IBM experiences cloud growth, but traditional business areas suffer

IBM's second-quarter revenues remained relatively flat, although the company reported strong growth in its cloud, analytics and Smarter Planet initiatives

IBM's revenues remained relatively flat in the second quarter 2012, although the company reported strong growth in its cloud, analytics and smarter planet initiatives.

Total revenues for the quarter fell by 3% to $25.8bn due to currency fluctuations.

Second-quarter net income was $3.9bn, compared with $3.7bn in the second quarter of 2011 – an increase of 6%.

Within its software business, revenues from the WebSphere family of products increased by 3% year over year, information management software revenues decreased by 1%, Tivoli software revenues increased by 2%, Lotus software revenues decreased by 8%, and Rational software revenues decreased by 7%. 

In its hardware business, revenues from Power Systems were down 7% compared with the equivalent period in 2011, System x revenues were down 8%, and System z mainframe server product revenues decreased by 11%. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), decreased by 8%. Revenues from System Storage decreased by 4%.

Revenues from IBM’s Global Technology Services segment decreased by 2% to $10bn. However, the company reported 13% growth in its business analytics revenues and over 20% growth in its Smarter Planet revenues in the first half of 2012.

The company said its cloud revenue had doubled during the first six months of the year.

"Our business analytics portfolio of services and offerings were up 13% in the first half, led by our GBS consulting practice," said IBM chief financial officer Mark Loughridge. "In cloud, we doubled last year's revenue, with contribution from all areas – private cloud, public cloud and our industry-based solutions.

"We also had revenue growth of more than 20% in the Smarter Planet portfolio, driven by industry-specific solutions and our Smarter Commerce and Smarter Cities offerings. So we’re getting real performance from the investments we’re making in our growth initiatives."

Ginni Rometty, IBM president and chief executive officer, said this performance reflected "continued strength in our growth initiatives and investments in higher value opportunities".



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