IBM System z Revenues Down in Q3 2014

IBM announced that the third quarter  of 2014 was a difficult one for the company, buffeted by both economic and technology forces. Net income for the period was down 17% from the same period in 2013, $3.5 billion compared with $4.1 billion. 

The declines were seen across all of IBM’s product lines, including mainframes. Revenues from System z mainframe server products decreased 35%compared with the year-ago period, the company said.  Revenues from Power Systems were down 12% compared with the 2013 period.  Revenues from System x were down 10%.  Revenues from System Storage decreased 6%. 

IBM’s software products, usually immune from market gyrations, also slumped during the recent quarter. Revenues from the software segment were $5.7 billion, down 2%compared with the third-quarter of 2013.  Software pre-tax income decreased 3%, IBM said. Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were $3.7 billion, down 1% versus the third-quarter of 2013.  Operating systems revenues of $513 million were down 11% compared with the prior-year quarter.  

“We are disappointed in our performance,” said Ginni Rometty, IBM chairman, president and chief executive officer. “We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry.  While we did not produce the results we expected to achieve, we again performed well in our strategic growth areas – cloud, data and analytics, security, social and mobile - where we continue to shift our business.  We will accelerate this transformation.”  

IBM is also divesting itself from its “nonstrategic” semiconductor manufacturing business, Rometty announced. The company has reached an agreement under which GLOBALFOUNDRIES will acquire IBM’s Microelectronics OEM semiconductor business and manufacturing operations.  The transaction with GLOBALFOUNDRIES is expected to close in 2015.  The results from continuing operations exclude the Microelectronics business, which is presented separately as discontinued operations.

For more information, go to the IBM site.