Dive Brief:
- IBM reported lower quarterly earnings for the 14th straight quarter on Monday, according to the Wall Street Journal.
- The company said revenue fell 14% to $19.29 billion – more than $300 million short of the $19.6 billion analysts expected.
- Analysts say the report confirms that corporate buyers are increasingly turning to inexpensive cloud computing services delivered via the Internet.
Dive Insight:
IBM blamed the drop in earnings partially on a stronger U.S. dollar, which made its products more expensive overseas, but the decline also indicates IBM customers may be moving away from its traditional servers, software and services faster than the company had anticipated. The company has responded with a new set of cloud, security and data analytics businesses, but it takes time to grow those areas.
IBM’s customers “have complex environments and many are asking us to help them navigate that complex environment,” said Martin Schroeter, IBM’s chief financial officer in an interview. “That takes time.”
IBM recently introduced its Cognitive Business Solutions unit, which will employ analytics experts trained on the company’s artificial intelligence and machine learning products.
“We’re going to continue to drive that transformation, but we’re not as far along as we would have thought,” Schroeter said.
Cloud is one bright spot for IBM. The company said its cloud computing business generated $9.4 billion in revenue over the past 12 months, though that growth isn’t yet making up for the company’s overall revenue declines.
