IBM has announced third-quarter 2014 net income from continuing operations was $3,5-billion compared with $4,1-billion in the third-quarter of 2013, a decrease of 17%. Operating (non-GAAP) net income from continuing operations was $3,7-billion, as compared with $4,5-billion in the third-quarter of 2013, a decrease of 18%.
The company reported diluted earnings from continuing operations of $3.46 per share, compared with diluted earnings of $3.77 per share in the third-quarter of 2013, a decrease of 8%. Operating (non-GAAP) diluted earnings from continuing operations were $3.68 per share compared with operating diluted earnings of $4.08 per share in the third-quarter of 2013, a decrease of 10%.
For the third-quarter of 2014, IBM reported consolidated net income of $18-million or $0.02 of diluted earnings per share, which includes a net loss from discontinued operations of $3,4-billion, or $3.44 per diluted common share.
Total revenues from continuing operations for the third-quarter of 2014 of $22,4-billion were down 4% (down 2%, adjusting for the impact of the divested customer care outsourcing business and for currency) from the third-quarter of 2013.
“We are disappointed in our performance. 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,” says Ginni Rometty, IBM chairman, president and CEO.
“We are executing on a clear strategy that is moving IBM to higher value, and we’ve taken significant actions to exit nonstrategic elements of the business. This includes the announcement that we will divest semiconductor manufacturing to focus on research and development that will differentiate our systems. We will continue to make the investments and the changes necessary to manage our business for the long term. And we remain fully committed to returning significant value to shareholders through dividends and share repurchase.”
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.
The Americas’ third-quarter revenues were $10,1-billion, a decrease of 2% (down 1%, adjusting for currency) from the 2013 period. Revenues from Europe/Middle East/Africa were down 2% to $7,2-billion (down 3%, adjusting for currency). Asia-Pacific revenues decreased 9% (down 8%, adjusting for currency) to $5-billion
Revenues from the company’s growth markets were down 6% (down 5%, adjusting for currency). Revenues in the BRIC countries — Brazil, Russia, India and China — were down 7%.
Global Services segment revenues decreased 3% to $13,7-billion. Global Technology Services segment revenues decreased 3% (up 1% adjusting for the impact of the divested customer care outsourcing business and for currency) to $9,2-billion. Global Business Services segment revenues were down 2% (down 1%, adjusting for currency) to $4,5-billion.
Revenues from the Software segment were $5,7-billion, down 2% compared with the third-quarter of 2013. Software pre-tax income decreased 3% and pre-tax margin decreased to 35,5%.
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% from with the prior-year quarter.
Global Financing segment revenues decreased 3% in the third-quarter to $487-million
Revenues from continuing operations from the Systems and Technology segment totaled $2,4-billion for the quarter, down 15%. Revenues from Power Systems were down 12% compared with the 2013 period. Revenues from System x were down 10%. Revenues from System z mainframe server products decreased 35% compared with the year-ago period. Revenues from System Storage decreased 6%.
The company’s total gross profit margin from continuing operations was 48,6% in the 2014 third-quarter period compared with 49% in the 2013 third-quarter period. Total operating (non-GAAP) gross profit margin from continuing operations was 49,2% in the 2014 third-quarter compared with 50,1% in the 2013 third-quarter period.
