Boston, MA 04/17/2014 (wallstreetpr) – Few companies, let alone technology companies, endure as long as International Business Machines Corp. (NYSE:IBM) already has. Of late, the 102-year-old company has been posting declining revenues quarter after quarter and the results for the latest quarter were no exception.
Another Declining Quarter
IBM’s revenues for 1Q2014 declined by 4% to reach $22.5 billion while it was $23.4 billion in 1Q2013 — the eighth consecutive quarter in which revenue has declined. This was below the analysts’ estimated average of $22.9 billion, as per Reuters. Net income declined in 1Q2014 by 21% at $2.4 billion, compared to $3 billion in 1Q2013. Operating net income (non-GAAP) declined by 22% to $2.6 billion, compared to $3.4 billion in 1Q2013. EPS fell by 1% to $2.54 from $3.
Despite aggressive share purchases of $8 billion in the quarter, the IBM stock has declined by about 10% in the past one year.
Revenues declined in IBM’s self-defined ‘growth markets’ as well as in the BRIC countries.
The positive news in this quarter came from business analytics where revenues were up by 5% and cloud computing services where revenue was up by 50%.
Software revenues were up but that constitutes a relatively minuscule portion of IBM’s overall business. Revenues from its hardware business including the System Z mainframe servers declined. IBM’s tax rate was 20%.
Future Prospects
IBM’s future growth prospects may well lie in how its Software and Systems and Technology division performs. International Business Machines Corp. (NYSE:IBM) may opt for acquisitions to maintain growth in the Software division. In the Systems and Technology division, IBM will continue to sell off assets as it already has. The sale of its server assets to Lenovo has already been finalized. The weakness in the hardware segment will likely continue at least until next year when IBM will launch a new mainframe computer.
As the International Business Machines Corp. (NYSE:IBM) researchers learn to take advantage of the billions spent in researching and developing the Watson artificial intelligence platform and take it to the market to help crunch medical data (to begin with), IBM should remain a leader in the leading edge of number crunching with its mainframes and supercomputers.
