Last night Mark Loughridge (CFO) unveiled IBM’s Q3 financial results, which did not make for particularly pretty reading, but which demonstrated the company’s ability to squeeze out costs.
The company reported revenue of $24.7bn, a decline of 2% on last year when adjusting for currency. Relative to Q1 and Q2 year-on-year performances, the trend is down: IBM registered 1% growth in both Q1 and Q2 (see IBM: profits up despite headwinds). Despite this, IBM increased EPS from $3.28 last year to $3.62 this year, and pushed up operating pre-tax income by 7% to $5.5bn. Loughridge pointed out, however, that pension-related charges in UK impacted net income and will cause a shortfall in FY earnings.
Breaking it down by segment, IBM’s Services revenues remained flat at $14.4bn for the combined GTS and GBS businesses. GTS grew by 1% but GBS declined 3% (at constant currency). GTS growth was driven by IBM’s Integrated Technology Services operations, which includes IT consulting, project based business and managed services. In Europe, managed services is growing fastest.
Clearly the overall trend is low or no growth in Services. Meanwhile, Loughridge and team are working to identify and eradicate outsourcing contracts that are proving to be a drag on profits. This is likely to impact revenues in the shorter term.
Elsewhere in IBM, the Software business grew 3% (stay tuned for more on these numbers once we’ve analysed them further), while Systems and Technology revenue tumbled 12% (both are adjusted for currency swings).
The trend around geographies is unsurprising, with EMEA revenues ($7.2bn) down 1% and the Americas down 3%. Asia Pac was the relative shining star with 2% growth.