IBM 4Q revenue slumps, 2015 outlook not great

Global tech giant IBM's earnings slumped in the fourth quarter for 2014 as it moves away from its core hardware business.

The company reported that net income for the quarter was $3.5bn, down 17% from $4.1bn in Q3 2013. Total revenue fell to $22.4bn for the quarter, down 4% from $24.4bn in the same period last year.

Revenue in most categories has continued to decline, and its outlook for the year has disappointed investors, with shares falling 2% in aftermarket trading.

Software revenues were down 2% to $5.7bn, hardware was down 15%to $2.4bn, with System z mainframe server products down 35%.

IBM says it expects operating earnings per share between US$15.75 to US$16.50 per share in 2015, while analysts expect US$16.59.

The company says it is trying to reposition itself to sell new technologies such as data analytics, mobile and cloud computing.

Ginni Rometty, IBM CEO, says "We are making significant progress in our transformation, continuing to shift IBM's business to higher value, and investing and positioning ourselves for the longer term.

Cloud revenues were up 50% year-to-date, while business analytics revenues rose 8%. Mobile revenues doubled year-to-date and security revenue was up 20% year-to-date.

"In 2014, we repositioned our hardware portfolio for higher value, maintained a services backlog of $128 billion and achieved strong revenue growth across cloud, analytics, mobile, social and security," she says.

"Together these strategic imperatives grew 16% in 2014 and now represent $25 billion and 27% of our revenue."