IBM reported a 12 percent fall in first-quarter revenue as the technology company continues to shed unprofitable businesses to focus on cloud-computing stuff.
Shareholders were not surprised and the share price stayed stable after the announcement.
It was the 12th straight quarter that the Armonk, New York-based company reported a drop in quarterly revenue, including the effects of currency.
IBM’s revenue has been shrinking for three years now as the company sheds low-profit businesses such as cash registers, low-end servers and semiconductors and focuses on emerging areas such as security software and cloud services.
While it has gotten rid of the old businesses, the new ones have so far failed to make up for revenue.
Fortunately, most investors are showing patience with IBM’s slow transformation, after all if you can’t trust a man with in a suit with a business title which is longer than War and Peace, who can you trust?
IBM did say that it has generated $7.7 billion in total cloud revenue over the past 12 months, up sharply from the year before.
Technology investors are focused on the new internet-based “cloud” model and which companies are making money from it. Amazon.com is expected to disclose financials from its Amazon Web Services cloud unit for the first time later this week.
IBM, which gets more than half its revenue from overseas, also said it now expects a seven percent impact from currency headwinds in the full year. It said in February it expected more than six percent.
Net profit fell slightly to $2.33 billion for the quarter ended March 31 from $2.38 billion a year earlier. On a per share basis, profit rose to $2.35 from $2.29 as there were fewer shares outstanding in the first quarter.
Still IBM is doing better than Wall Street expected, so that can’t be so bad.
Total revenue fell to $19.6 billion from $22.2 billion. That was broadly in line with analysts’ average estimate of $19.64 billion.