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IBM financials squeezed but cloud, mobile, security and analytics show growth

Cloud, security, mobility and analytics are the future for IBM as revenue drops for 16th quarter

IBM has reported first-quarter (Q1) revenue of $18.7bn, down 5% compared to 2015 - its 16th consecutive quarter of revenue decline.

On a more positive note, the company stated its cloud revenue grew 34% during Q1 2016 to $5.4bn, while sales from analytics increased 7% and revenue from mobile increased 88%.

The IT giant said that its security business grew revenue by 18%, but its systems division - which includes systems hardware and operating systems software - saw sales decline by almost 22% to $1.7bn.

In a transcript of the company’s earning call posted on the Seeking Alpha website,  IBM chief financial officer Martin Schroeter said that the Watson artificial intelligence engine represented strong growth potential for the business.

“Our solutions software growth of 3% was a significant sequential improvement from the fourth quarter of last year. Contributing to this growth was strong double-digit performance in our Watson cloud-based offerings and acquisitive content. From an offering perspective, the growth was led by analytics and security. In both of these areas, we have highly differentiated strategies and capabilities,” he said.

During the quarter, Schroeter said the company formed a video services unit, which will provide clients with a portfolio of video services and digital analytics.

The company reported a decline in its integration software business of 2%. Schroeter said: “Our annuity content is growing with stability in our on-premises content and acceleration in the adoption of SaaS [software as a service], specifically in the products that integrate a hybrid cloud environment, like application servers and our Connect family of products.”

IBM Global Business Services - which includes consulting, global process services, and application management - reported revenues of $4.1bn, down 4.3%.

In a bid to move away from traditional services, Schroeter said the company was expanding its services portfolio. He said the company was seeing a lot of price pressure implementing large-scale ERP systems, but the areas it was now moving into were “continuing to grow pretty well”.

He added: “We just announced the creation last year, at the end of last year, of a cognitive practice. That doesn't exist anywhere. It's the world's first. We are building skills there.”

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