IBM Weathers Another Tough Quarter; Mainframe Revenues Down

IBM reported its fourth-quarter and full-year 2014 income, and the results reflect a tough environment for the computing giant, buffeted by uncertain global markets and shifting technology paradigms. IBM reported its revenues were $92.8 billion for the year, down 6% from the previous year. Net income for 2014 was $15.8 billion, compared with $16.9 billion in the year-ago period, a decrease of 7%.

For the fourth quarter of 2014, total revenues were $24.1 billion, down 12% from the fourth quarter of 2013 and down 1% for the full year 2014. Net income totaled $5.5 billion compared with $6.2 billion in the fourth-quarter of 2013, a decrease of 11%.

System and server revenues were weak in the most recent quarter. Revenues from System z mainframe server products decreased 26% from the year before. Revenues from Power Systems were down 13%, and revenues from System Storage decreased 8%. Overall, revenues from continuing operations for the Systems and Technology segment totaled $2.4 billion for the quarter, down 39%. However, pre-tax income increased 12% for the unit.

Even software, usually a bright spot for IBM, had a tough quarter. Revenues from the software segment were $7.6 billion, down 7% compared with the fourth-quarter of 2013. Software pre-tax income decreased 11%. Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were $5.4 billion, down 6%. Operating systems revenues of $557 million were down 19%.

"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,” said Ginni Rometty, IBM chairman, president and chief executive officer.

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