.5%.

The earnings came as IBM said it is paying chipmaker Globalfoundries $1.5bn to take its loss-making chip business off its hands. IBM said that its semicondictor busiess was "not only capital expenditure intesive but a drag on our profit". The cash is expected to
be paid to Globalfoundries over the next three years.


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