IBM blames strong US dollar for 12% drop in first-quarter revenues

IBM reports $2.4bn net income from continuing operations in its first quarter, down 5% on the same quarter the year before

IBM reported its net income from continuing operations was $2.4bn in the first quarter, down 5% on the same period the year before.

It reported total revenues from continuing operations for the first quarter of 2015 of $19.6bn – down 12%, blaming a strong US dollar.

Revenues from its software division were down 8% to $5.2bn, while Global Services revenues dropped 12% to $12.2bn.

Revenues for its Systems Hardware business totalled $1.7bn for the quarter, down 23%.

Ginni Rometty, IBM chairman, president and chief executive officer (pictured), said: "Our focus on higher value – through portfolio transformation and investment in key areas of the business – drove continued margin expansion."

The business's ongoing transformation, to focus on strategic IT – along with the impact of currency exchange rates – meant overall revenues were down 12% from the same period the year before.

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"In 2015 we’re shifting billions of dollars of spending to data, cloud and engagement to extend our differentiation in the market. And, in the last few weeks, we’ve announced two initiatives – internet of things and Watson Health – that will further strengthen our position as a high-value innovation company providing solutions at the intersection of business and IT," said IBM CFO, Martin Schroeter.

Schroeter said IBM was expanding its public, private and hybrid cloud footprint: "Our cloud revenue was up over 75% year-to-year.” The company reported cloud revenue of $7.7bn. “We had terrific performance in our cloud foundational and 'as-a-service' offerings," he said. 

IBM’s annual subscription revenue for cloud services grew to $3.8bn, an increase of $1.5bn compared with 2014. "The bulk of that growth was organic, the result of our deep insights into how our clients run their business," Schroeter said.

The company has been steadily growing its SoftLayer cloud business. In February 2015, Shop Direct deployed a hybrid cloud infrastructure using SoftLayer to provide capacity on demand. This allowed the online retailer – which runs Very.co.uk – to react to market changes quickly and support digital initiatives such as building a more personalised customer experience.

The company released a new mainframe, the z13, in March 2015. IBM hopes enterprises will use it to build back-end systems for the mobile economy. It also debuted its Power 8 processor, optimised for data and cloud.

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