IBM: Fiscal 4Q14 Financial Results

IBM Corp. reports its 2014 fourth-quarter results for the three months ended December 31, 2014.

Revenue from system storage division decreased 8% (down 5%, adjusting for currency) with a modest sequential improvement from the rate in the prior quarter. As usual, strong growth came only from FlashSystems and Storwize portfolio.

In 4Q14 storage products represents 36% of System and Technology segment at $2.4 billion or $864 million.

Revenue of Tivoli were down 2% Q/Q.

Since at least 4Q11 or four years, Big Blue’s sales in storage hardware are declining each quarter compared to the same period one year ago (see table below), from 1% to 23% depending on the quarter. That’s the worst results compared to all the other biggest storage companies.

We still do not understand why IBM is not reacting to improve this activity. The recently good results in flash systems and relatively nice ones for Storewize disk arrays are far to compensate its poor business in legacy OEM and high-end disk products.

We also still do not understand why IBM is pursuing in storage. These last years, Big Blue sold at the right time its HDD business to Hitachi (then resold to WD). Recently it did the same for servers. Once more we think that the only solution for IBM, enabled to understand the storage market, is to sell its storage activity.

To whom? Lenovo is in the best position
because the Chinese company has excellent relationship with IBM:

• having already acquired IBM’s servers
• knowing storage following its acquisition of EMC/Iomega
• being already an IBM’s OEM in storage reselling some Storwize hardware
• wishing to become a leader in enterprise IT

IBM Storage Annual Revenue

* in $ million
Note: hardware only, estimations based on IBM’s figures, and without Tivoli software

IBM Storage Hardware Quarterly Revenue