Big Blue trips over China

The ever shrinking violet Biggish Blue missed revenue expectations for the fourth straight quarter claiming it was seeing weakening demand for servers and storage in China.

Chief Executive Officer Ginni Rometty and her team will abandon their annual incentive payments for 2013 because IBM failed to increase revenue. China was particularly embarrassing as the government-owned corporations that IBM relies on for a large chunk of revenue stopped buying.

China represents five percent of IBM’s business, about 40 percent of which is hardware sales. China was proving inscrutable, executives moaned and a new government headed by Xi Jinping is spearheading significant structural reforms that are affecting state-owned companies.

IBM Chief Financial Officer Martin Schroeder read his tarot cards and predicted growth will return towards the end of 2014 and he was “comfortable” that IBM would get back to mid-single digits across the growth market regions by the end of the year.

Revenue in that business, which includes server and storage products, fell for the ninth straight quarter as more companies switched to the cloud from traditional infrastructure.

Sources said IBM and China’s Lenovo have revived discussions about a sale of Big Blue’s low-end server unit, though executives did not mention that on Tuesday.

US government spying in emerging economies helped fuel hatred at US businesses like IBM. Asia-Pacific revenue fell 16 percent, while that from Brazil, Russia, India and China fell 14 percent in the quarter.

Total revenue fell 5 percent to $27.7 billion in the fourth quarter ended December 31, missing the cocaine nose jobs’ of Wall Street expectation of $28.25 billion.

Revenue from IBM’s system and technology unit, which includes servers and storage, fell 26.1 percent to $4.26 billion. Revenue from global technology services, its largest business, fell 3.6 percent to $9.92 billion.

In fact, the only area which did well was software which grew 2.8 percent to $8.14 billion.

Net income – that is to say profit – for the fourth quarter rose to $6.2 billion, from $5.8 billion, a year earlier.