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April 17, 2014

Plummeting hardware sales hit IBM revenue

Company suffers five-year low.

By CBR Staff Writer

IBM reported a 4% drop in revenue generated during the first quarter of 2014 to $22.5bn, due to sinking hardware sales, while its net income also declined 21% to $2.4bn.

IBM was also hit with a massive restructuring programme that cost the computing firm about $900m, while reporting a gain of $100m for the divestiture of its customer service outsourcing business.

IBM chairman, president and chief executive officer Ginni Rometty said that during the quarter, the company took actions to transform parts of the business and to shift aggressively to its strategic growth areas including cloud, big data analytics, social, mobile and security.

"As we move through 2014, we will begin to see the benefits from these actions. Over the long term, they will position us to drive growth and higher value for our clients," Rometty added.

Hardware revenues dropped by 23% during the quarter to $2.4bn, mainly due to a 40% drop in sales of mainframe servers, while sales of global technology services also dropped but software revenues mounted 2% to $5.7bn.

During the quarter, IBM’s operations Europe/Middle East/Africa generated positive revenue growth of 4% to $7.6bn, with its other markets including Americas and Asia-Pacific reporting 4% and 12% revenue declines, respectively.

IBM recently snapped up American marketing firm Silverpop, to offer advanced marketing software to clients, as well enable them to respond to individual customer’s behaviour across email, the web and mobiles.

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