IBM financials

2021

Revenue - $57.35 billion, profit - $5.74 billion

IBM's revenue in 2021 reached $57.35 billion against $55.18 billion a year earlier. IBM's software business (this includes Red Hat solutions and software for automation, information security, Big Data, artificial intelligence, etc.) amounted to $24.14, and in 2020 - $22.93 billion. Sales of cloud solutions for the year increased by 20%, to $20.2 billion.

Chief Financial Officer Jim Kavanaugh emphasized that the cloud solutions and consulting segment saw a "healthy acceleration" in financial growth.

At the end of 2021, IBM's consulting division showed revenue growth to $17.84 billion from $16.26 billion a year earlier. In the direction of infrastructure solutions (it is based on IBM Z mainframes), revenues fell slightly - from $14.53 billion in 2020 to $14.19 billion a year later. In the financial services market, IBM's revenue fell from $975 million to $774 million.

IBM's net profit in 2021 was $5.74 billion, which exceeds the one-year-old figure of $5.59 billion. It also follows from the IBM report that the company's profit in the consulting services sector in 2021 amounted to $1.45 billion against $1.03 billion in profit a year earlier. In the software division, profit increased from $3.34 billion to $4.72 billion, and in the infrastructure division - from $1.65 billion to $2.03 billion.

In 2021, the flow of cash from IBM's main activities will amount to $12.8 billion, and free cash flow - $6.5 billion. These and other results include the performance of Kyndryl (separated from IBM) for 10 months of 2021.

By the end of 2021, IBM had accumulated cash in the amount of $7.6 billion against $6.7 billion a year earlier. The company's total debts for the year decreased by $9.6 billion and amounted to $51.7 billion. Most of this amount comes from funds raised to buy Red Hat.^[1]

World's Second Largest ICT Developer by Revenue

According to Synergy Research Group, the total revenue of the 13 largest manufacturers of software and ICT services for business, including telecom operators, reached $613 billion in this market in 2021, which is 10% more than a year earlier. IBM was ranked second on that list.

2020: Revenue continues to decline as IT hardware sales fall

In 2020, IBM raised $73.62 billion against $77.15 billion a year earlier. One of the catalysts for this decline was the IT equipment division (Systems), whose revenues decreased to $6.98 billion from $7.6 billion in 2019.

According to Bloomberg, IBM's revenue has not grown from year to year for 10 consecutive quarters. Apparently, the company's turnaround plan, which was introduced by its new CEO Arvind Krishna, requires more time to implement and achieve results.

The actions we have taken to focus our business on hybrid cloud services and artificial intelligence will begin to give a return, and this gives us confidence that we can achieve revenue growth in 2021, Krishna said, commenting on the financial results.

In 2020, the Cloud & Cognitive Software division registered an increase in turnover to $23.38 billion from $22.89 billion a year earlier. In the direction of Global Business Services, sales decreased from $16.8 billion to $16.16 billion. Revenue in the Global Technology Services division sank even more - from $27.36 billion to $25.81 billion.

In 2020, IBM earned $34.1 billion in the Americas, which is 4% less than a year ago. In the Asia-Pacific region and EMEA, sales also decreased by 4%, to $15.9 billion and $23.6 billion, respectively.

According to data from financial statements, IBM's cloud revenue at the end of 2020 reached $25.1 billion, an increase of 19% compared to 2019. Excluding fluctuations in exchange rates and assets, which the company has already got rid of, revenues rose by 20%. Revenue at IBM Red Hat rose 18% for the year, "normalizing at a level comparable to past data," the report said. ^[2]]

2019: Revenue drop from $79.6 billion to $77.15 billion

In 2019, IBM's revenue began to fall again: it amounted to $77.15 billion against $79.59 billion a year earlier. The main reason for the decline lies in the decrease in demand for IT equipment. The corresponding division (Systems) completed the year with a turnover of $7.6 billion, while in 2018 it exceeded $8 billion.

In the direction of technology services and cloud platforms (Cloud & Cognitive Software), sales rose from $22.2 billion to $23.2 billion. Revenues in the field of cloud services increased by 11%, to $21.2 billion. Excluding fluctuations in exchange rates and indicators of assets sold, cloud revenue jumped 14%.

IBM's revenue in the business services market (a division of Global Business Services) changed slightly on an annualized basis and reached $16.63 billion.

In the IBM Global Technology Services division, which in 2019 ceased to be the largest in the American corporation, turnover decreased to $27.36 billion from $29.15 billion in 2018.

At the end of 2019, IBM made a net profit of $9.43 billion, which is 8% higher than the profit a year ago. True, in 2018, the company made a one-time payment of $1.9 billion in connection with the update of tax legislation in the United States.

On the day of the release of the 2019 financial results, IBM quotes rose 5% due to the fact that the profit and sales of the IT giant were higher than market expectations.

2019 will be remembered by IBM for closing its deal to buy Red Hat. Joining Red Hat is not yet fully reflected in IBM's profits. For now, it is not possible to calculate the deferred revenue of Red Hat in total IBM sales in accordance with accounting rules. However, IBM Chief Financial Officer James Kavanaugh said that the purchase of Red Hat in 2019 has already begun to bear fruit.^[3]

2018

Revenue growth in the segment of software platform solutions based on AI by 26.6%

Revenue growth by 1% to $79.6 billion

In 2018, IBM's revenue amounted to $79.6 billion, which is 1% more than a year earlier. If you do not take into account currency fluctuations, then the company's sales have not changed. Prior to that, the IT giant's revenue fell for 6 years.

IBM revenues increased largely due to the cloud business, the volume of which jumped by 12% in 2018 and reached $19.2 billion.

The company earned $21.7 billion on analytical solutions, which is 9% higher than a year ago. Mobile products brought the company $5 billion in revenue, which is 3% more than in 2017.

Revenue from the so-called "strategic imperatives," to which IBM includes cloud services,  artificial intelligence, analytical tools, social networks, mobile technologies and information  security solutions, increased by 9% on an annualized basis - to $39.8 billion.

The Technology Services & Cloud Platforms division, which is responsible for infrastructure services, technical support services and integration software development, recorded revenues of $34.5 billion in 2018. In 2017, sales were about the same.

IBM Systems, a structure specializing in IT equipment and operating systems, recorded a 2 percent decline in revenues in 2018 - up to $8 billion. OS brought the company $1.7 billion in revenue.

In the direction of business services (Global Business Services), annual revenue increased by 2% and reached its size of $16.8 billion. Consulting revenues increased by 5%, reaching $7.7 billion. The volume of business in the field of application management services amounted to $7.9 billion, which is 1% less than in 2017.^[4]

Sales of IBM cognitive solutions (this includes the Watson AI platform, analytical and information security services) in 2018 turned out to be $18.5 billion, which is about the same as a year earlier.

IBM's net profit in 2018 rose to $8.7 billion from $5.8 billion in 2017.

2017

Revenue drop over 6 years

In 2017, IBM revenue amounted to $79.1 billion against $79.9 billion in 2016. Sales of the American corporation have continued to fall since 2011.

IBM's net profit in 2017 was halved, from 11.9 billion to 5.8 billion, dollars which the company attributed to additional expenses arising from a change in tax laws in. USA

In 2017, the tax rate from the company's main activities amounted to 12%, and in 2018, according to management's forecast, the indicator may increase to 16% plus or minus 2 percentage points.

The so-called "strategic imperatives," to which IBM includes cloud services,  artificial intelligence, analytical tools, social networks, mobile technologies and information security solutions, brought the company $36.5 billion in 2017, which is 11% more than a year ago. The listed technologies began to generate 46% of IBM's revenue.

The volume of cloud business for the year reached $17 billion, which is 24% more than in 2016. IBM plans to maintain big investments in "strategic imperatives" in 2018.

IBM's largest division is Technology Services & Cloud Platforms, which covers infrastructure services, technical support services, and integration software development. In 2017, revenue here amounted to $34.3 billion, down 3% year-on-year.

Revenues of the American vendor in the business services market (Global Business Services structure) decreased by 2% to $16.3 billion. Sales of cognitive solutions increased by 1% and reached $18.5 billion, and IBM Systems, which is responsible for the production of IT equipment and operating systems, ended 2017 with a 5 percent increase in turnover, which turned out to be equal to $8.2 billion. Sales of servers and other hardware increased by 9% to $6.5 billion.^[5]

Q3: Mainframe gave hope for long-awaited growth

In October 2017, IBM released its quarterly financial statement. The server business grew by 10% thanks to the new mainframes. This equipment should help the American company return to growing revenue.

In July-September 2017, the revenue of the Systems division, which, in addition to servers, is responsible for the release of storage systems (DSS) and operating systems, amounted to $1.7 billion against $1.6 billion a year earlier. In the third quarter of 2016, sales here fell by 21%.

In the third quarter of 2017, IT equipment, in particular, brought the blue giant a turnover of $1.3 billion, which is 14% more than a year ago. The share of Systems' revenues in the total revenue of the American giant reached about 7%.^[6]

Most of IBM's revenue is generated by Cognitive Solutions cognitive , Global Business Services, and Technology Services & Cloud Platforms. ON

Commenting on the financial results, IBM President, CEO and Chairman of the Board of Directors Ginni Rometty noted that the market "enthusiastically accepted the new mainframe z Systems, which provide customers with breakthrough security capabilities."

According to analyst Edward Jones & Co. Josh Olson, mainframes will be a big contributor to IBM anticipated long-awaited revenue IBM in the fourth quarter of 2017. Such equipment is very beneficial for manufacturers, since many software products and services are sold with it, the expert emphasized.

As Bloomberg notes, the mainframe business is cyclical, and analysts doubt IBM's ability to maintain growth in this market after a drop in server hardware sales in general. In this regard, Josh Olson believes that IBM should show growth in other markets, such as cloud and other services, especially since the fall in the traditional IT-Business is stronger than the growth of new categories.^[7]

In July-September 2017, sales of mainframe IBM z Systems jumped 62%, data storage - 4%, while the implementation of servers on Power processors decreased by 8%. The company has not released servers on the standard x86 processor architecture since 2014, when it sold the corresponding business to Chinese Lenovo.

From IBM's message, it follows that the company's DSS sales grew during the first three quarters of 2017 in a row. Champion Solutions Group Senior Vice President of Strategic Marketing (IBM partner) Mike Piltoff confirmed to CRN a strong revival in demand for IBM storage. According to him, IBM has an excellent range of DSS systems, especially for flash memory solutions.^[8]

IBM has many good flash storage systems. This business is becoming mainstream, "said Piltoff.

He added that IBM's DSS-business growing despite the company's lack of an x86 server market. Approximately 75% of the storage that Champion supplies to customers is installed in such systems. IBM Power servers account for only 25% of these sales.

According to IDC analysts, the global DSS market reached $10.8 billion in the second calendar quarter, an increase of almost 3% on an annualized basis.

In July-September 2017, IBM's revenue in quarterly terms decreased for the 22nd time in a row, although the decline was minimal - by 1% compared to the third quarter of 2016, to $19.15 billion. Compared to the second quarter of 2017, revenue rose by $2.9 billion due to the mainframe mentioned above. IBM expects to complete a protracted drop in revenue in October-December 2017, expecting growth of about 1.5%, to $22-22.1 billion, which is more than the average forecast of Wall Street analysts ($21.8 billion).

After the publication of this positive forecast, IBM quotes jumped 9% - the highest since 2009. At the same time, from the beginning of January to October 18, 2017, company quotes decreased by 12%. As a result of a 9 percent rise in price of IBM securities, the market capitalization of the IT corporation grew by $12.6 billion per day.

Q2: Continued DSS revenue growth

In July 2017, IBM released its second quarter financial statement. It follows from it that the company's revenue in the storage system market (DSS) continued to grow after a protracted decline.

In April-July 2017, storage sales brought IBM 8% more revenue than in the same period of the previous year. In the first quarter, growth was measured at 7%, while more than five previous calendar quarters, the company's sales of this equipment decreased.

The improvement in the DSS market at IBM was associated with a double-digit increase in sales of arrays built exclusively on flash drives (the so-called all-flash solutions). At the same time, the main profit comes from mid-level and high-level platforms.

IBM did not specify exactly how much the company earned from DSS sales. The report only states that the revenue of the IBM Systems Group division, which includes storage systems, as well as servers, in the second quarter of 2017 amounted to $1.7 billion, a decrease of 10% on an annualized basis.

According to IBM CFO Martin Schroeter, mainframe and DSS sales margins increased in April-June 2017 relative to the same period in 2016. The margin in the segment of IBM Power Systems servers also rose, but here the growth was only in quarterly terms.

In February 2017, IBM DSS division Manager Ed Walsh said in an interview with SearchStorage that flash storage is a priority for the company in the storage market. These devices, in particular, are used in the IBM Watson supercomputer for processing Big Data.

In the second quarter of 2017, IBM's total revenue decreased by 5% to $19.3 billion. Excluding currency fluctuations, the decline was 3%.^[9]

2016: Nearly 5-year revenue drop to $79.9 billion

On January 18, 2017, IBM released its annual financial statement. It follows from it that the company's revenue has been steadily declining for almost 5 years, since the fast-growing directions of the IT giant cannot compensate for the decline in traditional markets.

In 2016, IBM's revenue amounted to $79.9 billion, a decrease of 2% compared to the previous year. In October-December, sales decreased by 1% ($21.8 billion), and this quarterly decline became the 19th in a row. Annual net profit fell 11% to $11.9 billion.

IBM's decline in revenue is largely due to lower sales of servers and other IT hardware. The Systems division responsible for it in 2016 recorded revenue of $7.7 billion, while a year earlier it was measured at $9.5 billion.

Amid the fall of traditional business, IBM is betting on new, fast-growing destinations that the company calls "strategic imperatives." These include:

• cloud products,
• artificial intelligence,
• analytical tools,
• social networks,
• mobile technologies and
• information security solutions.

In 2016, "strategic imperatives" brought the American corporation $32.8 billion in revenue (41% of the total), which is 13% more than a year ago. The volume of cloud business increased by 35%, to $13.7 billion.

IBM predicts that the number of users of artificial intelligence technologies implemented by the cognitive platform Watson will reach 1 billion. In 2016, sales of IBM cognitive solutions rose 1.4% compared to 2015 and amounted to $5.3 billion.

The IBM report also states that in 2016, the company's revenues in the business services market (a division of Global Business Services) decreased by 4.1% on an annualized basis - to $4.1 billion. Technology Services & Cloud Platforms (covering infrastructure services, technical support services and integration software development) showed a 1.7 percent rise in sales to $9.3 billion.^[10]

2015

10% profit growth

On January 19, 2016, IBM published a financial statement, from which it follows that the company's sales have been declining for almost four years. This is due to the high dollar exchange rate and the fall of the IT market.

In 2015, IBM's revenue amounted to $81.7 billion, which is 12% less than a year earlier. In October-December, income decreased by 8.5%, and this quarterly decline turned out to be the 15th in a row.

Speaking to reporters and analysts at a conference on the publication of IBM's results, the company's CFO Martin Schroeter said that due to the strong dollar, the blue giant missed $7 billion in revenue in 2015 and $300 million in profit in the fourth quarter. According to the forecasts of the top manager, unfavorable fluctuations in exchange rates will lead to a decrease in profit before taxing IBM by $1.3 billion in 2016.

According to Reuters, in 2015 the US dollar index grew by 9%, and in 2016 it is expected to grow further by 3.4%.^[11]

At the end of 2015, IBM's net profit was $13.2 billion, which is almost 10% more than a year ago.

According to data from IBM's financial report, the company's annual revenues from sales of technology and business services amounted to $32 billion (-9.7% compared to 2014) and $17.2 billion (-12%), respectively.

Software implementation fell by almost 10% to $23 billion. At the same time, IBM's cloud business is on the rise: its volume in 2015 reached $10 billion (includes sales of equipment for cloud data centers and the provision of professional services in this area), an increase of 43% on an annualized basis.

According to IBM, thanks to the offer of complex cloud solutions, the number of contracts worth more than $100 million in this market in 2015 increased by 40%.

IBM's hardware business has been in IBM for several years. The company's revenue from the sale of servers, storage systems and other equipment in 2015 decreased by about a quarter, amounting to $7.58 billion.^[12]

IBM is trying to stop the decline in software sales

On April 21, 2015, IBM management announced the need to strengthen the company's position in the software industry, otherwise it will not be possible to fulfill the financial tasks.

At the end of 2015, IBM predicts operating profit in the range of $15.75 to $16.5 per share. To achieve these indicators, everything possible must be done to stop the fall in software sales, said IBM Chief Financial Officer Martin Schroeter during a conference on the publication of the corporation's quarterly reports on April 21, 2015.

IBM believes that without strengthening the software business, the company will not be able to fulfill its financial tasks

In January-March 2015, IBM Software's software development and sales division received revenue of $5.2 billion, which decreased by 8.2% on an annualized basis. Excluding currency fluctuations, negative dynamics was measured at 2%.

In 2014, the company's software revenue fell by almost 2%. This business generates about 28% of revenue for the blue giant. In software sales, key IBM integration solutions, including WebSphere, account for approximately two-thirds of the volume. Operating systems account for about 8% of revenues (data for the first quarter of 2015).

Credit Suisse analyst Kalbinder Garcha says that in order to achieve at least zero growth in software sales in 2015, IBM needs to achieve double-digit business rates in the last three calendar months.

"However, given the results of the first quarter, the likelihood of such progress is very low," Garcha.

The expert predicts IBM operating profit at $15.58 per share in 2015, which is 3.4% less than the forecast of the American manufacturer itself. Credit Suisse attributed this difference in revenue expectations to the fact that IBM is unlikely to be able to return the software business to a positive trajectory.

According to Bloomberg observers, it will really be difficult for IBM to stop the fall in software sales during the reorganization of the corresponding division, which is developing a number of new products and switching to a subscription software distribution model.^[13]

According to Kalbinder Garchi, the sale of subscription software takes only a fourth of the revenue of the IBM Software division, and the remaining revenues are accounted for by the traditional implementation of licenses.

Sales fall, assets make no profit

In the first quarter of 2015, IBM sales amounted to $19.6 billion, which is 12% less than in 2014^[14].

Profit fell by 5%, to $2.4% billion. IBM refers to the appreciation of the dollar - it negatively affected financial results, since two-thirds of the corporation's income comes from abroad. If currency fluctuations and the results of recent sales of the corporation's divisions were taken into account, then the volume of sales did not change compared to 2014, according to IBM.

In the second quarter of 2015, IBM is trying to get rid of ineffective divisions and invest in strategic areas that it sees:

• cloud systems,
• analytics
• mobile technologies.

The corporation intends to invest $3 billion in the created division of the Internet of Things.

IBM revenues in these segments increased by 20%, but did not compensate for the decline in sales indicators of other divisions (revenue from cloud services in 2014 increased by more than 60%). Even taking into account changes in exchange rates, sales in both the service division and the software division fell by 2%.

And the revenues of the mainframe division have more than doubled. This was facilitated by the release of the mainframe z13. However, IBM hardware sales fell 23% to $1.7 billion.

During the first quarter, $1.1 billion was paid to shareholders in the form of dividends, the company sent $1.2 billion to buy back shares.

2014

IBM's 2014 revenue fell 5.7%, profit 27%

On January 21, 2015, IBM released a financial statement that reflected the results of 2014. The company's profit fell 27% and revenue fell 5.7%. Sales of the Blue Giant have been steadily declining for almost three years.^[15]

In 2014, IBM's net profit was $12 billion against $16.5 billion a year earlier. Revenue fell to $92.8 billion from $98.4 billion in 2013. In October-December, sales decreased by 12% on an annualized basis, and this quarterly decline turned out to be the 11th in a row.

By the end of 2014, IBM's accounts had accumulated about $8.5 billion in the form of cash and cash equivalents, as well as short-term investments. The company sent 6% of revenue to research and development.

IBM revenue falls for nearly 3 years

"We

have made significant progress in reorganising our operations while continuing to shift business focus towards more revenue-generating areas. Our investments and benchmarks are designed for the long term, "IBM Chief Executive Officer Ginni Rometty commented on the financial results.

According to her, the company considers mobile, cloud and analytical technologies, as well as solutions in the field of social services and information security (information security), strategically important. IBM's revenue from these products in 2014 rose 16% to $25 billion, which corresponds to 27% of the total turnover of the American corporation.

The cloud business added about $7 billion to IBM's revenue, which is 60% higher than in 2013. In the mobile, analytical and information security segments, the company's revenues jumped by 200%, 7% and 19%, respectively.

This rise contrasts with the failed hardware direction of the IBM, for which the Systems and Technology division is responsible. The company's revenue from the sale of servers, storage systems and other equipment in 2014 fell by 23% to $10 billion.

The IBM report also states that in 2014 the company earned $37.1 billion (-3.7% compared to the previous year) and $17.8 billion (-3.1%) on technology and business services, respectively. The volume of software business decreased by 1.9% to $25.4 billion. Among the divisions of the company, only IBM Global Financing, which is responsible for various financial services, showed revenue growth in 2014 - by 0.6% to $2 billion.

IBM cheaper than Oracle

After IBM announced the unsatisfactory financial results of the third quarter of 2014, the corporation's quotes began to fall rapidly. As a result, as of November 20, 2014, IBM shares fell to such a level that the market capitalization of the American company was lower than that of competitor Oracle.^[16]

Since October 1, 2014, IBM's securities have declined 14% to $161.43 apiece at the close of the New York Stock Exchange on Wednesday, November 19. The manufacturer's capitalization dropped to $159.8 billion against Oracle's $181.3 billion. Shares of the latter for the same period rose in price from $38.09 to $40.92.

IBM's market capitalization has become lower than Oracle's

In the third quarter of 2014, IBM's revenue fell for the tenth time in a row (to $22.4 billion), which the head of the company, Ginni Rometty, called an "unsatisfactory result," after which she canceled the goal of achieving a profit of $20 per share in 2015, which was set by her predecessor Sam Palmisano.

Investors were frustrated by IBM's financial failures, however Ginny Rometty gave cause for optimism. In November 2014, the corporation announced several products (such as IBM Verse) and large deals that could provide revenue growth in the long term.

First, IBM entered into an IT outsourcing agreement worth 1 billion euros with the largest in the To Europe air carrier. Lufthansa IBM also began to cooperate Twitter with in the field of analyzing these messages on the social network, which is necessary for the correct formation of business decisions. China The Blue Giant has signed Tencent Holdings a contract with a large Internet provider to jointly develop cloud solutions.

In addition, IBM has expanded its partnership with SAP, allowing the latter to use its data centers, and in return gaining access to the SAP HANA database and client Internet platform. Finally, as it became known in November, IBM teamed up with Nvidia to work on the most powerful supercomputer on Earth.

2013: IBM sales decline continues

IBM Corporation recorded a decrease in revenue in the third quarter of 2013 by 4% to $23.7 billion. In the same period of the previous year, the corporation's revenue amounted to $24.7 billion. Profit increased by 6% to $4 billion.

IBM revenue for the first 9 months of 2013 decreased compared to the same period in 2012 by 4% to $72.1 billion.

The decrease in revenue is mainly due to a drop in sales of the hardware division - by 17% to $3.2 billion. The decline was also recorded in the services department, but not so significant - by 3%.

Revenue from the sale of Power Systems servers on Power architecture fell 38%, System x servers on x86 architecture - 18%. System z mainframe revenue increased by 6%. Storage sales declined 11%.

As a result, IBM's total revenue in China for the specified period fell by 22%, and sales in the hardware region - by 44%. Lofridge believes that in early 2014 the demand for equipment of foreign companies in China will increase, that the decline will not be constant.

2012

Year results: tenth year in plus

IBM's net profit for 2012 grew by 5% even despite a 2% decline in revenue. In 2012, IBM's revenue amounted to $104.5 billion, while in 2011 it amounted to $106.9 billion.

Net profit amounted to $16.6 billion, while in 2011 it amounted to $15.9 billion. Earnings per share have risen 10% since 2011, the tenth consecutive year in which the company's earnings per share have risen 10% for the year or more.

Virginia Rometty, President and CEO of IBM, attributed the financial success to the implementation of a number of initiatives, including the intensification of analytical solutions, cloud technologies and smart systems in the market.

Revenue for 2012, it grew by 80% in the cloud market. Revenue from smart systems increased by 25% in the same period. Separately, IBM's business in growing markets such as India and China grew 4% in 2012 compared to 2011.

The largest geographical market for IBM remains America, where in 2012 the corporation earned $44.6 billion, which is 1% less than 2011. Revenue in the EMEA region decreased by 6% to $31.8 billion, while in the Asia-Pacific region it grew by 3% to $25.9 billion.

Interestingly, IBM's revenue in the hardware segment decreased, while software sales were in the black. The service direction in 2012 amounted to $58.8 billion, which is 2% less than 2011, of which business services accounted for $18.6 billion (-4% in annual comparison).

IBM's revenue from software sales in 2011 amounted to $25.4 billion (+ 2% in annual comparison), then the systems and technology division earned $17.7 billion (-7% in annual comparison). IBM's financial division generated $2 billion in revenue, down 4% from 2011.

Separately, in the fourth quarter of 2012, IBM's revenue amounted to $29.3 billion, which is 1% less than the same period a year earlier. Net profit in the fourth quarter was $5.8 billion (-6% in annual comparison).

3rd Quarter: IBM Revenue Falls Across All Items

IBM, which recently reoriented itself to selling more marginal software and services in relation to equipment, nevertheless reported a decrease in revenue in the third quarter of 2012. The company earned $24.7 billion, which is 5% less in annual terms. Analysts expected slightly higher performance, in particular, Thomson Reuters predicted revenue at $25.36 billion.

IBM's net profit in the third quarter of 2012 amounted to $3.8 billion, which is almost the same as a year earlier. Earnings per share amounted to $3.33, which is 4% higher than in the third quarter of 2011.

In terms of geographic markets, the most negative results were achieved by IBM in the Americas and Australia. Thus, in the Americas, the company's revenue amounted to $10.4 billion, which is 4% less in annual terms. Revenue in the EMEA region amounted to $7.2 billion, which is 9% less in annual terms. In the Asia-Pacific region, the company's revenue increased by 1%.

The service technology division showed revenue of $9.9 billion (minus 4% in annual terms), the business services division - $4.5 billion (minus 6%). Sales revenue software amounted to $5.8 billion (minus 1%), revenue from the sale of middleware products, such as, and, WebSphere Tivoli Lotus also in annual terms decreased by 1% to $3.6 billion.

According to Chris Ambrose, Vice President of Gartner, such results are associated with a number of reasons. In particular, in recent years, customers using service services have changed their approach to consuming services: now they prefer to split them into several small contracts between different providers. The exchange rate differences of the dollar/euro, which had a depressive impact on IT spending in Europe, also affected. The expert also believes that now customers are lengthening IT update cycles in order to reduce the corresponding costs.

Q2: 3% revenue reduction

In the second quarter of the next financial year, IBM's revenue amounted to $25.8 billion, which is 3% less than the second quarter of 2011. The failure of the corporation's revenue turned out to be much more serious than analysts expected: according to Thompson Reuters forecasts, for example, the company's revenue for the second quarter was supposed to be $26.28 billion (-1.5% in annual terms).

Despite the decline in revenue, IBM's other financial performance was quite satisfactory. First of all, the corporation's net profit amounted to $3.9 billion, compared to $3.7 billion in the second quarter of 2011. As a result, earnings per share amounted to $3.34, which is 11% more in annual terms.

IBM Chief Financial Officer Mark Loughridge said in a conversation with analysts that "IBM's business model has achieved the highest performance in the current market conditions." He acknowledged that the quarter was difficult enough for the company, and also cited currency fluctuations that cost IBM up to $1 billion in revenue.

America remained the largest market for IBM, here the Blue giant earned $11.1 billion (-1% in annual terms), revenue in the EMEA region amounted to $7.9 billion (-9% in annual terms). In the Asia-Pacific region, IBM earned $6.3 billion, 2% more than a year earlier.

IBM's service division showed a decline in revenues by 3% in annual terms, Global Technology Services showed $10 billion (-2%), and Global Business Services - $4.7 billion (-4%). Software sales as a whole remained "flat," revenue from the sale of software amounted to $6.2 billion. Equipment sales decreased in relation to other business areas by a maximum of 9% to $4.3 billion.

However, there are separate segments where IBM's business was successful: this is BI (+ 13%), cloud solutions (revenue doubled compared to the first half of 2011), revenue in the direction of Smarter Planet solutions increased by 20%. However, the company does not disclose specific figures for these technologies.

1st Quarter: Sales Below Plan

While analysts were counting on IBM revenues in the first quarter of 2012 in the amount of $24.82 billion, the company announced a slightly smaller amount - $24.7 billion. The Zyfras do not differ fundamentally, but in any case they reflect a decrease in revenues from hardware sales by 7% to $3.7 billion, a decrease - from business services less than 2% to $4.6 billion, growth - from software by 5% to $5.6 billion, growth - from technology services by 2% to $10 billion.

IBM's announcement of a relatively low level of income led to an immediate decline in its stock quotes by 1.9% to $203.50. However, passions subsided quite quickly, and soon the securities rose in price by 2.3% to $207.45. Recall that as of April 3, a historical maximum of the value of the blue giant shares was recorded at $210.69.

Nevertheless, against the background of a decrease in yields for the period from January to March, IBM earned $3.07 billion or $2.61 in terms of share. The company posted a 7% increase in business profitability, notably beating Wall Street analysts' forecasts. Excluding the impact on profit of a number of acquisitions and benefits payments, in terms of share, it amounted to $2.78, while analysts predicted $2.66. The decline in stock prices was due to the lack of complete confidence of investors in the ability of IBM to effectively develop new lines of business, and not only squeeze profits from one service division.

IBM has increased its profitability forecast for 2012 from $14.85 to $15 per share (analysts' estimates are $14.93). Until 2015, the company expects to increase profitability to $20 per share. This is a rather rare case when such a large company openly declares clearly delineated long-term goals.

The corporation also officially confirmed its intention to sell Toshiba Tec for $850 million to the retail business.

2011:7% increase in net income to $15.9 billion

Net profit in 2011, calculated on the basis of requirements, GAAP reached 15.9 billion, dollars showing an annual growth of 7%;

Net annual operating income (excluding GAAP requirements) rose 9% to $16.3 billion.

• Total annual income increased by 7% (3% adjusted for changes in exchange rates) and reached $106.9 billion;

• Free cash flow rose over the year by $300 million to $16.6 billion;

• Revenues in regional growing markets increased by 16% (11% adjusted for changes in exchange rates);

• Revenue from sales of business intelligence systems rose 16%;

• Revenue from sales of solutions for the "Intelligent Planet" (Smarter Planet) showed an increase of 47%;

• Revenues from sales of cloud computing solutions increased by 3 times compared to the same final figure in 2010.

2010: Sales up 4% to $99.9 billion

At the end of 2010, the company's revenue reached $99.9 billion, an increase of 4%, profit increased by 10% to $14.8 billion.

Free cash flow rose $1.2 billion over the year to a record $16.3 billion;

Gross profit margins rose to 46.1%, showing growth for the seventh consecutive year.

In regional terms, revenue grew the most in the Asia-Pacific region - by 12% to $23.2 billion at the end of the year - while in the EMEA region (Europe, the Middle East, Africa) - decreased by 2% at the end of the year to $31.9 billion.

Separately, the company noted high growth rates in the BRIC group (Brazil, Russia, India, China) - in the 4th quarter, IBM's total revenue in these countries increased by 19% (by 17%, taking into account currency fluctuations).

Russia leads in terms of IBM revenue growth among all BRIC countries. In the third quarter of fiscal 2010, which ended on September 30, the company in Russia grew by 56% compared to the same period in 2009. In India, IBM sales increased by 15%, in China - by 36%, in Brazil - by 15%. The average growth in the BRIC region in the third quarter was 26%, in the second - 16%, in the first - 14%.

IBM sales software for the 4th quarter of 2010 increased by 7% to $7 billion. Within the framework of this value, sales ON WebSphere increased by 32%, - Lotus decreased by 3%. The latter was the result of a decrease in demand for IBM products for organizing collaboration against the background of the development of alternatives from and. Microsoft Google Sales of software in 2010 increased by 5.1% to $22.5 billion.

Sales of Business Analytics, including both software and related services, grew by 19% in Q4 2010.

Systems and Technology Group's Q4 revenue rose 21% to $6.3 billion, driven in part by strong sales of mainframe System z servers (up 69% since 2009). Sales of System x servers in the last quarter of 2010 increased by 18%, Power servers - by 2%. Entry-level hardware sales were up 30%, mid-range sales were up 7%, and storage sales were up 8%. The group's revenue for the entire 2010 increased by 11% to $18 billion.

Global Services revenue in the 4th quarter of 2010 increased by 2%, Global Technology Services - by 1% to $10.2 billion, Business Services - by 4% to $4.8 billion. In the 4th quarter of 2010, the company signed contracts for the provision of services in the amount of $22.1 billion, 18% more in comparison with the year-on-year. The volume of outsourcing contracts grew by 24% to $14.1 billion. Revenue growth of Global Technology Services and Global Business Services in 2010 amounted to 2.3% and 3.2%, respectively (up to $38.2 billion and $18.2 billion, respectively).

"We

ended the year with amazing results, recording record profits and free cash flow and exceeding the boldest revenue forecasts in terms of per share for 2010," said IBM Chief Executive Officer Samuel Palmisano.

According to Palmisano, between 2011 and 2015, IBM plans to spend $20 billion on acquisitions. At the same time, 15 transactions were announced in 2010, including the purchase of a specialist in the field of data analysis Netezza for $1.7 billion.

In 2011, IBM expects an improvement in the IT market. Analysts note that IBM is starting the new fiscal year, being in good enough positions to ensure further growth. IBM has become the second major high-tech company after Intel to forecast a further economic recovery.

2005: Fin Year-End: Consulting Chief Sales Driver

2005 revenue $91.134 billion

• IBM Global Services (IGS, consulting branch) - $47.357 billion.
• Systems and Technology Group (STG, Equipment Division) - $23.857 billion
• Software Group (Development Branch ON) - $15.753 billion

Notes