IBM Cites $8.7 billion in Annual Cloud Revenue

IBM reported declines in core services, software and hardware businesses, offset somewhat by growth in cloud services, big data analytics and its legacy mainframe business.

For the second-quarter of 2015, IBM reported consolidated net income of $3.4 billion or $3.50 of diluted earnings per share, including operating net losses in discontinued operations related to the Microelectronics business. Second-quarter net income from continuing operations was $3.5 billion compared with $4.3 billion in the second quarter of 2014, a decrease of 17 percent.

"Our results for the first half of 2015 demonstrate that we continue to transform our business to higher value and return value to shareholders. We expanded margins, continued to innovate across our portfolio and delivered strong growth in our strategic imperatives of cloud, analytics and engagement, which are becoming a significant part of our business," said Ginni Rometty, IBM chairman, president and chief executive officer.

Revenues from the company’s strategic imperatives --- cloud, analytics, and engagement --- increased more than 20 percent year-to-date (more than 30 percent adjusting for currency and the divested System x business). Total cloud revenues increased more than 50 percent (more than 70 percent adjusting for currency and the divested System x business) year-to-date, and is $8.7 billion over the last 12 months, adjusted for the divested System x business. The annual run rate for cloud delivered as a service -- a subset of the total cloud revenue -- increased to $4.5 billion from $2.8 billion in the second quarter of 2014. Revenues from business analytics increased more than 10 percent (more than 20 percent adjusting for currency) year-to-date. Revenues from mobile more than quadrupled, and social revenues increased more than 30 percent (more than 40 percent adjusting for currency), both year-to-date.

Global Technology Services segment revenues were down 10 percent (up 1 percent adjusting for currency and the divested System x business) to $8.1 billion. Global Business Services segment revenues were down 12 percent (down 3 percent adjusting for currency) to $4.3 billion.

Revenues from the Software segment were down 10 percent to $5.8 billion (down 3 percent adjusting for currency) compared with the second quarter of 2014. Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were $4.0 billion, down 7 percent (flat adjusting for currency) year-to-year. Operating systems revenues of $0.4 billion were down 17 percent (down 9 percent adjusting for currency) year-to-year.

Revenues from the Systems Hardware segment totaled $2.1 billion for the quarter, down 32 percent (up 5 percent adjusting for currency and the impact of the divested System x business) year-to-year. Revenues from z Systems mainframe server products increased 9 percent compared with the year-ago period (up 15 percent adjusting for currency). Total delivery of z Systems computing power, as measured in MIPS (millions of instructions per second), increased 24 percent. Revenues from Power Systems were down 1 percent compared with the 2014 period (up 5 percent adjusting for currency). Revenues from System Storage decreased 10 percent (down 4 percent adjusting for currency).