For IBM, a Soft Quarter in Hardware, But Hard Gains for Software

IBM reported a tough first quarter, including soft mainframe sales. Overall, the company saw first quarter revenues of $22.5 billion, down 4% from the first quarter of 2013. Net income was $2.4 billion, down 21% year-to-year.

Revenues from the overall Systems and Technology segment totaled $2.4 billion for the quarter, down 23% from the first quarter of 2013. Total systems revenues decreased 24%. Revenues from System z mainframe server products decreased 40% compared with the year-ago period. Total delivery of System z computing Power, as measured in MIPS, decreased 19%. 

Other server lines didn't do much better. Revenues from Power Systems were down 22% compared with the 2013 period.  Revenues from System x were down 18%. Revenues from System Storage decreased 23%.

IBM's software sales were stronger over the past quarter, however. WebSphere was the brightest spot in the IBM portfolio during the recent quarter, with revenues from WebSphere increasing 12% year over year.

Overall revenues from the Software segment were up 2% to $5.7 billion compared with the first quarter of 2013. Revenues from key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were $3.7 billion, up 4% versus the first quarter of 2013. 

Operating systems revenues of $519 million were down 10% (down 9%, adjusting for currency) compared with the prior-year quarter. Information Management software revenues increased 1%. Revenues from Tivoli software increased 7%. Revenues from Workforce Solutions software decreased 4%, and Rational software increased 1%.

“In the first quarter, we continued to take actions to transform parts of the business and to shift aggressively to our strategic growth areas including cloud, big data analytics, social, mobile and security,” said Ginni Rometty, IBM chairman, president and chief executive officer. “As we move through 2014, we will begin to see the benefits from these actions. Over the long term, they will position us to drive growth and higher value for our clients.”

More information is available from the IBM website