IBM’s most recent sales figures point to a very uncertain future

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By J Maslow

Vintage IBM COmputer
Vintage IBM Computer

When it comes to company transformation and reinvention to take advantage of any changes in the volatile high-technology landscape, few companies have the staying power of International Business Machines (IBM). The Armonk, New York-based company has reinvented itself several times over to reflect changing market dynamics ever since it debuted as a time-clock and computing scale company. It became the dominant power in mainframes and even dominated the personal computer market for a while. Indeed, the IBM PC ushered in a revolution in open hardware-based personal computing and reshaped the consumer computing market. Recently, IBM has shed much of its computer hardware business, both at the consumer and server level, and focused primarily on three fronts: Big data analytics, cloud computing and software services.

Considering how adroitly IBM sensed the changing tech winds of the past and made the necessary changes to come out a winner, seasoned market observers shouldn’t be too alarmed at IBM’s recent sales figures. On its face, IBM’s sales performance numbers can be easily perceived as disappointing. Its global technology services (outsourcing) arm suffered a 7.3% decline while its software sales figures weakened by 6.9%. In absolute numbers, IBM reported total earnings of $5.48 billion for the quarter. This is quite a fall from the $5.73 billion it reported in the same quarter one year earlier. Considering the fact that analysts have expected revenues to limp in at $5.41 billion, IBM’s figures exceeded expectations.
Still, IBM’s figures show that its latest efforts at reinventing itself is facing some challenges. It is moving quickly towards becoming a purely software, Big Data, and cloud computing play. It is somewhat unclear as to how much of its sales erosion is due to its transition and how much can be attributed to a softening global economy.


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