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IBM grows security and mobile businesses, but services decline

Cliff Saran

IBM has reported major growth in its security and mobile businesses following its ground-breaking alliance with Apple.

It posted second-quarter earnings of $4.1bn, an increase of 28% on the $3.2bn in the second quarter of 2013.

Two IBM employees walk past the IBM logo

The company’s middleware business grew 3%, while operating systems were down. Overall, IBM made $6.5bn in software revenue, up 1%.

Its security business grew 20% and mobile business revenue doubled.

Hardware sales were driven by System z mainframe, System x and Storage, while Power revenue declined by 28%. Its Systems and Technology revenue was $3.3bn, down 11%.

Services businesses generated $14bn in revenue, down 1% at constant currency, while Global Technology Services revenue was $9.4bn, also down 1%.

IBM's Global Business services revenue dropped by 2% to $4.5bn. Consulting and systems integration grew 1%, while application outsourcing was down 9%.

During the quarter, the company took a $1bn charge from staff cuts.

In a transcript of the conference call published on the Seeking Alpha financial site, Martin Schroeter, IBM's senior vice-president and chief financial officer, finance and enterprise transformation, said: "The underlying theme from the expansion of our cloud platforms and capacity to the OpenPOWER consortium, to the partnership with Apple for enterprise mobility to next generation chip technologies, is that we're leveraging our unique strengths and innovation, and enterprise capabilities to maintain our differentiation in the emerging areas of enterprise IT."

Commenting on the Apple alliance, Schroeter said: "We continue to have strong growth in MobileFirst, leveraging over 5,000 mobile experts and our expanding capabilities. Supporting our partnership with Apple, our software group will develop unique enterprise cloud services, native for iOS, to deliver the full enterprise-class mobile experience, from analytics to cloud storage and data security."

He said IBM made an investment of $1.2bn in Q1 to expand SoftLayer cloud hubs globally, plus a $1bn investment to bring Watson's cognitive capabilities to the enterprise. The company also launched its BlueMix cloud in June.


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