IBM Boosts Cloud Footprint With London, US And Australia Data Centres

20 July, 2017, 00:47 | Author: Alicia Barber
  • IBM CEO Ginni Rometty right with IBM research scientist Geoffrey Siwo

The good news for IBM was that its cloud-related revenue grew 17 percent this last quarter, led by its "as-a-service" offerings, which were up 32 percent year-to-year. This marks the 21th straight quarter the company has reported lower revenues. Profit margins also narrowed across all business units, including the divisions for its main cloud computing and Watson-artificial intelligence operations - two areas Ms. Rometty is counting on to propel the company's turnaround. The company's total cloud revenue amounted to $15.1 billion during the last 12 months, or about 20 percent of IBM's overall revenue, so there's still a long way to go in the transition.

IBM believes the core of storage revenues are moving to software while the growing part of on-premises storage hardware is getting focussed on flash, which is reflected in its results.

IBM is down 10.43% so far this year, including the post-earnings drop. The company is now striving hard to make IBM a company that provides cloud computing and data analytics. And 30 percent of those next-generation technologies are delivered as a service, contributing to an $8.8 billion run rate in that category at the end of the quarter. "We strengthened our position as the enterprise cloud leader", she said in a press release. IBM reiterated a forecast for this year of "at least" a $13.80-a-share profit for 2017 before certain costs, while analysts peg it at $13.68.

But the new businesses still aren't yet big enough to offset declines in its traditional businesses. "We know how to migrate them from one era to another", Martin Schroeter, IBM's chief financial officer, said on the conference call. "IBM is very liberal with what they count as 'strategic, ' which is still growing as a percentage of their business, but it's still not turning the aircraft carrier yet", said Ralph Finos, an analyst with Wikibon, owned by the same company as SiliconANGLE.

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"IBM operates cloud data centres in almost every major market around the world, ensuring that our clients can keep their data local for a variety of reasons - including performance, security or regulatory requirements", Considine says.

Mobile-based revenues jumped 27%, while security segment revenues increased by 4%.

IBM stock has dropped more than 7 percent since the beginning of this year.

In the company's latest fiscal results, IBM reported revenue of $4.6bn in its cognitive solutions business, which includes software and transaction, down 2.5% for the same period past year. Warren Buffett's Berkshire Hathaway Inc. sold about a third of its investment in IBM during the first half of this year.

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